Many states in India are bringing in laws similar to the Andhra Pradesh Employment of Local Candidates in the Industries/Factories Act 2019.
This signals a threat of parochialism (narrow outlook), affecting the larger economic interests of the country.
Why is diversity in recruitment essential?
If the workforce from a particular region is identified with a particular set of skills, it is because of social, economic and geographical factors specific to that region.
Labour contractors in infrastructure projects are aware of these aspects as they seek to maximise efficiency and quality.
Organisations that pursue social diversity as a matter of policy (‘equal opportunity’ employers) too have experienced commercial success.
This is because they are able to be responsive to the needs of an equally diverse marketplace.
This is particularly true for sectors with a direct customer interface (such as Fast-Moving Consumer Goods, aviation and media).
Nevertheless, it extends to other areas as well.
What is the threat in local employment?
For the Indian economy, its diverse labour pool is a key strength.
Given this, a few states seeking to disregard this advantage is an unhealthy sign.
The states are likely to lose their productive edge in the process.
The trend might -
increase the risks of labour shortages
trigger a rise in unemployment
aggravate wage inflation
render labour markets rigid and incompetent
exacerbate regional inequalities
It is also odd that States should erect labour market barriers at a time when the country is moving the other way.
India is increasingly removing barriers to inter-State trade and to the movement of capital across entities, by implementing the bankruptcy law.
What is the way forward?
Cosmopolitanism has been one of the driving forces in India’s early industrial success.
Be it Mumbai, Kolkata, Ahmedabad or other industrial townships created in the hinterland, the above has been true.
When ‘outstation’ workers merge into the host populations, they initiate a social process that make societies more egalitarian, secular and tolerant.
India’s Constitution too guarantees labour mobility under Article 19 which says that every individual could freely move in and around the country and work anywhere s/he wishes to.
In all, the free movement of labour and capital must move hand in hand for the evolution of capitalism under a democratic framework.
