Karnataka's reservation folly

It will harm jobs, not increase employment

The move by the Congress government in Karnataka to introduce job reservation for locals in the private sector, by tying it to receiving incentives, goes against the grain and spirit of the Constitution. It also flies against the fundamental principle that for the country to be one, people must be free to travel and work where they wish to. Reservation for locals exists only for seats in educational institutions. Job reservation for religious and linguistic minorities remains a contentious issue. Reservation for the economically and socially backward sections is one thing, but seeking to introduce reservation for a linguistic majority is unprecedented. Right now, the matter is a proposal and the state government has sought discussion and dialogue, but should the rules in question be notified, there is every chance that they will be seriously challenged in court. Yet a bad idea, even if set aside for the time being, it can do a lot of damage by growing insidiously over the term.

 
The economic arguments against the move are formidable as well. First, there are no data to suggest why this move was necessary. The results of a socio-economic survey initiated in 2014 are not yet in. Without such data, how do we establish the basic premise that locals are losing out? Moreover, why would anyone choose Karnataka for private business enterprise if the state did not provide the freedom to choose one’s employees? Businesses would be justified in shunning the state if it made them compromise on merit and profitability at the altar of the government’s political agenda. The fact that the government did not include the information technology and biotechnology industries in the ambit of the proposed change shows that even it is aware of the economic reasoning. Extending reservation to these industries would be the end of Bengaluru and Karnataka as the hub of such jobs in the country. It is these industries that require high skill levels and likely have the highest proportion of outsiders.

 
Bengaluru has, in fact, become the Mecca for young entrants into the job market from the Indian educated middle class and the global success of the silicon plateau has become the main driver of revenue for the state government. It is quite likely that in the overall white-collar field, locals do better in clerical jobs than in technical ones. Among blue-collar jobs, skills matter and the right thing to do would be to actively promote skill development. As for unskilled jobs in sectors like construction, the ability to land a job in a high-growth economy like Karnataka’s depends foremost on a person’s desire to do a particular kind of work. It is doubtful whether unskilled migrant workers are depressing wage rates and pushing out locals from jobs in Karnataka, which has a lower level of unemployment than the national average, and it is yet to be established if locals have a higher level of unemployment than the rest. If reservation of this nature is eventually imposed, it will curb the freedom of operation of businesses and act as a deterrent against new businesses coming in. That will be hugely counterproductive, not by just curbing the growth of jobs in general but also those of better quality.