Following strong criticism from industry stakeholders and tech executives, the Karnataka government has decided to put its Karnataka State Employment of Local Candidates in Industries, and Other Establishments Bill, 2024, on hold for now. The Bill was approved by the State Cabinet on 15 July, 2024, and was to be tabled for discussion in Assembly on 18 July, 2024. In what is perceived to be a move to protect its regional interests, and also owing to the fact that 80% jobs for people of Karnataka within the state was an electoral promise of the Karnataka Congress in the 2023 Assembly elections, this move was definitely expected. Add to this the fact that Bangalore’s prestigious Urban Local Body elections are on the anvil.
According to a source in the Karnataka Labour Ministry, who does not want to be named, the Bill could provide up to 6 lakh jobs to youth from Karnataka in various categories. However, the Bill seems to have been framed with little to no consultative process, leading to a massive backlash from all fronts. The Bill mandates appointment of “Local Candidates”, which it defines as an individual born in Karnataka, residing in the state for at least 15 years, fluent in Kannada and who will pass a test administered by a “nodal agency”. It requires for any industry, factory or other establishments to appoint 50% of local candidates in management categories and 70% in non-management categories.
The Bill, taking cognizance of possible difficulties organisations may face in hiring talent due to this clause, allows for the establishments, within three years, with active collaboration of government or its agencies, to take steps to train talent. Establishments may also apply for relaxation from the provisions of this Act to the government. Failing to adhere to the provisions in the Bill, companies could be punished with a penalty of Rs 10,000 to Rs 25,000.
The Karnataka government is also contemplating 100% reservation for “locals” in Groups C & D grade government jobs. The Bill further adds that “the order passed by the Government shall be final provided that, the relaxation provided under this section shall not be less than 25% for management category and 50% for non-management categories”. The Bill defines “management category” as supervisory, managerial, technical, operational, administrative, and higher roles, with the exception of directors, and “nonmanagement category as clerical, unskilled, semi-skilled, skilled, IT/ITES employees, and contract or casual workers in various establishments.
Industry stakeholders from the tech hub of India are fuming at the various clauses within the Bill that put firms in a bind. Bangalore is home to several e-commerce, IT and tech startups. Bangalore, dubbed as the Silicon Valley of India, alone contributes to 25% of Karnataka’s GDP. At a time when globally there is a huge talent crunch, these clauses can work as a dampener to the efforts of organisations striving to augment productivity in a conducive political and economic climate.
The National Association of Software and Service Companies (NASSCOM), a nongovernment trade association and advocacy organisation that primarily serves the Indian technology industry has sought “an urgent meeting with industry representatives and state authorities”, claiming that the Bill “could force companies to relocate”.
Kiran Mazumdar Shaw, the Executive Chairperson of Biocon Limited, took to X (Twitter) to air her views, writing, “As a tech hub, we need skilled talent and whilst the aim is to provide jobs for locals, we must not affect our leading position in technology by this move. There must be caveats that exempt highly skilled recruitment from this policy.”
Another criticism against the Bill is that it is anti-Constitutional as it is in violation of Article 14 of the Indian Constitution which guarantees all citizens equality before law, freedom to move freely, form associations and carry out a profession of their choice.
However, there have been similar instances of reservations for locals in jobs within their state earlier too. In 2015, the Gujarat government under Anandiben Patel, had reserved 33% police jobs for women, which it tweaked in 2019 to “10% quota for locals in jobs and education”, and implemented it too. Introduced just ahead of the 2019 general elections, through various clauses in the Bill, the Gujarat government specifically targeted the economically weaker sections in the General category.
In 2020, the Haryana state government enacted the Haryana State Employment of Local Candidates Act, which required private companies to employ 75% cent of staff with monthly salaries under ₹30,000 from among state domiciles, as per a report by the News Minute. Be that as it may, this Haryana legislation was challenged in the Punjab and Haryana High Court and struck down by the court in 2023, News Minute report added. It cited Articles 14 and 19 of the Constitution, which guarantee equality and freedom, respectively. The HC ruled that the rule “exceeded” the state’s authority by restricting private employers from freely hiring from the open market. It termed the Act’s restrictions as “erecting artificial walls” and a callback to the “Inspector Raj” era.
Besides Haryana, Andhra Pradesh in 2019 became the first state to enact a law mandating 75% reservation for locals in private sector jobs, News Minute added. The Andhra Pradesh High Court in 2020 said this Bill “may be unconstitutional”.
In 2023, Jharkhand government under Hemant Soren passed the Local Resident of Jharkhand Bill, paving the way for 100% reservation for Class 3 & 4 jobs under the State government. Despite being rejected by the then Governor of the state, the Hemant Soren government passed the Bill again without seeking approval of any authority. However, the implementation of the Bill is yet to see the light of day.
In Karnataka, justifying the Bill, Chief Minister Siddaramaiah said, “It is our government’s wish that the Kannadigas should avoid being deprived of jobs in the land of Kannada and should be allowed to build a comfortable life in their motherland. We are a pro-Kannada government. Our priority is to look after the welfare of Kannadigas.”
Karnataka Ministers Priyank Kharge and MB Patil have come out in defence of the Bill, assuring the industry that there is no need to panic as a wider consultation with stakeholders of the industry is on the anvil and both jobs and investments in the state will be protected.
By Seroja Manoj. Seroja is a civil society member pursing a course in Public Policy from Bengaluru.
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