CII red-flags Haryana govt on 75% quota to locals in private firm jobs

This Act applies to all the companies, societies, trusts, limited liability partnership firms, and any person employing ten or more persons.

Much before Haryana assembly in November 2020 passed the Bill that now binds industry to reserve 75% jobs for locals, Confederation of Indian Industry (CII) had cautioned the Manohar Lal Khattar-led BJP-JJP coalition government about adverse impact of this decision on existing businesses and investments.

Under the Haryana State Employment of Local Candidates Act, 2020, the private sector will have to employ 75% of the local candidates with respect to such posts where the gross monthly salary or wages are not more than ₹50,000. (HT Photo)

Coinciding with CII’s strong reservations about this move of the state government, some local industry associations of Haryana had petitioned the Punjab and Haryana high court to apply brakes on this contentious bill. The court had, however, declined the plea on the grounds that bill was yet to become an Act, CII functionaries familiar with this matter said.

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On Wednesday and the day after chief minister Khattar announced that Haryana governor Satyadeo Narain Arya had given assent to the bill, the CII, which is apex industry organisation, made it clear that it was miffed with this populist decision and reminded Haryana about “Ek Bharat Shrestha Bharat” vision of Prime Minister Narendra Modi.

“At a time when it is important to attract investments at state level, the Haryana government could have avoided imposing restrictions on Industry. Reservation affects productivity and Industry competitiveness,” Chandrajit Banerjee, director general, CII, said in a statement.

“We hope Haryana government relooks at the legislation. With Prime Minister’s vision of ‘Ek Bharat Shrestha Bharat’ we look forward to an integrated and mobile labour market within the country.”

Under the Haryana State Employment of Local Candidates Act, 2020, the private sector will have to employ 75% of the local candidates with respect to such posts where the gross monthly salary or wages are not more than ₹50,000.

This Act applies to all the companies, societies, trusts, limited liability partnership firms, and any person employing ten or more persons.

Sources in CII said their director general Banerjee’s statement is a reflection of the tough stand the CII had taken in the run up to Haryana drafting this bill. Immediately after learning about Haryana’s decision to pass the legislation, the CII functionaries flagged the concerns of the Industry actively to the State government. At least six representations along with suggestions (see box) were submitted to chief minister Khattar and deputy chief minister Dushyant Chautala to reconsider the decision.

“This law if implemented is bound to impact existing businesses present in the state and slow down investments while further affecting ease of doing business ranking of Haryana,” the CII functionaries told Hindustan Times.

The CII’s warning that the new law has potential to affect in what is called ease of doing business comes in the backdrop of Haryana slipping to the 16th slot in 2018-19 rankings from the third position.

CII sources say the “job reservation act” has potential to give a blow to the industry friendly image of Haryana. In the run up to the government tabling the bill in the Vidhan Sabha, the CII held discussions with “major industrial houses” in the state regarding the impact of this legislation on their businesses.

“They have been saying that this Act is going to affect their businesses in a big way and that they will have o rework their expansion plans in Haryana. We have been requesting the state government to reconsider the decision as this will have a long term negative impact on Haryana’s image as a business hub,” CII officials privy to the talks with the government, said.

Senior executive committee member, Garments Export Manufacturers Association (GEMA), Gautam Nair, said that the 75% private sector job quota is not a good policy as the apparel export industry has to work in an extremely competitive market. “We have been losing business to countries like Bangladesh and Vietnam. Apparel exports is a labour intensive industry and we are already not competitive. Legislations such as these will further erode our competitiveness,’’ Nair said.

Nair whose Matrix Clothing manufactures garments for brands like Ralph Lauren and Gapp said if the government introduces such distortions then workers efficiency and competitiveness will decrease. “ The apparel industry is primarily situated in Gurugram and Faridabad. There is not enough local labour to do this job. This industry needs migrant labour from Bihar, Jharkhand and Eastern Uttar Pradesh.”

President of Gurgaon Industrial Association, Jagananth Mangla, said that the industry needs skilled and proficient workforce which can handle its machines and equipment diligently. “We have been opposing the private sector quota move. But since the government has enacted a law despite our opposition, we will figure out how to go about it,’’ Mangla said.