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India Inc feels the rising pressure to serve up jobs for locals
9 min read.Updated: 27 Nov 2020, 08:20 AM ISTGoutam Das
While bills seeking job reservations for locals don’t stand the test of law, industry can’t ignore the wider issues
Such bills do set a tone. The broader message some in industry feel is to make sincere efforts to hire additional native workers in some sectors since not all migrants are skilled
NEW DELHI :
In a large industrial park in Haryana’s Bahadurgarh, a supplier of zinc and aluminium die cast parts runs a busy plant. The company’s 150 staffers produce, polish and pack parts of security locks, sanitary and decorative hardware. Only about two per cent of the workers are native to Haryana.
Why are so few locals employed by the company? The company’s owner, who didn’t want to be identified because labour inspectors would come knocking, listed many reasons: workers from the state are inflexible; they don;t want to do overtime, and at the drop of a hat, they can create chaos, demand more money, fight.
Employing a large number of migrants on the factory floor has its drawbacks too but the industrialist said he had little choice. A large chunk of its workforce is from Bihar and Uttar Pradesh. When they go on leave, it takes a month for them to return to work. “In contrast, local workers may take only two-three days off. But longer leaves are acceptable to us because it is lesser of an evil than handling locals," he said.
Then consider Ignoxlabs Limited, a Gurugram-based company that provides emergency support and health monitoring services to elders under the brand Emoha Elder Care. The firm requires a mix of professionals, from nurses and nursing officers to paramedics and care coordinators.
“In our work, we always give credence to skills. The best quality nurses in the country come from Kerala. If all the nurses have to come from Haryana, there would be a challenge in good quality nursing," Saumyajit Roy, co-founder & CEO of Emoha Elder Care, said.
For both these firms and thousands of private manufacturing and services companies operating in Haryana, a new bill seeking reservation has sparked off a debate that spans the rule of law as well as the role of business in nurturing local environments.
On November 5, the Haryana Legislative Assembly passed the Haryana State Employment of Local Candidates Bill, 2020, which if enforced requires private companies in the state to offer 75% of the new employment to local candidates with a pay ceiling of ₹50,000 per month. The ceiling would ensure that all blue-collar workers, and also all entry-level white collar workers such as BPO and sales professionals, are covered within its ambit.
Industry bodies are, of course, opposing the bill tooth and nail. The Haryana bill comes in a post-pandemic world when the state is facing an unemployment crisis. Unemployment in the state in October 2020 was trending at over 27%, ahead of Rajasthan (24%) and Jammu and Kashmir (16%), data from the Centre for Monitoring Indian Economy (CMIE) showed. There is a pressure on the state government to show the creation of jobs.
“Haryana is very sensitive to economic shocks. The state has a large number of industrial workers and many of them are contractual labourers. In an economic shock, these are the guys who lose their jobs quickly. And they are the ones who don’t get back the jobs equally fast," said Vyas, managing director and CEO of CMIE . Over the last six months, contractual workers in the industrial belts of Gurugram, Manesar, Faridabad and Panipat have lost jobs.
Haryana is not the first state to attempt a reservation bill in private jobs. Neither would it be the last. In 2019, the Andhra Pradesh Legislative Assembly passed the AP Employment of Local Candidates in Industries and Factories Bill that also sought to mandate 75% local employment.
“All state governments are coming under pressure. It is a reflection of jobs being scarce," Vyas said. “Earlier, it had the shape of caste groups wanting reservations but the Supreme Court has repeatedly said this is not on. Now, there are alternate ways being found," he added.
While coercing private companies to employ native workers goes against the spirit of the Indian constitution and indeed, the free flow of jobs within the country, there are moral questions industries must address. Companies setting up shop in a state often extract concessions, from cheap land to power benefits. Don’t they have an obligation to create higher local employment? Also, aren’t some companies reluctant to pay a wage locals see as meeting their aspirations, relying instead on migrants who can be managed with a minimum wage?
The answer to these questions are nuanced.
“States should regulate to ensure that businesses don’t engage in extractive and exploitative practices that take advantage of the resources a state has to offer, without reinvesting the gains and giving back to the local community. But mandating that businesses hire locals is counterproductive," Sabina Dewan, president and executive director of JustJobs Network, a think tank, said.
Recruitment should be open to all the most qualified candidates and as a nation, India must promote more labour mobility not less, she added. “Ultimately, states should ensure that all workers are treated well — this will spur local aggregate demand that is a far more effective strategy than quotas for hiring locals."
A local tone
The bills are not likely to stand the test of law.
The Andhra Pradesh bill has been challenged in the Andhra Pradesh High Court. “The fate of the enactment is yet to be decided as a matter is still pending before the judiciary. Concerns were raised in Haryana Vidhan Sabha about the state’s bill being violative of Article 16 of the Constitution of India," Raunak Singh, founding partner at Avitr Legal, a law firm specialising in employment laws, said.
