Job Reservation In Private Sector

Updated: May 31 2004, 05:30am hrs
The Common Minimum Programme (CMP) of the Congress-led government released on Thursday advocates that the government engages in dialogue with political parties, industry and other organisations for job reservation in the private sector for scheduled caste and scheduled tribe youth. While the political compulsions of coalition politics may have given rise to this recommendation, it goes against the logic of economic efficiency and is clearly undesirable. It seems unlikely that the parties demanding job reservation have thought through the economic implications of their demand. To be efficient, it is desirable that enterprises be allowed to hire the best available talent, regardless of the caste or class the latter may belong to, with the selection being based only on the suitability of the candidate for the job based on his or her qualifications, experience, and potential. This is as true for the private sector as it is for the public sector. Job reservation, whether in the private or public sector, introduces additional market distortions and leads to sub-optimal outcomes, and is thus undesirable. The pledge to have such a dialogue has been interpreted by some as revealing of the governments desire to persuade the private sector to have job reservation. But what incentives will the government give the private sector to reserve jobs Will the private sector be truly persuaded or will they be compelled to be persuaded Will those private sector enterprises that do reserve jobs be rewarded, and compensated by the government And if so, how Will the compensation/reward be sufficient to cover any losses that the private sector enterprise may have incurred while reserving jobs Will this reward be decided on a case-by-case basis, which, as some have pointed out, can soon become suitcase-by-suitcase basis Further, having persuaded a private sector enterprise to hire, will the government also persuade the enterprise not to fire Clearly, job reservation, apart from being undesirable from the standpoint of economic efficiency, would also throw open a Pandoras box full of contentious issues.

Instead of job reservation, what is needed to improve the lot of the socially deprived classes is better access to education, generation of suitable employment opportunities, and a social safety net. The private sector can and does have an important role to play in uplifting the deprived classes, but this cannot be through job reservation. The private sector can contribute through greater public-private partnership in providing education and other amenities to the deprived classes, setting up of industrial or small-scale units with employment opportunities suitable for SCs and STs, among others. The government should concentrate on creating conditions that would allow the private sector to function in an efficient manner, and not create distortions in the name of correcting other discrepancies. There is no need to even engage in a dialogue on job reservation in the private sector.