EXPLAINER Andhra Pradesh

Localising the labour force through reservations

The Andhra Pradesh law, passed by the Assembly in July, 2019, and notified promptly next month, reserved 75% of jobs for locals in industries and factories

The Andhra Pradesh law, passed by the Assembly in July, 2019, and notified promptly next month, reserved 75% of jobs for locals in industries and factories

The story so far: On Saturday, the Haryana Government notified a law reserving 75% jobs for locals, which will come into effect from January 15, 2022. The law requires firms to reserve 75% of all jobs offering a salary of less than ₹30,000 a month for eligible candidates of State domicile. Following the Haryana move, the Jharkhand Assembly passed a Bill providing 75% reservation for locals in the private sector for salaries up to ₹40,000 a month. In 2019, the Andhra Pradesh Government had passed a similar law — the A.P. Employment of Local Candidates in Industries/Factories Act.

What did the Andhra law stipulate?

The Andhra Pradesh law, passed by the Assembly in July 2019, and notified promptly next month, reserved 75% of jobs for locals in industries and factories, including any joint venture and project taken up under the public-private partnership (PPP) mode. Where suitable local candidates were not available, the industry or factory would be given three years to train local candidates with “active collaboration of the Government”. The Government also laid down that industry would have to apply for any exemptions from the Department of Labour, Employment and Training before sourcing employees from other States.

How has the industry coped so far?

For now, the priority for the State, according to industry experts, is on getting new industries to absorb the local candidates in phases, as implementing the law for existing workforce would entail terminating employees who may be from other States. The Government is not forcing employers to implement the Act for various reasons, which mainly include the prevailing gloomy industrial scenario, largely attributable to the pandemic’s aftermath.

Has the law been challenged yet?

While the Government has begun training programmes to develop skilled labour to cater to various sectors and implement the Act, an advocate has filed a writ petition challenging the law’s constitutional validity. The State, the advocate stated, has no power to prescribe the domicile or place of birth or place of residence as a requirement for public employment.

What do private industries feel?

The Andhra Pradesh Chambers of Commerce and Industry Federation president-elect P. Bhaskar Rao told The Hindu that while seeking to implement the Act, the importance of productivity levels of workers should not be overlooked. For instance, the workforce from Odisha and Bihar is highly productive compared to workers belonging to the Telugu-speaking States, he said. Mr. Rao said the Government has “not compelled us to implement the Act.”

Another issue which the industries are grappling with is the uncertainty whether local candidates will continue in their jobs and the possibility of them resisting the entry of job-seekers from other States if the situation necessitates outsourcing.

What are the takeaways for Haryana and Jharkhand?

For Haryana, already home to a thriving commercial, IT and automobile industry, a firm implementation of the law could drive away existing investors as well as dry up fresh greenfield and brownfield investments.

“Instead of compelling firms to hire locals, the State can consider giving a 25% subsidy to firms as an incentive for hiring locals,” Mr. Rao said. The industry chamber has also suggested to the State that if reservations have to be made, they should begin with a lower threshold of 20%-25% and give time for the State’s youth to inculcate and hone their specialised skill sets.

While mineral-rich Jharkhand will have its own set of unique issues and challenges in implementing the job reservation plan, we have to wait for the final rules and implementation date to be notified before assessing its implications.

The broader trend of raising the sons of the soil issue for electoral gains in States will hurt the investment climate across the country, warned Amitava Ghosh, co-founder and principal partner at SSA Compliance Services LLP. “If more States follow suit, there will surely be an extreme level of talent crunch across industries in different States, and the free movement of India’s manpower resources within the nation will be threatened,” he said.

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Printable version | Aug 9, 2022 5:19:35 pm | https://www.thehindu.com/news/national/andhra-pradesh/localising-the-labour-force-through-reservations/article37413859.ece