The Argument against Private Sector Reservation and why they hold no water.
1) It will lead to Companies shutting down or leaving India
To think that simply passing one law relating to recruitment of personnel will lead to companies shutting down and leaving the country is oversimplification and a naive assumption. This is the argument put forward by all the people who are against this essential step needed to bring about inclusive growth in the country and ensure equitable distribution of wealth across all sections of the society. Following are the reasons why it won’t hurt the Private Companies at all:
1) Companies already have to comply with several laws made by the government like Labour laws, which regulate hiring, firing, work hours etc. Then there are Minimum Wages Act, Companies Act, Factories Act, Maternity Benefits Act, Environment Protection Act and of course, Taxation laws like GST and laws mandating CSR. Private Sector Reservation will be just like any other rule made by the government, that the companies will have to comply with. There has not been a single known case of any company shutting down because of say Maternity Benefits Act made it unviable or that any company stopped recruiting women because of this law. Nor do we hear any Company complaining about CSR hurting its profitability.
2) Human Resource is just one of the ingredients for running a company and sustaining its profitability. A lot depends on availability of credit, marketing strategy, product design, customer service, financial management, exchange rate etc. Hence, one factor alone is not enough to shut down a company.
3) Human Resource in India is overall cheap and hiring a few more people to comply with the quota requirements, will at the most lead to only a small dent in the profitability of the company. It will be similar to GST, where Companies had to face some temporary shocks, but were back on track within months. There were many Companies opposed to GST, since it would make compliance more strict, but not a single company shut down and left India for such simplistic reason.
4) Challenges arising due to changing government policies are part and parcel of running a business anywhere in the world. Due to Global Warming, many tough regulations have been brought in place for automobile manufacturers, EU has tightened its Data Privacy Norms, which has made many Big Corporates change their Global privacy policies. Hence, for Companies, Reservation is just another challenge they would have to cope with.
1) Companies already have to comply with several laws made by the government like Labour laws, which regulate hiring, firing, work hours etc. Then there are Minimum Wages Act, Companies Act, Factories Act, Maternity Benefits Act, Environment Protection Act and of course, Taxation laws like GST and laws mandating CSR. Private Sector Reservation will be just like any other rule made by the government, that the companies will have to comply with. There has not been a single known case of any company shutting down because of say Maternity Benefits Act made it unviable or that any company stopped recruiting women because of this law. Nor do we hear any Company complaining about CSR hurting its profitability.
2) Human Resource is just one of the ingredients for running a company and sustaining its profitability. A lot depends on availability of credit, marketing strategy, product design, customer service, financial management, exchange rate etc. Hence, one factor alone is not enough to shut down a company.
3) Human Resource in India is overall cheap and hiring a few more people to comply with the quota requirements, will at the most lead to only a small dent in the profitability of the company. It will be similar to GST, where Companies had to face some temporary shocks, but were back on track within months. There were many Companies opposed to GST, since it would make compliance more strict, but not a single company shut down and left India for such simplistic reason.
4) Challenges arising due to changing government policies are part and parcel of running a business anywhere in the world. Due to Global Warming, many tough regulations have been brought in place for automobile manufacturers, EU has tightened its Data Privacy Norms, which has made many Big Corporates change their Global privacy policies. Hence, for Companies, Reservation is just another challenge they would have to cope with.
Hence, whatever doubts are being raised regarding the effect of Private Sector Reservation on the Economy are all ill-founded and is nothing but fear mongering.
2) It is against the spirit of meritocracy
The most common argument against all forms of reservation is probably that it limits the choices of the organisation from hiring meritorious candidates. This similar to assuming that all backward class people are devoid of merit and that talent and merit is the sole proprietary of a particular privileged section of the society. The following arguments repudiate these claims:
1) First of all, the question that arises is that What is Merit ? Is the ability to memorize and mug up entire books and getting good marks called merit or is fluency in English a sign of meritocracy. With hiring processes in companies now being made more complex with attributes like "X-factor", "Self - actualization potential" or some psychometric jargons being used to assess the merit, making the definition of merit subjective and even more vaguer. But to put it in simple terms, merit still means the same thing - "Their opinion of you".
