BIZ FEELS THE HEAT ON JOBS FOR LOCALS

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BIZ FEELS THE HEAT ON JOBS FOR LOCALS

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• Ground feedback: If one looks at the MSMEs spread across India, one realises that many of them employ workers from outside their home states. Why is that so? Many reasons - local workers are inflexible, they avoid any overtime, they have local power and can create chaos and demand more money.
• Employing more migrants: When MSME owners employ many 'outsiders' on the shopfloor, the drawback is the long period of leave when they go back home (annually). Locals don't take long leaves. Still owners prefer non-locals!
• Skills important: Some firms focus only on skills, like a firm focused on emergency elderly care. It hires nurses in large numbers, and found that the best ones come from Kerala. All nurses coming from Haryana would create a problem for such firms, but a new law intends to do that, via reservations for locals.
• The new Haryana law: In Nov 2020, the state passed the "Haryana State Employment of Local Candidates Bill, 2020". Private firms may be asked to ensure 75% of all new jobs to locals (pay ceiling is Rs.50000 pm). So all blue-collar and entry-level workers (BPO, sales) are covered. Industry bodies are strongly opposing this.
• The pandemic crisis: Due to the pandemic, the state of Haryana is facing an unemployment crisis. The CMIE has reported huge rates of unemployment for Haryana (27%), Rajasthan (24%) and J&K (16%). So state govts. are under pressure to do something drastic. Why highest for Haryana? Because the state has large no. of industrial workers, many of them contractual. [CMIE - Centre for Monitoring Indian Economy]
• A long trend: The Andhra Pradesh legislative assembly in 2019 passed the "AP Employment of Local Candidates in Industries and Factories Bill" seeking 75% local employment. While earlier it would be tried under caste umbrellas, but the S.C. ruled it out, so now it is done via this route. But coercing private companies to hire natives is against the constitutional spirit, and hampers free flow of jobs across India. 
• The other side: When firms set shop in any state, they take concessions like cheap land and power. Should they not then create higher local employment? And are they avoiding paying the right wages by hiring non-locals?

1. It is for states to ensure administratively that exploitation of benefits that they offer without reinvesting of gains is avoided 
2. Legally mandating hiring of locals may be counter-productive
3. India needs to promote labour-mobility as a nation, and all workers ought to be treated well. That will create local aggregate demand (more effective than quotas for locals)

• Judicial challenge: Such Bills may not survive the test of law. Article 16 is about equality of opportunity for all citizens in matters of employment or appointment. States argue that Art.16 talks of public employment and not private, to they indeed can legislate. But lawyers don't agree. 
• Broader message: Hiring more locals is the clear message, judicial scrutiny or not. That is what the US has forced Indian IT firms to do, irrespective of who rules the US. And the new norms around H-1B visas say the same. 
• Benefits of hiring locals: Some firms feel that not all migrants are skilled, and employing natives generates goodwill in local community. But the nature of some businesses precludes this possibility. 

1. An example is hospitality, where geographic reservation does not work, as diversity is needed (in people, food, beverage). 
2. It's not possible in construction also. 
3. The South Indian states are not facing unemployment like the northern states are (AP is at 6.6% compared to India average of 7%). 
4. Southern states are more industrialised, and people have moved up the ladder, keeping space vacant for migrants at the bottom.

• Haryana's case: In large firms, there's a 50:50 ratio in natives versus migrants. These firms have a permanent workforce, but also those on flexible contracts. Some feel that this mix of talent does well for the firm.
• Education and skilling: Firms need skilled people, and poor skilling from educational institutions doesn't help. More locals also means handling law and order issues more delicately (the Maruti violence case). Companies cannot be feudal in attitude, but have to engage professionally. The master-servant mindset won't work if professional relationships are to be built. 
• Avoiding volatility: Large firms should hire workers of different age groups, to avoid "only very young workers" (the Japanese firms in Gurugram-Manesar belt). With the new Bills coming in, firms will be forced to make many changes.

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