The Karnataka State Employment of Local Candidates in Industries, Factories, and Other Establishments Bill, 2024
Kartavya Desk Staff
Syllabus: Government Policies and Interventions
Source: HT, BS
Context: The Karnataka State Employment of Local Candidates in Industries, Factories, and Other Establishments Bill, 2024 has sparked controversy since its cabinet approval on July 15, 2024.
Provisions of Karnataka Employment Bill, 2024:
Provisions | Details
Reservation Percentages | 50% of management jobs and 70% of non-management jobs must be reserved for local residents.
Definition of ‘Local Candidate’ | Must be born in Karnataka and domiciled there for 15 years
Capable of speaking, reading, and writing Kannada.
Secondary school certification in Kannada or passing a proficiency test conducted by the Nodal Agency.
Relaxation Clause | Industries lacking sufficient local candidates can apply for relaxation, however, reservations for locals must be:
Not less than 25% for management roles.
Not less than 50% for non-management roles.
Penalties for Non-compliance | Rs. 10,000 to Rs. 25,000 penalty for violations. Daily penalty for continued non-compliance
Compliance Reporting | Companies must report compliance to the nodal agency.
Previous cases of similar bills in other states: Earlier, several states such as Haryana, Andhra Pradesh etc. have enacted similar legislation to ensure reservation for locals in the private sector. The Act enacted by Haryana was declared unconstitutional by the Punjab and Haryana High Court as it violated Part III (Fundamental rights) and the constitutional morality principle.
Why states are pushing for local Reservations in the Private Sector?
• Job Creation: The private sector is the largest source of employment, making reservation a tool for social justice.
• Son of Soil: There’s a belief that jobs created within a state should prioritize its residents.
• Government Support: Given benefits like tax breaks and loans, the private sector can be encouraged to adopt affirmative action policies.
• Socio-economic Development: To promote socio-economic development by ensuring locals benefit from local industries.
• Cultural and Language Preservation: To preserve local culture and language by promoting employment of people who are familiar with local customs and languages.
• Political Considerations: To fulfil political promises and aspirations of local populations.
• Addressing Migration: To mitigate the need for migration of local talent to other states in search of job opportunities.
• Balanced Regional Development: To promote balanced regional development by encouraging local industries to hire from the local workforce.
• Supporting Local Businesses: To support local businesses and industries by ensuring a skilled local workforce is available.
• Reducing Dependency: To reduce dependency on non-local or migrant labour and encourage self-sufficiency in employment.
Issues with the local Reservation in Private sector:
Cons | Explanation
Can Trigger Exodus of Investors | Local job reservations may lead to an exodus of domestic and multinational investors, especially in sectors like auto and IT that rely on highly skilled manpower.
E.g., Haryana witnessed a 30% drop in investment in 2022 due to the local reservation law, impacting its ranking among states in terms of new investment projects.
Affect Existing Industries | The focus on the “son of the soil” and restrictions on the free movement of manpower can adversely affect existing industries in the state.
Extreme Talent Crunch | Imposing reservations on gig and platform companies may result in a severe talent crunch, affecting the availability of skilled individuals.
Constitutional and Legal Issues | It is beyond the power of states to create domicile as a condition for employment as the constitution provides this provision for public employment and only parliament is empowered to make such laws under Article 16(3)
75% reservation also goes beyond the reservation ceiling of 50%
Public Employment (Requirement as to Residence) Act, 1957 abolished Residence as a criterion for a job. A few exceptions were made for Andhra Pradesh, Manipur, Tripura, and Himachal Pradesh.
Violation of Article 19: Previously, the Punjab High Court had criticized the reservation in private sector law for imposing excessive control on private employers, creating an “Inspector Raj,” and impairing individuals’ rights under Article 19(1)(g) of the Constitution.
Private jobs are skill-based and analytical, and citizens have the fundamental right to work anywhere in India.
Promotes Regionalism | Local job reservation policies pose threats to unity in diversity, potentially creating local vs. non-local divisions.
Undermines Merite system | They undermine the merit system, affect economic efficiency, and may lead to a shortage of qualified workers, impacting economic development.
Promotes Vote Bank Politics among states
What does the Constitution Say?
The Constitution of India guarantees freedom of movement and consequently employment within India through several provisions.
• Article 14provides for equality before the law irrespective of place of birth.
• Article 15guards against discrimination based on place of birth.
• Article 16guarantees no birthplace-based discrimination in public employment.
• Article 19ensures that citizens can move freely throughout the territory of India.
Judicial Pronouncements:
Legal Cases | Key Points
Dr Pradeep Jain v Union of India, 1984 | Legislation for “sons of the soil” deemed unconstitutional
Sunanda Reddy v State of Andhra Pradesh, 1995 | Supreme Court affirmed the unconstitutionality of a state policy giving 5% extra weightage based on the medium of instruction.
2002 Rajasthan Case | Supreme Court invalidated the appointment of government teachers in Rajasthan, which favoured applicants from specific districts or rural areas.
2019 UP-Subordinate Service Selection Commission Case | Allahabad High Court struck down a UP recruitment notification that preferred women who are “original residents” of Uttar Pradesh alone.
2023 | The Punjab and Haryana High Court invalidated a 2020 Haryana government law that reserved 75% of private-sector jobs for state residents.
Conclusion:
What is more important for states is to focus on skill training (capacity building of Youths), economic recovery and education to provide ample job opportunities, fostering competition in the free market. While local reservations may offer short-term gains, they could hinder long-term economic development and national unity.
Insta Links:
Haryana private sector quota law
Prelims Links:
Consider the following statements : (UPSC 2023)
Statement-I : The Supreme Court of India has held in some judgements .that the reservation policies made under Article 16(4) of the Constitution of India would be limited by Article 335 for maintenance of efficiency of administration.
Statement-II : Article 335 of the Constitution of India defmes the term ‘efficiency of administration’.
Which one of the following is correct in respect of the above statements?
(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I (b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I (c) Statement-I is correct but Statement-II is incorrect (d) Statement-I is incorrect but Statement-II is correct