2) One of the most important thing that Corporates look out for in a candidate is Work experience. Talent and merit is not something that can not be assessed by a 15 minutes interview or writing a flowery CV, it is only a tool to identify potential and not talent. It is only when a person is given the opportunity to work hard, to perform and prove himself, that he would be able to manifest his real talent, while also learn new skills on the job, enhance himself and gain work experience. And it is this work experience that will ultimately help him climb the Corporate ladder.
3) There is widespread prevalence of the notorious Reference Culture in Indian Corporates, which is also against the spirit of meritocracy. If Corporates are the holy grails of meritocracy, where hiring is purely based on merit and merit alone, then why does a candidate need Strong and Influential References to complement his merit and talent. Reference here basically means that you need to have endorsement from some rich Industrialist, local Politician or someone already working in the management of the organisation. Hence, in case of Private Sector Reservation, the government simply acts as a "Reference" to endorse the underprivileged candidates for the job.
4) In many of the places, like say a Librarian in school or say a BPO service executive, it does not require a person with a particular educational qualification or some exceptional skills. It requires skills which are easily acquired and are easily replaceable. In jobs like BPO, basically anyone with decent English speaking skills can be employed or replaced without any loss in efficiency or productivity. Anyone with a B.Com degree can be employed in occupations like book keeping or accountancy, without requiring some exceptional CV.
5) Reservation was never meant to accept anyone just on the criterion of caste. Reservation simply means that a person having requisite qualification for the job should not be denied it just because he is born in a certain caste. Even in case of government jobs, certain basic qualifications are necessary to apply for the job, reservation does not imply that Private companies are being asked to make a 10th pass candidate as the Finance manager or an illiterate person as a software programmer. If, for example, say there are 10 vacancies reserved for ST category people in a company, the companies are free to employ the Best 10 from a pool of thousands of qualified ST candidates. No one is forcing the companies to employ unqualified people for the job.
3) It will bring Public sector inefficiencies into Private Sector
It is a well known fact, that PSU's tend to be highly inefficient in their working. Many of them have turned into sick units, shut down or even subjected to disinvestment. But the cause of this inefficiencies is not at all related to reservation, but rather it is the inherent problems of government owned commercial organisations, due to lack of responsibility and accountability and lack of motivation for the top management and major stakeholder, that is, the government to focus on profitability, as its contribution to government's treasury is quite minuscule. Experience from countries like USSR and recently Venezuela has also proved this fact. No reservation existed in USSR or Venezuela, yet the government run enterprises there too were extremely inefficient.
Another reason is that most of the government enterprises are tasked with providing public services to meet the objective of social welfare. For example, in case of BSNL, the company is mandated to provide telecom and internet services even in rural, backward or remote areas, where their commercial viability is questionable. Discoms are required to provide electricity at concessional rates, again to meet the objective of social welfare. Private Sector Companies are mostly devoid of any such commitments, hence, the fact that reservation is the major cause for failing PSU's is a myth that holds no water.
Many of the PSU's like ONGC, BHEL and SAIL have been very successful despite there being Reservations. ONGC has even started operations abroad in countries like Vietnam and Russia. It is the proper management of the company that makes or breaks it and not Reservations.
4) It will affect FDI and scare the investors
Reservations have no connection with Foreign Direct Investment. Foreign investment does not flow into a country by seeing the caste of the employees. FDI is based on a number of factors like size of the market and consumer base, political and economic stability of the country, trained manpower available for low wages and finally expectation of returns on investment.
In fact, it is quite the opposite. It is the affirmative action taken by the government since independence, that has help uplift millions of OBC/SC/ST out of poverty and then graduate into middle class, which has helped increase the Market size and the potential customer base, which has made India an attractive investment destination. It is not the minuscule and saturated top 1%, but the crores of middle class, where the major demand for goods and services comes from. No company wants to let go of this opportunity of exploiting such a lucrative and huge market, especially at a time when there has been stagnation and saturation in Western markets and in view of the uncertainties caused due to sanctions and the ongoing US-China trade war. According to World Investment Report 2017, released by UNCTAD, India ranks at the 9th position in terms of FDI inflows, even though India ranks much lower at 100th position in World Bank's Ease of Doing Business Index. Hence, there is no correlation between the government policies and the FDI inflows. Investors do not care if doing business in a country is challenging as long the country has a Consumerist Middle Class that can enable them remain profitable.
