Haryana | Quota law in private jobs is a quick fix that will backfire

Some of the worst ideas are introduced with the most noble of objectives. It was easy to miss the sheer inhumanity and pointlessness of the demonetisation exercise for the attractive wrapping of eliminating black money as well as terror financing in one shot. The Haryana State Employment of Local Candidates Act, 2020, is another such example, which promises to eliminate unemployment in the state by 2024 (which, coincidentally, is when the next elections take place).

The law was supposed to kick in from January 15. The High Court of Punjab and Haryana stayed its operation pending resolution, and on February 17, the Supreme Court revoked the stay (on a technical ground that the high court ought to have given reasons for any stay), while directing the high court to hear and dispose the challenge to the law’s constitutionality expeditiously. In the meanwhile, the apex court also directed the state government to not take any coercive steps, meaning that companies won’t face consequences for not complying immediately.

A Theme Going Forward

As the pain of unemployment deepens, laws such as Haryana’s will soon be replicated across India. Therefore, much depends on the outcome of this constitutional challenge, which will invariably be taken to the Supreme Court in appeal. Andhra Pradesh and Jharkhand have similar laws that are pending in their respective high courts, while Karnataka and Punjab have, in recent times, flirted with the idea.

On the face of it, these laws appear unconstitutional. Article 15 of the Constitution says that the State (meaning, government) shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth, or any of them. In other words, no government can pass laws that favour people of one of these classes over others. Naturally, one is tempted to point out that the State does routinely carve out special benefits to women, backward and scheduled castes, and religious minorities, to name just some classifications.

However, these benefits also flow from exemptions within the Constitution. For instance, Article 15(3) allows the State to make special provisions for women and children. Reservation in employment for backward classes as well as scheduled tribes and castes are permitted by Article 16(4) and (4A). Article 16(3) provides that in matters of employment by the government, Parliament can make laws that impose restrictions of local residence. However, as of now, this applies only to public employment, and only Parliament has the power to make such law (and not the state legislature, as in the case of Haryana, Jharkhand, and Andhra Pradesh).

The states, in their defence, will argue that the Article 15 protections are not available to private employment, and the laws under question fall within the ordinary labour laws of each state, which apply to all industries. Irrespective, it is anybody’s guess how the Supreme Court will interpret these constitutional questions. Beyond that, if a constitutional amendment is required, political will permitting, it can be pushed through.

Whether the provisions of these laws could have longer term ramifications on the citizenry is another question altogether. In fact, these laws might have the undesirable effect of making inter-state migration within India — something that so many of us have benefited from — a thing of the past.

Take for instance, the requirement that one must be domiciled in Haryana for five years (originally 15) before one is eligible to take up one of the protected jobs. This might not affect many who have been living in a city/state for over that period, but for a new person to move to that city in search of jobs will be out of the question. Over time, if more states enact such laws, people will be incentivised to seek employment within their own states — so much for national integration.

A salary cap (Rs 30,000 in Haryana, in its latest iteration) under which the ‘local quota’ applies will also have the effect of depressing wages for locals. A prospective employee might be incentivised to reduce their expectations to just below the ceiling so as to be eligible for the job in a crowded market.

Irrespective of how we look at it, introducing such market distortions can only be counter-productive. Creating fully- or partially-protected economies will only take us back economically.

On the other hand, states have the reality of the political consequences of unemployment to contend with. While an employment guarantee is an attractive sales-pitch come election time, it might be akin to cutting off one’s nose.

 Abraham C Mathews is an advocate based in Delhi. Twitter: @ebbruz.

Views are personal and do not represent the stand of this publication.