Recently, the Karnataka State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill, 2024, was cleared in the Cabinet meeting chaired by Chief Minister Siddaramaiah.  

Karnataka’s Local Employment Mandate

• Management Positions: Industries, factories, and other establishments required to appoint local candidates in 50% of management positions.
• Non-Management Positions: 70% of non-management positions to be filled by local candidates.

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Who is an Eligible Candidate?

• Birth and Domicile: Born in the State of Karnataka. Domiciled in the State for a period of 15 years.
• Language Proficiency: Capable of speaking, reading, and writing Kannada legibly. Passed a required test conducted by the nodal agency.
• Educational Requirement: Secondary school certificate with Kannada as a language. Alternatively, pass a Kannada proficiency test as specified by the nodal agency notified by the government.
• Training for Local Candidates: Industries and establishments, in collaboration with the government, should train local candidates within three years.
• If Sufficient Local Candidates Are Not Available: Industry or establishment may apply for relaxation from the Act’s provisions to the government.
  • After due enquiry, the government may pass appropriate orders. Orders passed by the government shall be final.
• Compliance and Penalties:
  • Management Positions: Percentage of local candidates should not go below 25%.
  • Non-Management Positions: Percentage of local candidates should not go below 50%.
  • Range of Penalties: Failure to comply may attract penalties ranging from ₹10,000 to ₹25,000.

Long-Pending Demand

• Calls for 100% Reservation: Passed amid demands for 100% job reservation for Kannadigas.
• Kannada Organisations’ Rallies: In July, Kannada organisations organised rallies across the State. Demanded immediate implementation of the Sarojini Mahishi report.
• Sarojini Mahishi Report Recommendations: Suggested 100% reservation for locals in Group C and D jobs in Central government departments and public sector undertakings (PSUs) operating in Karnataka.

What is the Local Reservation?

• The concept of a local reservation was born out of concerns about job shortages and the necessity for governments to satisfy their domestic electorates.
• The policy states that the jobs created in a state will be offered first to those who belong to that State.

Reasons for Demand Local Reservation

• Lack of opportunities: The lack of sufficient employment opportunities in the manufacturing sector has made it difficult for surplus agricultural labor to find alternative employment. 
  • This has led to increased competition for jobs in the rural areas, further fueling the demand for local reservation.
• Employment Situation: The COVID-19 lockdown exacerbated the unemployment crisis, particularly among migrant workers in urban areas.
• Populist Impulse and Youth Support: Implementing local reservation measures is often seen as a populist move to appease voters.
  • A 2017 national survey by CSDS and Lokniti found that nearly two-thirds of the youth support job reservation for locals.
  • Several states, including Jharkhand, Madhya Pradesh, Andhra Pradesh, Maharashtra, and Karnataka, have implemented local reservation policies in the private sector.
• LPG Reforms and Jobless Growth: The economic reforms initiated in India in the early 1990s, known as LPG reforms, have been criticised for contributing to jobless growth.
• Agrarian Distress: Years of low returns from agriculture, coupled with fractured landholdings and inadequate non-farm incomes, have contributed to the demand for local reservation.
• Fear of losing out: This is not unique to India or Indian States, but is universal.
  • It was spectacularly manifest in the Brexit vote, when Britons thought that foreigners were taking away local jobs, and hence voted to secede from the European Union. 
  • In America too, the anti-immigrant sentiment was exploited during the recent presidential election campaign.

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Arguments Against Reservation in Private Sector

• Balancing Fundamental Rights and State Intervention: Reservation in private employment creates an unprecedented intrusion by the State government into the fundamental rights of the employers to carry on their business and trade as provided for under Article 19 of the Constitution of India.
• Exodus of low-paid workers: There would be an exodus of low-paid workers as they would be unable to find work unless their states of origin give them sufficient job opportunities.
• State Domicile Quotas and the Erosion of Common Citizenship in India: A fundamental wedge is sought to be created between persons domiciled in different States by the statue in question which is contrary to the concept of common citizenship provided in the Constitution of India.
  • Dilemma of ‘One Nation, One Everything’ versus Regional Employment: Reservation in the Private sector would be a direct attack on the fundamental idea of the Indian economy as one unit.
• Striking at the Core of Meritocracy in the Private Sector: Reservation in private sector, goes against the fundamental principle of merit that alone drives the private sector, as opposed to the public sector, where the governments continue to hire on the basis of an archaic flawed reservation system for their political purposes.
• • Giving 75 percent or above reservation goes against the supreme court’s ceiling of 50 percent for maintaining meritocracy.

Arguments in Favor of Reservation in Private Sector

• Discriminatory HR Policies: A 2019 study conducted by the Azim Premji University found that the SC/ST communities were “over-represented” in low- paying jobs and “under-represented” in high- paying ones.
• Upholding Social Justice in Private Sector amid Privatization Concerns: Social justice movements have increasingly feared that increasing privatization may lead to a complete decline of opportunities for the historically marginalized caste groups.
• Global Precedents: Even in the US, companies like General Motors and Ford have systems in place to employ African Americans, Asians and so on.
• Advocating Parity in Social Commitments Between Public and Private Sectors: In mixed economy, when the public sector is being asked to discharge its social commitment through the reservation of jobs, there is no reason why similar conditions should not apply to the private sector that has been given a lot of concessions by the government to enhance industrial growth.
• Employment Equality for Stakeholders in the Private Sector: Our private sector takes a lot of money from public sector banks and financial institutions, and there is a huge default in loan repayment and taxes.
  • Those whose land, labor and capital are being used by the Indian entrepreneurial class can definitely seek some modicum of equality in job distribution.

Way Forward

• Voluntarily Code of Conduct (VCC): India Inc. declared that they would adopt a Voluntarily Code of Conduct (VCC), according to which, they would take up measures to ensure social justice in their organizations.
• Focus on Human development: The government should train the labor and also pose restrictions on the contract by the industrial sector which pose a “hire and fire” basis and promote long-term contracts.
• Shifting Government Focus from Employment Guarantees to Inequality Reduction: The governments should create an environment through their policies such that those policies can help minimize inequalities in income, status, facilities, and opportunities. So, the government should focus on its role rather than guaranteeing employment.
• Safeguarding Fundamental Rights in Policy Formulation: It is crucial to guarantee that any policy decision aligns with the Constitution of India, upholding the fundamental rights of citizens and avoiding any violation thereof.”

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Conclusion

• Rather than focusing on the reservation to provide jobs, the government should focus on skill enhancement and job creation.
• Moreover, this goes against the spirit of “Ek Bharat Shreshtha Bharat,” which demands an integrated and mobile labor market within the country