Private Sector Reservation will have the effect of more and more people becoming a part of India's middle class, by putting more money into hands of many backward class people and will in turn boost the demands for goods and services, thus simulating the economy and will help achieve the twin objective of Equality and Growth, which is termed as Inclusive Growth. Rather than seeing from a myopic and narrow perspective, the effects Reservations will have on the Private Sector, it should be seen from the long term perspective.
5) It will lead to brain drain and mass migration of unreserved category people
Although this argument is quite ignorant of many facts, still there is much to clarify regarding it. Brain drain has been happening in India since decades "Despite" there being no Reservation in the Private Sector. The major reasons from brain drain from India are craze for western lifestyle, better standard of living and a vibrant Corporate Culture, better salary abroad in terms of Purchase Power Parity as compared to India, more opportunities available for research and innovation along with several personal reasons one may have. In fact, many people leave India and do jobs quite lesser than their qualification, with lesser salaries than their Western counterparts, just to gain an entry ticket into the country.
Mass migration to any other country is not possible, as no country allows such policies of mass immigration onto its soil, no matter how educated and qualified the people are. Rather, Right Wing governments have been gaining prominence in the West and Anti-immigration sentiments are growing, especially in Western Europe and USA. Canada is the only country which is still generously open to immigrants, but even then at the most, only a few thousand people can migrate abroad every year and sometimes only for a limited period.
2) It is against the spirit of meritocracy
The most common argument against all forms of reservation is probably that it limits the choices of the organisation from hiring meritorious candidates. This similar to assuming that all backward class people are devoid of merit and that talent and merit is the sole proprietary of a particular privileged section of the society. The following arguments repudiate these claims:
1) First of all, the question that arises is that What is Merit ? Is the ability to memorize and mug up entire books and getting good marks called merit or is fluency in English a sign of meritocracy. With hiring processes in companies now being made more complex with attributes like "X-factor", "Self - actualization potential" or some psychometric jargons being used to assess the merit, making the definition of merit subjective and even more vaguer. But to put it in simple terms, merit still means the same thing - "Their opinion of you".
2) One of the most important thing that Corporates look out for in a candidate is Work experience. Talent and merit is not something that can not be assessed by a 15 minutes interview or writing a flowery CV, it is only a tool to identify potential and not talent. It is only when a person is given the opportunity to work hard, to perform and prove himself, that he would be able to manifest his real talent, while also learn new skills on the job, enhance himself and gain work experience. And it is this work experience that will ultimately help him climb the Corporate ladder.
3) There is widespread prevalence of the notorious Reference Culture in Indian Corporates, which is also against the spirit of meritocracy. If Corporates are the holy grails of meritocracy, where hiring is purely based on merit and merit alone, then why does a candidate need Strong and Influential References to complement his merit and talent. Reference here basically means that you need to have endorsement from some rich Industrialist, local Politician or someone already working in the management of the organisation. Hence, in case of Private Sector Reservation, the government simply acts as a "Reference" to endorse the underprivileged candidates for the job.
4) In many of the places, like say a Librarian in school or say a BPO service executive, it does not require a person with a particular educational qualification or some exceptional skills. It requires skills which are easily acquired and are easily replaceable. In jobs like BPO, basically anyone with decent English speaking skills can be employed or replaced without any loss in efficiency or productivity. Anyone with a B.Com degree can be employed in occupations like book keeping or accountancy, without requiring some exceptional CV.
5) Reservation was never meant to accept anyone just on the criterion of caste. Reservation simply means that a person having requisite qualification for the job should not be denied it just because he is born in a certain caste. Even in case of government jobs, certain basic qualifications are necessary to apply for the job, reservation does not imply that Private companies are being asked to make a 10th pass candidate as the Finance manager or an illiterate person as a software programmer. If, for example, say there are 10 vacancies reserved for ST category people in a company, the companies are free to employ the Best 10 from a pool of thousands of qualified ST candidates. No one is forcing the companies to employ unqualified people for the job.