Article 16 is about equality of opportunity for all citizens in matters relating to employment or appointment. The Haryana government is arguing that Article 16 talks about public employment while the reservation bill pertains to private sector employment. “Even if the bill shapes into an enforceable enactment, it is highly unlikely that it will skip constitutional scrutiny," Singh noted.
Nonetheless, these bills do set a tone. The broader message: make sincere efforts to hire additional native workers. This is similar to the Indian IT Industry having to hire in higher numbers in the United States irrespective of whether it is a Republican or a Democratic government. The H-1B visa curbs and attempted regulation around it have set that tone.
“Indian state governments do extend a lot of benefits. One of the agendas is to engage the local worker. This is important because state governments want to work towards the growth of their economies," Pradeep Bakshi, managing director and CEO of Voltas Limited, an air conditioner and appliances company, said.
Employing local workers can pay off since not all migrants are trained or skilled. Besides, employing natives generate goodwill among local communities. “Initially, there may be teething issues. However, over a year or so, you can create a bandwidth of people from local sources," he added.
Of course, there are times when this is simply not possible because of the nature of the business. It would also work against migrant labour.
V. Prabhu Kishore, chairman and founder of Varun Group, which has business interests in sectors such as automotive retail and hospitality in Andhra Pradesh, Telangana, and Karnataka said that geographic reservation isn’t possible in industries like hospitality. “I need diversity in people, food, beverage. It is not doable in construction either — you need people from Odisha, Bengal, Bihar. To some extent, hiring more locals is doable in automobiles," he said.
Southern Indian states have a far lesser unemployment challenge than Haryana. According to CMIE, Andhra Pradesh’s unemployment rate as of October 2020 is 6.6%, or nearly the India average of 7%. Unemployment in Telangana (2.9%), Tamil Nadu (2.2%) and Karnataka (1.6%) is far below the national average. People in southern Indian states that are industrialised have progressively moved up the ladder, vacating jobs in sectors such as construction to migrants from the East and North India.
In the automobile belt of Haryana, the larger companies today have a 50:50 ratio when it comes to native workers versus migrants. There are two broad categories of employment. Besides a permanent workforce, manufacturers employ a large chunk on flexible contracts.
Some companies have a bigger percentage of migrants in their regular workforce and more local representation in the contractual part — this works because at the hint of trouble, contractual employees can be fired easily compared to the permanent worker. Nevertheless, many industrialists think an overall 50:50 ratio is an achievable number even outside of the automobile industry.
“Companies should not have 100% local people and neither can they have 100% migrants. The principle of population mix will bring in different kinds of youngsters, a diversity of talent to create a high performance culture. 50:50 is a good mix," an executive associated with Maruti Suzuki who didn’t want to be identified said.
Trying to employ additional native workers wouldn’t be enough in the absence of skills sets. Companies, and state governments have to show intent to skill locals, too.
A.V. Monish Row, a past president of The Vizagapatam Chamber of Commerce and Industry said that there are politics of appeasement and then, ground realities. “Both have to find a common ground. If you have to employ locals, they need the skills. Most of the time our education institutes churn our people who are not employable," he said. The Andhra Pradesh government, he added, is opening skills centres, skills universities, and collaborating with various corporates. “This is work in progress. At the end of the day, what is implemented on the ground matters," he said.
Meanwhile, hiring a higher number of native workers implies that companies have to get a handle on discipline, particularly in volatile belts like Gurugram-Manesar. Manufacturers need to engage workers professionally and patiently. Labour unions often allege that HR and industrial relations teams have a feudal mentality.
“Unless companies don’t start moving beyond the master-servant framework and start seeing their workers as rights-bearing citizens who are equal stakeholders, they won’t professionalise their relationship with them," Rakhi Sehgal, an independent labour researcher and trade union activist, said.
To be more professional, and be able to hire local workers who can talk back, it is therefore crucial to do a few things. “Companies have to better train the HR department’s managerial level staff to deal with a workforce that is aspirational and assertive," Sehgal suggested. “Firms also have to invest in the workforce and help them evolve frameworks to articulate their concerns and grievances," she added.
Harbhajan Singh, a former director at automaker Honda Motorcycle & Scooter India Pvt. Limited, recollected the long time it took him to make workers understand the right perspective. Blue collar recruits compare wages across different companies and this creates a confrontational mindset if they earn less. “It took me time to make people understand that a company’s survival is dependent on the right cost and quality of the product," Singh said. “It also took me time to make workers understand that discipline is important," he added.
Singh suggested manufacturers hire a diverse workforce spanning multiple age groups. In the Gurugram-Manesar belt, multinationals, particularly the Japanese, recruited a younger workforce. “In some cases, 90% of their workforce were of the same age. They are fresh out of colleges, have a volatile temperament," Singh said. His thinking: a multi-generational workforce should be more understanding.
The latest reservation bill is a reminder: quickly make changes on the HR front or face business disruptions.