The Karnataka government is considering rules for multinational companies in the state to list the number of locals they employ. Job preference to locals was tried first in Haryana, but struck down by the Punjab and Haryana High Court. It is now in the Supreme Court
By Vikram L Kilpady
The Karnataka government is in the process of coming up with norms that would require all multinational companies in the state to display the number of local Kannadigas employed by them and their details. The decision was announced during deliberations in the state legislative council on a bill that makes it mandatory to have 60% Kannada on the signboards of business establishments in the state.
State Kannada and Culture Minister Shivaraj Tangadagi said a committee headed by him will frame the rules and will include secretaries from other departments and MLAs, who have sent in their suggestions. The opposition BJP is, however, not impressed. While it supported the agitation by Kannada language groups for Kannada signboards, the party is not sure if this will work in the state. Senior BJP leader CN Ashwath Narayan said the rules will just remain on paper and be misused to harass companies operating in Bengaluru and other parts of Karnataka.
Without pitching for a law, making it mandatory to hire Kannadigas a la Haryana, the state has soft-pedalled it by saying locals should be preferred. Karnataka Minister for Information and Bio-Technology Priyank Kharge underlined the existing preference for Kannadigas as opposed to a mandatory rule. Tangadagi said that companies can lose their licence if they don’t follow the rules on displaying the number of locals employed.
Many analysts see the move to be a precursor to putting in a ceiling for jobs to non-locals, given the way the discourse proceeds. Multinationals over the years have made a beeline to Bengaluru for several reasons, topmost being the ability to employ well-educated candidates at a fraction of the cost in the West. That, in turn, increased the purchasing power of these folks, and everybody wanted a piece of that same pie.
It should be noted that though the Congress won a simple majority in the last Karnataka assembly election, the majority of voters in Bengaluru pitched for the BJP, which was voted out of the state. More on the state’s politics later, since the proposal for displaying the number of locals employed in MNCs ties in with it.
The protectionist attempt to shield jobs for locals has a simple reason: There are not many jobs available. Data website Statista puts the projected unemployment figures for 2024 at 7.38%, which in absolute terms means 40.22 million people will be unemployed in the country as per forecast. Since there has been no Census after 2011, a ballpark guess, using the capital city’s now-estimated population of 33.8 million, would indicate that India will have more people unemployed in 2024 than the population of Delhi metropolitan area.
Incidentally, Haryana, which surrounds Delhi from three sides, had the highest rate of unemployment in December 2022 at 37.4% and was the first to move to protect jobs for locals. The Haryana government brought in the Haryana State Employment of Local Candidates Act, 2020, which reserved 75% jobs for local youth in the private sector, capping salaries for the quota at Rs 30,000 a month. This was to leave companies the discretion to hire people from outside the state right from lower management up to the CEOs. The law came into effect from January 15, 2022, after it was notified in November 2021. The 2020 Act covered employment in private companies, societies, trusts and partnership firms in the state.
The government had initially planned to cap the salary for the quota at Rs 50,000 per month, but reduced it to Rs 30,000 after concerns expressed by industry representatives. Employers had to compulsorily register employees drawing gross salary of Rs 30,000 per month and below on a designated portal of the state labour department.
The Act’s purpose was to ostensibly provide jobs for local youth in the private sector, as claimed by Chief Minister ML Khattar. The demand had first been raised by the ruling BJP’s ally Jannayak Janata Party in the 2019 assembly polls. Though it contested separately, it allied with the BJP to return the Khattar government to power in a post-poll arrangement.
But all was not hunky-dory with the state’s industry. While larger MNCs and firms didn’t fret much at what would have been a matter of mere compliance for them, smaller industry groups didn’t play ball. Some industry bodies, among them the Faridabad Industrial Association, moved the Punjab and Haryana High Court against the quota law.
On November 17, 2023, the High Court bench of Justices GS Sandhawalia and Harpreet Kaur Jeevan quashed it, saying the Haryana State Employment of Local Candidates Act, 2020, was unconstitutional and violative of Part III of the Constitution of India. The bench then held it ultra vires and ineffective from the date it came into force.
Faridabad Industrial Association counsel, Senior Advocate Akshay Bhan, and counsels for other petitioners had argued that the Act violated Articles 14 and 19 of the Constitution. Bhan added that several industrial associations had moved court against the law and said the state did not have legislative competence under Article 35 to enact the law. The petitioners contended Haryana wanted to create reservations in the private sector by introducing a sons-of-the-soil policy, infringing the constitutional rights of employers.
In its verdict, the High Court said the state cannot discriminate against people just because they do not belong to a certain state. It noted that the submission of quarterly reports and the rights of officers to call for documents for verification amounted to a return of inspector raj and that private employers were being put on the state’s anvil on whom to employ. Further, the Act also protected officers acting in good faith from legal proceedings and frustrated the employers’ hands.
The High Court also found that the state’s action exercised control over a private employer, which is forbidden. The restrictions under the Act ended up impairing a person’s right to carry on occupation, trade, or business under Article 19(1)(g) of the Constitution.
Stung by the High Court quashing the populist measure, the state government moved an appeal in the Supreme Court immediately. In early February 2024, the apex court issued notice to the industry associations.
One can’t fault Haryana for rushing in where angels fear to tread. Such a measure is something state governments have been looking at longingly for quite some time since the centre has not shown any urgency to introduce reservation in the private sector. Despite reservation in government jobs and the public sector, demands have been made for introducing quotas in private sector jobs. That is on a different level.
In Karnataka, however, the Congress victory in the assembly election has not left the Opposition in dazed stupor. Unlike at the national level, the BJP, which has tied up with the Janata Dal (Secular) of former PM Deve Gowda and his son HD Kumaraswamy, has been quick to pounce on any issue. Former CM Jagadish Shettar, who quit the BJP ahead of the assembly elections, is back in the party as it readies itself for the 2024 Lok Sabha elections. With the national leadership exhorting its cadre to win with over 400 seats or 370 seats depending upon whether the rally is in north or south India, its cadre in Karnataka are leaving no stone unturned.
In Keragodu village of Mandya district, Republic Day this year was followed by a lightning mobilisation of the BJP and its allied outfits over the removal of a saffron flag with the image of Hanuman on it. BJP leaders said the administration took down the flag as a deliberate provocation. Later on, district in-charge minister N Cheluvarayaswamy said the flagpole was installed on panchayat land to raise the national flag and was replaced by another flag in the evening. Seeking to downplay the tense situation, the minister offered to install the Hanuman flag near a temple or elsewhere.
Similarly, a proposal to tax temples that had revenue above Rs 10 lakh and Rs 1 crore by 5% and 10%, respectively, became a hot topic. The BJP and its allied media pitched it as if all temples were being taxed at a uniform rate while what the government had done was to attempt setting a revenue threshold. The proposal cleared the assembly, but failed at the Legislative Council since the BJP and its allies had more numbers.
Just before the announcement of the MNCs-locals plan, the state saw vociferous protests over the lack of signage in Kannada. The language issue, which originated in Tamil Nadu in the 1960s over Hindi imposition fears, has found a new home in Bengaluru and Karnataka. The irony is that Bengaluru got onto its development stride only when central institutions and business began to set up shop there to avoid Chennai (then Madras) and Tamil Nadu. Bengaluru’s weather was an added bonus along with it being a Garden City.
It’s now the turn of the Kannada faithful to ensure they don’t alienate the very MNCs who have turned the capital of the state into a southern megapolis rivalling Mumbai and Delhi.