RSTV: THE BIG PICTURE- JOBS-LOCALS FIRST POLICY

insightsonindia.com/2019/08/03/rstv-the-big-picture-jobs-locals-first-policy

August 3,
2019

RSTV: THE BIG PICTURE- JOBS-LOCALS FIRST POLICY

Introduction:

Fulfilling one of its biggest election promises, the Jagan Mohan Reddy government
passed a bill in the Assembly which reserves 75 per cent jobs factories for Andhra
Pradesh youths, making it the first state in the country to introduce such a provision in
the private sector. The Andhra Pradesh Employment of Local Candidates in
Industries/Factories Act, 2019 was approved by the Assembly. The Bill states that if an
industrial unit fails to find enough skilled local workers, then it will have to train them in
association with the state government. The company is also required to act in
accordance with the new law and submit a quarterly compliance report. Similar
demands have come up in different states like Karnataka, Madhya Pradesh,
Maharashtra, and Gujarat. The Congress party government led by Chief Minister Kamal
Nath in Madhya Pradesh has vowed 70 percent reservation for native candidates.

Features of Andhra Pradesh Employment of Local Candidates in

Industries/Factories Act, 2019:

It reserves 75% private jobs across all categories in industrial units, factories, joint
ventures and projects in public-private partnership mode.
If locals with necessary skills are not available, then companies must train them in
association with the state government and hire them.
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 Only those units that are listed in the first schedule of the Factories Act will be
exempted from the Act, after the government approval. These are mostly
hazardous industries like petroleum, pharmaceuticals, coal, fertilisers and cement,
among others.
Companies will have to comply with these provisions within three years of the
commencement of the Act.

Rationale behind this move:

With growth in industries, the demand for land has been increasing.
Since most of the land requirement is met by acquiring private agricultural
lands, the land owners are being displaced and deprived of their occupation
and thereby loss of income.
Local people have complained that industrialisation in their areas have
deprived them of means of livelihood.
To address this gap, the government has brought this legislation.

Will it help? And Negatives of the move:

The Andhra Pradesh government’s proposed law to enforce 75 percent reservation

for local candidates in private sector jobs may be right in intent, but
conceptually flawed and may have little practical value beyond political
jingoism.
This would mean irrespective of the availability, all private sector enterprises
will have to ensure a minimum of 75 percent employment for local
candidates.
In the absence of local candidates of a particular skill level, the law would force the
employers to recruit them anyway and train them. The government has promised
help to upskill the staff, but this could be time-consuming. Businesses that have to
remain nimble to adapt their business strategies to changing market situations
may find it tough to meet this requirement.
Against the concept of “One Nation”.
A provision of such sweeping import could in fact hinder the state’s economic
growth by affecting the ease of doing business. Ease of recruiting talent is a
major aspect that influences the index.
Dangerous to the unity of our country.
Social tensions.
If job creation is the intention, the move may become counterproductive.
The private sector could suffer a setback as it would hinder choosing the best
candidates, irrespective of the linguistic background or domicile of the
person, to comply with the rule.
Localised protectionism will affect growth.
Also, once it is enforced, there is no stopping other states from coming up with
similar populist policies, even for white-collar jobs where merit is paramount for
productivity. This could mean greater informalisation of labour, which in turn

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 means greater insecurity for the same workers whose interests the government is
purportedly protecting with the move.
It will affect the migration of laborers from other states with surplus working force
which keeps the wages low.
This will increase the cost of production, and India’s advantage of being able to
create products at lower cost will disappear.
The act threatens the constitutional fabric of the country.
The end result of industry loss of confidence and business moving elsewhere
would, of course, be a decline in the economic well-being of the blue-collar workers
the policy is supposed to protect.
People with transferable jobs will be affected.

Challenges:

The act contradicts fundamental rights i.e Article 16 of the constitution which
specifically says that no citizen shall, on grounds only of religion, race, caste, sex,
descent, place of birth, residence or any of them, be ineligible for, or discriminated
against in respect of, any employment or office under the State.
The act threatens the constitutional fabric of the country as it will create social
disharmony in the country.
It would also violate the landmark Indra Sawhney judgment of the Supreme
Court which caps reservation “of any manner” at 50%.
In 1984, the supreme court allowed the domicile reservation in the educational
institutions. However, the supreme court in the same case said that policy
promotion that violates fundamental right is not allowed as it may lead to
fragmentation of the society.
It would be difficult to attract more investment which is the need for newly formed
state.
Lack of skilled workforce already exists.
The demand in long turn may end up asking for reservations in private firms too
which would be difficult and be a challenge to handle.

Way Forward:

Incentivizing the industry may be a better approach.

Incentives like lower electricity charges or land use charges can be offered and
inturn ask them to invest in training the locals.
Skill development policies.
Maharashtra model can be adopted which encourages Dalit entrepreneurs to set
up industries.

Source: click here

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