Gurgaon: The new Haryana law reserving 75% of private sector jobs for the state’s residents will impact the allied economy, particularly in industrial belts like Gurgaon, Faridabad and Rewari, harming not just the manufacturing sector, but also retail, IT and housing sectors, according to industry leaders.
This is because the new law will need efficiency and skill requirements to be lowered, which will ultimately impact the companies’ productivity, revenue and competitiveness, possibly compelling some industries to consider relocating to other states, say industrialists.
The strength of the Gurgaon-Manesar belt — one of India’s largest automobile hubs — for instance is its cosmopolitan nature and ability to attract people with the specific skill sets that industries need. Availability of manpower with the same skill sets locally will now be a huge challenge, they say.
Deepak Maini, general secretary, Federation of Indian Industry (Haryana chapter), told TOI the reservation policy will dissuade new investments in the state. “Also, companies that are already present in the state may shelve expansion plans and choose to relocate to other cities because industries require a skilled workforce to produce high-quality products that are competitive in the global marketplace. Hiring is done on merit, not on the basis of one’s birthplace,” he said.
IT, auto, apparel and garments are the major industries in Gurgaon. Several manufacturers, including Maruti Suzuki, Hero MotoCorp, Honda Motorcycles and JCB, as well as their ancillaries, have units in the city. The auto industry contributes more than 30% of the state’s GDP.
According to industry bodies, around 75% workforce in the automotive sector, 90% in the garment and apparel industry, 80% in IT & ITeS, 50% in retail and 85% in the construction sector are from outside Haryana.
“All companies will find it tough to implement the new law and its outcome will be felt across sectors. If migrant workers from UP, Bihar, Odisha, MP and Rajasthan won’t come, what will happen to the housing rentals, retail, eateries etc,” said HP Yadav, president, NCR Chamber of Commerce.
Though the law has a provision that allows companies to hire from outside if they don’t find suitable candidates, the approval has to come from government authorities. In a way, the law will give rise to ‘inspector raj’, a system that the Centre is systematically dismantling to improve the ease of doing business through executive decisions and new labour codes.
Harbhajan Singh, former director (general affairs), Honda, said such a move would force industries to change their HR policy. “This ie because the first preference will have to be given to locals and we will need to get permission from the deputy commissioner to hire a non-local. This entire exercise is time-consuming ,” he said.
HR firms also say that reservations are not the way to create jobs. “Most industrial workers are employed on annual contracts and many of them are from outside Haryana. When their contractual period ends, they will automatically lose their jobs because the employers will be forced to hire only locals,” said Kailash Kumar, vice-president of a staffing firm.
The new law comes at a time when Haryana is witnessing the highest unemployment rate in the country. According to the Centre for Monitoring Indian Economy, the February unemployment rate in Haryana stood at 26.4% as against the national average of 6.9%.