3) It will bring Public sector inefficiencies into Private Sector
It is a well known fact, that PSU's tend to be highly inefficient in their working. Many of them have turned into sick units, shut down or even subjected to disinvestment. But the cause of this inefficiencies is not at all related to reservation, but rather it is the inherent problems of government owned commercial organisations, due to lack of responsibility and accountability and lack of motivation for the top management and major stakeholder, that is, the government to focus on profitability, as its contribution to government's treasury is quite minuscule. Experience from countries like USSR and recently Venezuela has also proved this fact. No reservation existed in USSR or Venezuela, yet the government run enterprises there too were extremely inefficient.
Another reason is that most of the government enterprises are tasked with providing public services to meet the objective of social welfare. For example, in case of BSNL, the company is mandated to provide telecom and internet services even in rural, backward or remote areas, where their commercial viability is questionable. Discoms are required to provide electricity at concessional rates, again to meet the objective of social welfare. Private Sector Companies are mostly devoid of any such commitments, hence, the fact that reservation is the major cause for failing PSU's is a myth that holds no water.
Many of the PSU's like ONGC, BHEL and SAIL have been very successful despite there being Reservations. ONGC has even started operations abroad in countries like Vietnam and Russia. It is the proper management of the company that makes or breaks it and not Reservations.
4) It will affect FDI and scare the investors
Reservations have no connection with Foreign Direct Investment. Foreign investment does not flow into a country by seeing the caste of the employees. FDI is based on a number of factors like size of the market and consumer base, political and economic stability of the country, trained manpower available for low wages and finally expectation of returns on investment.
In fact, it is quite the opposite. It is the affirmative action taken by the government since independence, that has help uplift millions of OBC/SC/ST out of poverty and then graduate into middle class, which has helped increase the Market size and the potential customer base, which has made India an attractive investment destination. It is not the minuscule and saturated top 1%, but the crores of middle class, where the major demand for goods and services comes from. No company wants to let go of this opportunity of exploiting such a lucrative and huge market, especially at a time when there has been stagnation and saturation in Western markets and in view of the uncertainties caused due to sanctions and the ongoing US-China trade war. According to World Investment Report 2017, released by UNCTAD, India ranks at the 9th position in terms of FDI inflows, even though India ranks much lower at 100th position in World Bank's Ease of Doing Business Index. Hence, there is no correlation between the government policies and the FDI inflows. Investors do not care if doing business in a country is challenging as long the country has a Consumerist Middle Class that can enable them remain profitable.
Private Sector Reservation will have the effect of more and more people becoming a part of India's middle class, by putting more money into hands of many backward class people and will in turn boost the demands for goods and services, thus simulating the economy and will help achieve the twin objective of Equality and Growth, which is termed as Inclusive Growth. Rather than seeing from a myopic and narrow perspective, the effects Reservations will have on the Private Sector, it should be seen from the long term perspective.
5) It will lead to brain drain and mass migration of unreserved category people
Although this argument is quite ignorant of many facts, still there is much to clarify regarding it. Brain drain has been happening in India since decades "Despite" there being no Reservation in the Private Sector. The major reasons from brain drain from India are craze for western lifestyle, better standard of living and a vibrant Corporate Culture, better salary abroad in terms of Purchase Power Parity as compared to India, more opportunities available for research and innovation along with several personal reasons one may have. In fact, many people leave India and do jobs quite lesser than their qualification, with lesser salaries than their Western counterparts, just to gain an entry ticket into the country.
Mass migration to any other country is not possible, as no country allows such policies of mass immigration onto its soil, no matter how educated and qualified the people are. Rather, Right Wing governments have been gaining prominence in the West and Anti-immigration sentiments are growing, especially in Western Europe and USA. Canada is the only country which is still generously open to immigrants, but even then at the most, only a few thousand people can migrate abroad every year and sometimes only for a limited period.
I am sorry but many of your arguments are flawed and doesn't hold water.
ReplyDeleteVery solid arguments!
ReplyDeleteWhy dont you create a company like paytm or google and give 100% reservations..its easy to make arguments and take admission based on caste at lesser mark and hardwork but tougher to do thing
ReplyDelete