GD Topic - Job Reservation in Private Sector: A Boon or a Barrier?

Students taking MBA entrance exams and preparing for the Group Discussion Round must prepare themselves as it is an important part of the admission process. Check out the below article for a discussion on Job Reservations in the Private Sector. Also, find direct links to other GD topics for MBA admission.

Group Discussion or GD/PI is a part of the MBA admission process. MBA entrance exams are going on and students planning to get admission to top B-schools must up their game as scoring in the entrance exam will not be sufficient. Many universities also conduct a Group Discussion round and a candidate's performance in this round can make or take the chances of getting admission to his/her desired university/college.

Management of Business Studies (MBA) is a two-year post-graduation degree and to get admission in the course, students have to take the entrance exam. After the entrance exam, many colleges/universities conduct a GD round to test the communication and listening skills, English proficiency, subject knowledge, and leadership qualities of the candidates. Having these qualities is essential for candidates not only for admissions but also for their future in business management. In this round, a topic is given to a group of participants. The group gets five minutes to think about the topic and start the discussion. Candidates are supposed to put forward their points and have a healthy conversation over the given topic within 20-25 minutes. After the discussion, a panel of judges scores the candidates, and admissions are done based on the scores and university-specific eligibility criteria. 

Read this article for a discussion on the GD topic - Job Reservation in the Private Sector.

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Job Reservation in the Private Sector

Job reservation in the private sector is a policy introduced to mandate private sector businesses reserve a specific percentage of their workforce for some sections of society such as the unprivileged, backward classes and historically subjugated. While this approach existed in public sector jobs such as government jobs, government schools, colleges, and other spheres; its extension to the private sector jobs has triggered huge debates among people.

Many states are introducing 75% job reservation in the private sector. For Instance,

• The Jharkhand government implemented a new policy stating that employers must reserve 75% of private sector jobs with salaries up to ₹30,000 per month for local candidates.
• Haryana passed the Haryana State Employment for Local Candidates Bill, reserving 75% of private sector jobs paying up to ₹50,000 per month for local candidates.
• Uttar Pradesh is also formulating a similar policy for job reservation in the private sector.

Although the rationale behind job reservation in private jobs is to reduce a state’s migration level and provide better employment and equal opportunities locally, it has raised concerns about economic efficiency and business autonomy. People are wondering: Will these policies solve migration and unemployment problems or will these policies create a problem of productivity and interference for the businesses?

Reservation for Locals in the Private Sector

Reservation policies have existed in our society for decades. Originally they aimed to uplift unprivileged sections of the society. However, over time, reservations have evolved into a political lightning rod and parties are using them to gain votes. This is not the first time the government has given job reservations in the private sector. In 2008, the Maharashtra government mandated 80% of the jobs to the locals. Andhra Pradesh also implemented a similar policy reserving 75% of the industrial jobs for the locals. In 2020, the Haryana government implemented a similar bill.

In July 2024, the Karnataka government came up with a controversial bill reserving jobs for locals in the private jobs in that state. The government decided to provide domicile-based reservations for the private sector in Karnataka. The bill has caused a lot of criticism from all quarters of society, be it experts, politicians, academicians, startups, or entrepreneurs.

These policies have reignited the debate between outsiders and locals. On one hand, the locals argue that they deserve the first right to jobs in their home states; on the other hand, such policies may create regional disparities and limit opportunities for talented individuals from other states. There are many states such as Assam, Meghalaya, and Manipur where the industry is not very developed. Talented people from those states will lose the opportunity to work at their desired company in another state.

These controversies raise questions: Should locals get reservations in the private sector in their states? If yes, then what are the implications of such a step? What are the positives and negatives of such a step? And what should be the possible solutions and way forward?

To answer these questions let’s dive into the GD topic: Job Reservation in Private Sector: A Boon or a Barrier? and understand the pros and cons of the policy along with possible solutions to the issues.

