Relevance:GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. Inclusive growth and issues arising from it./ GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Key phrases: domicile conditions , sunset law, local job reservation ,ease of doing business ,employer-employee relations, migrant labour , regionalism, inequality , constitutional mandate

Why in news?

• The Haryana government has brought into effect on Jan 15 the Haryana State Employment of Local Candidates Act 2020, which makes it mandatory for all employers in the State to reserve 75 per cent of the jobs offering a monthly gross salary or wages of up to ₹30,000 for local candidates. This law applies to new recruitments and will not come into effect from retrospective effect.

All about the Law

• The Act applies to all the ‘Employers’ in the State. This includes all companies, partnership firms, societies, trusts, limited liability partnership firms and any person or employer that employs 10 or more employees in any trade, business, manufacturing units or enterprise
• The Haryana State Legislative Assembly passed this Bill in November 2020. The government made some amendments to the Act including relaxing domicile conditions for local candidates and reducing the threshold level from ₹50,000 gross monthly salary to ₹30,000 gross monthly salary for employers. The law will have a sunset clause and will cease after ten years of enactment.
• Present status of the law : It has finally been enforced on January 15.

Several industry bodies have challenged the law in the Punjab and Haryana High Court. But, so far, have not got a stay on the implementation. The court dismissed a plea for early hearing last week and has now scheduled the hearing to February 2

State Government’s Argument for the Law:

• One of the key arguments of the government has been that urbanisation and industrialisation has led to substantial land acquisition in the State, which has historically been an agrarian society.
• The government believes this has led to reduction in employment opportunities in agriculture sector for the local youth and the law will help create new job opportunities for them and also encourage skill development.
• It also believes it will reduce dependency of employers in Haryana on migrant workers and improve their efficiencies.

Compliance required by the Industry:

• All employers in the State have been directed to register their existing employees garnering a monthly pay of not exceeding ₹30,000 on the designated portal within three months and can now initiate any new recruitment in this pay bracket only after completing this process.
• They will also need to file a quarterly report on the government’s designated portal providing information regarding the local candidates employed and appointed in this pay bracket in the previous quarter as per the norm.

Concerns raised by the Industry:

• It is discriminatory in nature and against the concept of one nation.
• They believe this will substantially increase their compliance burden especially on small and micro enterprises.
• Concerns over availability of enough workers for jobs in trades that are dominated by workers from certain clusters of the country, such as construction and manufacturing as well as in the services sector such as hospitality and retail.
• Though there is a provision for an exemption if an adequate number of local candidates of desired skill or proficiency are not available for a particular category of jobs. But the government can accept or reject the claim or direct the company to train local candidates in the desired skills.

Challenges in implementing it:

On Business and Management

• It will impact the business-friendly image of the State, ease of doing business rankings and may also discourage fresh investments by industries.
• Any rule which tries to artificially control the internal functioning of a private enterprise against the market, will affect its competitiveness in the market and hurt their productivity.
• It will affect employer-employee relations and may foster a bias within the organisation
• It may bring forth the negative dimension of trade unionism which may affect the overall industrial climate in the state

On Socio-political environment:

• It will provoke framing of similar laws in other states for local political mileage which can affect the demand-supply chain of skilled and unskilled labour across the states.
• It may give rise to feeling of regionalism which is against the concept of One Nation being emphasised by the Central Government so openly and vehemently
• It is not so far in the past we have witnessed outsiders being attacked by locals on such grounds fomenting civil disturbances in various states.

Against Constitutional mandate:

• Preamble so clearly states for citizens social and economic justice, equality of opportunity which gets negated largely. Besides this, the concept of fraternity may also get compromised
• Art 14 provides right to equality in general
• Art 16 guarantees equality of opportunity in matters of employment to all citizens
• Art 19(1)(g) allows right to follow profession of choice anywhere in India along with Art 19(d) and(e) allow right to move and settle in any part even for employment

Way Forward:

• Haryana being agriculturally advance state may focus more on development of Secondary agriculture which will not only generate employment and income but also be climate friendly
• It can develop its service sector by putting more emphasis on skill development
• The well-trained workforce shall also get employment opportunities in other states as well
• Such laws in short term may prove sounder but in the long run can be strategically disastrous .The state already has lost a lot of investment ,in the recent past , to other states due to non-conducive business environment on certain fronts.

Source: The Hindu  BL

Mains Question:

Q. The issue of unemployment is better addressed by sound economic policies rather than populist measures. In the light of the above statement critically analyse the Haryana State Employment of Local Candidates Act 2020.?