What is the issue?

• 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 -
  1. increase the risks of labour shortages
  2. trigger a rise in unemployment
  3. aggravate wage inflation
  4. render labour markets rigid and incompetent
  5. 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.