Arguments in Favour of Job Reservation in the Private Sector

The major objective of reserving jobs in the private sector is to reduce migration, increase job opportunities, and instill balanced regional development in states. Reserving jobs in the private sector for some sections of society is important because of the following benefits:

• Local Employment Generation: In recent years, the government has failed to generate enough job opportunities. Besides, LPG reforms have also decreased the number of public sector job opportunities. To resolve this issue, it is important to reserve jobs in the private sector to avoid the situation of unemployed locals. With job reservations, the state government can increase job opportunities for local residents and reduce unemployment.
• Social Stability: With more job opportunities, the locals can feel a stronger sense of belonging with reduced social tension. This can result in community harmony.
• Addressing Migration Issues: With local reservations, locals will migrate less to other states seeking jobs. Additionally, it will help reduce the businesses’ dependence on migrant employees.
• Promotes Inclusive Growth: Job reservations provide underprivileged and backward-class groups equal opportunities. This helps in reducing socio-economic disparities and fosters inclusive development within the state.
• Boosts Local Economy: With these policies, fewer locals will remain unemployed, resulting in more industrial productivity. These employment opportunities will also enhance the purchasing power of locals, boosting the local economy and improving the living standards within the state.
• Balanced Regional Development: Job reservations in the private sector ensure that the growth of the private sector benefits the state’s local population, ultimately reducing regional imbalances and encouraging long-term development.

Arguments Against Job Reservation in Private Sector

Despite numerous benefits, many people including politicians, etc., are against Job Reservations in the Private Sector due to the following reasons:

• Hampers Industrial Growth: With job reservations to locals, industries will be able to employ less talented people from outside the state which can hamper the growth of the industry. NASSCOM, the non-governmental trade association is also disappointed with the policy as they believe it will not only affect the growth of the industry but also the jobs and the global brand of that state.
• National Unity: These policies/bills promote regionalism and divisive forces in the country. If all states, such as Tamil Nadu, Maharashtra, etc., come up with such laws then many questions will arise over national integrity, national unity, interstate mobility, and social mobility of our country. Such policies contradict the whole idea of unity and integrity of the country, for which the freedom fighters fought for losing their lives.
• Regional Disparities: Although the idea behind job reservation policies is to boost local employment, it will result in regional disparities. For instance, there are more IT job opportunities in Karnataka and zero or fewer job opportunities in Northeastern states like Assam, etc., due to the less developed IT industry. Now with the job reservation policy in Karnataka, people from North-eastern states will not be able to get a job there, resulting in regional disparities and low economic growth of the country.
• Economic Inefficiencies: The reservation policies can also result in a mismatch between the job requirements of the industry and the available skills of the locals. With unskilled people employed to do a job, there will be a reduction in productivity and innovations in that state. Besides, these policies can also kill meritocracy in the country, ultimately resulting in economic inefficiencies.
• Investment Deterrence: If a state implements the job reservation policy for locals then foreign investors and investors from other states will hesitate to set up operations there, fearing excessive government interference and restrictions in hiring. Reduction in investment will result in a decrease in the economic development of the country.

Note: Meritocracy is a system that allows individuals to get selected, promoted, or rewarded based on their skills, talent, abilities, and achievements, rather than based on caste, family background, social class, or other privileges.

Job Reservation in Private Sector: Way Forward

The government gives reservations to different sections of society in one way or another to appease them. With the current event happening, there might come a time when everyone will want reservations in each sector. If such things happen, there will be 100% reservation and the whole idea of the term reservation will negate its meaning of serving the underprivileged and backward classes.

Hence, it is necessary to think of a way to solve the issue of migration and bring more employment opportunities to a state. Here are some of the measures that can be taken by the states to resolve the issue:

• Reform the Education Sector: The nature of education of primary and secondary class students in our country is exam-based which does not impart practical knowledge and skills among students. There should be a change from an exam-based education system to a learning-based, skill-based, and application-based education system.
• Promote Entrepreneurship Culture: State governments should encourage entrepreneurship to create more local employment opportunities by supporting local startups through financial aid, interest-free loans, tax breaks, and mentorship programs.
• Skill Development: Rather than providing reservations to the local and marginalized workforce, the state governments should focus on improving their skills through training programs and skill development initiatives. In this way, the locals will not require reservations to get a job.

With the above GD discussion, we can state that though the government’s idea behind job reservation in the private sector is good, it will cause numerous issues for the people and the economy. Thus, the state governments instead of imposing rigid policies, create opportunities. Governments must prioritize skill development, education, and incentivized hiring to empower the local workforce while maintaining meritocracy and business competitiveness. A collaborative approach involving the government, private sector, and civil society will ensure that economic growth and social justice go hand in hand. By addressing systemic challenges, India can move toward a more inclusive, skilled, and productive workforce.

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