India must address urban-rural disparities, and not use reservation as a universal remedy

• The issue of reserving private-sector jobs for people domiciled within the same State may face its first judicial test soon

Recent developments

• The Supreme Court has asked the Punjab and Haryana High Court to decide the validity of the Haryana law mandating 75% reservation for local candidates in private sector jobs that pay up to ₹30,000 a month.

Why did the Supreme Court lift the stay?

• The Bench observed that every law passed by the legislature was presumed to be legal.
• An order of stay of their implementation by a court of law should be reasoned.
• The High Court had not given sufficient reasons for stopping the Haryana law in its tracks.

Why was the law challenged?

• The petitioners contended that Haryana wanted to create a reservation in the private sector by introducing a policy of “sons of the soil”, which was an infringement of the constitutional rights of employers.
• It was also argued that private-sector jobs were purely based on skills and analytical bent of mind, and employees had a fundamental right to work in any part of India.
• Forcing employers to employ local candidates in the private sector with this bill is a violation of the federal structure framed by the Constitution of India, whereby the government cannot act contrary to the public interest and cannot benefit one class.

Why did the Haryana govt pass the law?

• Unemployment: In the backdrop of the reported loss of millions of jobs during the pandemic leadership in every State seeks to find employment opportunities for its youth.
• In some states, employers may find it cheaper to use the services of those from a faraway state, while in others there may be an acute shortage of labour within the local population.

What are the legal issues in such laws?

• Question of domicile reservation: While domicile quotas in education are fairly common, courts have been reluctant in expanding this to public employment.
• Right to Equality: Issue of forcing the private sector to comply with reservations in employment.
• For mandating reservation in public employment, the state draws its power from Article 16(4) of the Constitution.
• The Constitution has no manifest provision for private employment from which the state draws the power to make laws mandating reservation.
• In Haryana, it covers companies, societies, trusts, partnership firms and individual employers.
• The industry may feel that the residential requirement may adversely affect the hiring of talent from outside Haryana.

Conclusion

• Beyond the question of legality, what is flagged by such developments is the state of the economy, especially the labour economy.
• Rapid urbanisation and the agrarian situation are behind large-scale migration in search of employment.
• The real issue to address is the wide disparities between urban and rural areas, between advanced States and backward ones