The day after announcing the mandatory employment of locals in private jobs, the Karnataka government went on the back foot following heavy industry backlash. The strong reactions against the move forced it to promise not to implement it before holding consultations with trade and industry.
Industry and Information Technology associations, that own and operate businesses in Karnataka, came out strongly against the state government directive on mandatory employment of locals. Stung by the strong criticism and threat of industries shifting away from the state, the government on Wednesday (17 July), promised to hold up implementation of the new employment policy until consultations are held with trade and industry bodies.
After a spate of strong reactions came from the leading IT body, NASSCOM and Karnataka Chambers of Commerce and Industry that vowed to oppose the proposed legislation that mandates employment of locals in Karnataka firms and factories, the government said it would not implement any of the proposed laws without holding consultations with the trade and industry.
Leading IT body NASSCOM said it was disappointed with the proposed Karnataka State Employment of Local Industries Factories Establishment Act Bill, 2024, emphasizing that if implemented this could force companies to shift away from the state as talent would become scarce.
The IT sector which contributes 25 per cent to the state’s GDP and is home to 25 per cent of the country’s digital talent, and home to 11,000 start-ups and 30 per cent of total GCCs (Global Capability Centres), would be severely hit if hiring restrictions are put in place.
“In today’s highly competitive landscape, knowledge-led businesses will locate where talent is as attracting skilled workers is crucial for success. Globally, there is a huge shortage of skilled talent and Karnataka, despite the large pool, is no exception. For states to become a key technology hub a dual strategy is key – a magnet for best talent worldwide and focused investment in building a strong talent pool within the state through formal and vocational channels,” the NASSCOM stated.
“It is deeply disturbing to see this kind of bill which will not only hamper the growth of the industry but impact jobs and the global brand of the state. NASCCOM members are seriously concerned about the provisions of this bill and urge the state government to withdraw the bill,” the IT body stressed.
The bill’s provisions threaten to reverse this progress, drive away companies, and stifle startups, especially when more global firms are looking to invest in the state. At the same time, the restrictions could force companies to relocate as local skilled talent becomes scarce.
Ramesh Chandra Lahoti, President of the Federation of Karnataka Chambers of Commerce and Industry, lashed out at the government for coming out with a unilateral policy without consulting the trade and industry bodies. In its current format, he pointed out, the policy was doomed to failure. He said companies and factories that are already established will find it very difficult to find local talent and will not be able to fulfil the conditions being imposed.
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The Chamber, he iterated, will interact with the government to express its concerns and get the government to come out with necessary modifications in the best interests of the local population, and the industries for their efficient functioning.
Already, Deputy Chief Minister, DK Shivakumar, reacted positively to suggestions flowing from chambers that the government will soon be holding consultations with the trade and industry on how best to take forward the government’s intent to help the local population and also preserve, protect and promote the local language and culture.
Leading lights of the business and industry, like Kiran Mazumdar Shah of Biocon, batted for caution when coming out with new labour and employment policies. She said, “As a tech hub we need skilled talent and whilst the aim is to provide jobs for locals, we must not affect our leading position in technology by this move. There must be caveats that exempt highly skilled recruitment from this policy.”
Reacting to her advice, state IT minister, Priyank Kharge, said the proposed Bill has been brought in by the Labour Department and that it was yet to be put before the industry and trade bodies for consultations.
(Pictures: Wikipedia)
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