Sometimes, populism and Economics do not mix well

 

By Shankar Raj

Karnataka government’s move to reserve jobs for locals was a dangerous and disastrous step. Following protests from captains of industries, the Siddaramaiah Government did a quick U-turn and shoveled the bill into cold storage.

The draft bill titled ‘Karnataka State Employment of Local Candidates in the Industries, Factories, and Other Establishments Bill, 2024’, was passed by the Assembly unanimously this month. It mandated reservation for ‘local candidate’ in managerial (50%) and non-managerial (70%) jobs in the private sector.

The Karnataka CM was clever enough in not using the word ‘Kannadiga’ in the Bill. He defined local candidates as any person domiciled in Karnataka for 15 years and proficient in Kannada, hoping to sidestep legal troubles that a similar law brought by a previous Congress government ran into.

Mr. Siddaramaiah is not a lone ranger.  Such a ‘sons-of-the-soil’ policy has been taken up by several states of late. Haryana passed such a law, only to be struck down by the Punjab & Haryana HIgh Court last November. Jharkhand and Andhra Pradesh have similar laws, with the legislation being challenged in respective high courts.

Three possisble factors   

Why was the Bill brought out all of a sudden? There could be three factors. First,  Mr. Siddaramaiah and, probably the Congress too, wanted to divert the attention of the people from the intense struggle in the party to oust the CM and bring Deputy Chief Minister D.K. Shivakumar in his place.

Secondly, Mr. Siddaramaiah is losing support among the youth and the Bill could be a ploy to regain his popularity and retain power. Politicians often burn their fingers trying to mix populism with economics.

Thirdly, the CM is known to spring surprises that have resulted in backlashes. For instsance, in December last, he suddenly announced that the ban on wearing the hijab in educational institutions had been lifted; a day later, the announcement was dropped. Two years ago, he stoked the controversy over the beef ban brought in by the BJP government in Karnataka by suggesting that even some Hindus consumed beef . In another controversial statement, he said that the idol consecrated in Ayodhya was not of the real Ram, but of the BJP’s Ram.

Predictably, the reservation Bill ran into trouble the moment it was passed. Following the backlash from industries in Karnataka--at a time when Andhra Pradesh, Tamil Nadu and Maharashtra were olling out red carpets to industrial giants encouraging them to set up units in these States and enjoy full freedom to hire employees--the CM withdrew the Bill in double speed .

Ironically, Kerala, which has a reputation of not being industry-friendly, too chipped in. For the record, Andhra Pradesh too has a similar Bill cooling in its backyard.

It's not just legality

When it comes down to basics, it is common sense that the issue here is not just the legal tenability of such laws, but skills needed to run enterprises. And it is the government’s job to develop a skilled labour force-- through its own efforts and through public-private partnership--so that people can find jobs.

Job quotas have nothing to do with skills, it only panders to local voters. Quotas in skilled sectors, like information technology or biotechnology, run the risk of hurting the private sector, which thrives on merit and efficiency.

Quotas are also unacceptable in a country where migrants constitute a whopping 37% of the population. Maharashtra had once toyed with the idea of reserving jobs for locals and tried to shoo away Biharis and south Indians resulting in a meltdown of the economy of Mumbai.

Kerala’s economy is today run by ‘guest labourers’ from UP, Bihar, Odisha, Assam and other northeastern states. Vital sectors like agriculture, hospitality and other sectors would come to a standstill if Kerala thinks of implementing jobs for locals.

Instead of harping on quotas to fetch votes, governments should work extra time on skilling and job creation. Quotas in private sector jobs will only ruin the economy of the States concerned. Such ill-conceived laws should be junked forever.

In this context, Andhra Pradesh Chief Minister N. Chandrababu Naidu’s call for a skill census in his State and his suggestion for a nationwide one for developing human capital in the country needs  to be given a serious thought.