labels: economy - general, governance, management - general
Job reservationsnews
09 October 2004

Affirmative action needs to be taken to improve the lot of the downtrodden but are reservations the answer asks Uday Chatterjee

Union Minister for steel and chemicals, Ram Vilas Paswan''s name figures in the Guinness Book of World Records for having won an election with the highest margin of votes ever. That was in 1989. He has won every election he has stood for with handsome margins, ever since.

What is the secret of his success? The answer is — largesse.

As telecom minister, he dished out free telephone connections to several lakh telecom employees. As railway minister, he created a new zonal office at Hajipur, his constituency, which created scores of new jobs.

And what is he doing now? Since public sector companies are going private, the quantum of largesse that can be dished out is dwindling. So, he is championing the cause of reservation in the private sector. He, however, is not alone. Whenever the bill for reservation of jobs in government and public sector units come up for renewal the vote in favour of reservations is unanimous.

The government has formed a group of ministers on affirmative action and one of the terms of reference of this group is: To examine the issue of affirmative action including reservations in the private sector.

Now, there is no question that affirmative action needs to be taken to improve the lot of the downtrodden but the point is are reservations the answers?

Reservations were originally intended to be a temporary measure, something to have in place while the government tried to provide education to the backward castes to bring them to equal societal and economic status.

Reservations have been in existence since independence and yet have not improved the lot of those in the middle and lower rungs of the SC / ST categories. Only the so-called ''creamy layers'' of the SC / ST groups have benefited — the Paswan types. And the marginalised belonging to other castes have not been touched at all, rendering the entire exercise inequitable.

Apart from entering government jobs without merit, these job entrants knew then, as well as now, that they can retire comfortably the day they join service. Hence, there was no incentive to work. Besides, in the earlier days, public sector companies were as good as monopolies and so were in a position to carry inefficient and excess baggage. Private sector companies however, will not be able to afford this luxury and will lose out heavily on this score.

Another telling point is that between 1994-2000, organised sector employment accounted for a mere 3.53 per cent of the total jobs created in the country. In effect, only 0.6 per cent of the jobs created each year were in the organised sector.

According to the Federation of Indian Chambers of Commerce and Industry (FICCI), the organised private sector employs just around 10 million, and rigid labour laws have ensured that this figure has stagnated for years and years, with no incentive to hire. Thus, even if the entire organised private sector is reserved for the targeted social groups, the employment gains will be only modest.

The pro-job quota lobby, however, cites two reasons for supporting the move. First, given the fact that employment in the government and public sector has stagnated during the ''90s and has shown a decline in the past two years, it is the private sector that has to be the driver of future job growth. Hence the rationale for job reservations in the private sector for the underprivileged class.

Second, the pro-reservation lobby cites the example of the US. Companies like General Motors and Wal-Mart recruit up to 25 per cent of their workers from among the minorities. By contrast, the backward castes comprise just about 4 per cent of India''s total organised sector workforce.

The arguments are forceful, but as studies by India''s leading industry chambers show, they reveal just half the story. FICCI, for example, has come out with a detailed study, which shows that employment of minorities by US companies is strictly voluntary and is not mandated by law.

Rahul Bajaj of the Bajaj group asserts that nobody in his organisations is selected on the basis of caste, which is of no consideration. However, a look at the caste profile of his employees reveals that about 30 per cent of them belong to the SC / ST and other lower castes whose cause some ministers are championing. The same is sure to be the case with ITC and other such companies, which have their factories in the smaller towns.

According to the FICCI study, school dropout rates among the SCs and STs were as high as 76.63 per cent and 82.96 per cent, respectively. Also, around 40 per cent of the reserved category of seats among SCs and 60 per cent among STs remain vacant. For graduates, technicians and apprentices in the overall vocational training category, the number of seats vacant was even higher at 81 and 95 per cent, respectively.

Lastly, most of the new private sector jobs are now to be found in call centres, software, BPO, ITES, biotechnology and other white-collar professions. If you have reservations in these sectors, it is doubtful whether the candidates will measure up to the competency skills demanded by a globally competitive environment. Under such adverse fiats from minister who can blame employers like IBM, Microsoft and others from closing shop in India?

Instead of ''mindless'' reservations, industry argues for an on improving education standards, both at school and university levels, and inculcating skills through vocational training.

Apart from engaging the private sector in partnering with the government on this issue, a more sensible policy would be to promote entrepreneurship among the backward classes. The government on its side should focus on creating a conducive atmosphere for entrepreneurs to provide job opportunities to backward classes in the rural and semi-urban sector.


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Job reservations