Context:

• Haryana high court has stayed the reservation provision for local youth in industry.

Other States providing the reservation:

• Earlier, MP government had provided for the reservation of 70% of jobs in 2018.
• Andhra Pradesh had provided for the 75% of the private jobs in all categories which is sub-judicial in nature.
• Karnataka government had also provided for the 70% reservation in the private sector in 2020.

Constitutional mechanism for reservation:

Positives:

• It will create job opportunities for local talents.
• It will develop industry linkages with the Skill India mission thus enabling more skilled manpower.
• It will create a healthy competition between states for industrialization and lead to an inclusive growth.
• Providing jobs in lieu of the land is the most basic a company can do.
• It will ensure that wages of unorganized sectors don’t go down because of the migration of labor from other states.

Negatives:

• It will increase the cost of compliance for a company. Bigger corporates may shy away from investment in such state.
• One Nation, One market was the theme of GST. Such reservations distort the theme by creating artificial barriers.
• It may be unconstitutional in nature. Constitution provides for equality in employment and state can provide reservation for SC, ST, women and social & educationally backward caste. Local residential conditions are prescribed by Parliament only.
• It is populist in nature and will create unhealthy competition among Such competition will only create artificial barriers for migration eventually curtailing the cultural mixing.
• Definition of locals have not been specified.
• In the era of Ease of doing business, such legislations are unnecessary intervention by the government in economy.

Way Forward:

• Supreme Court needs to clearly provide the guidelines for the reservation of locals in the private sector while considering viewpoints of all the stakeholders.
• Rather than providing for the reservation, government can provide for the skill upgradation and voluntary allowance for the unemployed.
• Government must focus on the better education and better health thus leading to development of human capital.