Stung by the backlash from the IT sector and other industry players, the Karnataka government seems to have developed cold feet over its ludicrous jobs reservation Bill. The Bill calls for the appointment of Kannadigas in 50 per cent of management positions and 75 per cent of non-management positions in private industries. The candidates should have a secondary school certificate with Kannada as a language, or pass a proficiency test. He or she should have been a resident of the State for 15 years. That the Bill is a disaster is an understatement. The government should shelve it without much ado, if it wants Karnataka to remain as India’s premier IT and start-ups hub.

As Nasscom has said in response to the Bill, “Companies could relocate as local skilled talent turns scarce”. This could deeply hurt the State’s economy, which houses around 11,000 start-ups and is a hub for 30 per cent of the total Global Capability Centres in the country. Labour protectionism can drag down competitiveness. It could lead to rent-seeking and inspector raj, as businesses pay a price to source workers of their choice. Ease of doing business will be impaired.

The Bill is unlikely to stand up to legal scrutiny, for being violative of Article 14 (equality) and Article 19 (1) (d), which states that citizens have the liberty to move within the country and settle in any place of their choice. States have dabbled with ‘sons of the soil’ policies and politics from time to time, with Maharashtra standing out as the trendsetter in the 1980s. The Shiv Sena mounted a campaign against ‘south Indians’ who were a presence in Class 3 and Class 4 jobs. More recently, Haryana, Andhra Pradesh and Telangana have tried to float similar policies. In November last year, the Punjab and Haryana High Court struck down as unconstitutional a move by Haryana to impose a 75 per cent local recruitment norm on the private sector. The Supreme Court is yet to decide on an appeal in this regard. It should clear the air soon. The Andhra Pradesh High Court has indicated that quotas for locals, legislated by the State in 2019, are unconstitutional. Telangana tried to adopt a different route, offering tax breaks to businesses that employ locals.

Parochialism apart, if the States are concerned about locals being left out of modern segments of the economy, they should invest in their education and skilling. The skills mismatch and unemployment in IT-driven Karnataka, a State with sharp regional inequalities, is made worse by its weak manufacturing base. It is sharp in Haryana; its poorer education system does not allow locals to participate in Gurugram’s IT ecosystem. Recent studies such as India Employment Report point out that unemployment among graduates is nine times that of unskilled workers. As the latter flood the market, labour productivity and earnings remain low, as the Survey of Unincorporated Enterprises points out. The jobs crisis calls for an investment in quality education. Cynical short-term fixes worsen the problem.

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