Corporate India reflects embedded social inequities

Several US multinational corporations have adopted an ambitious racial justice and inclusion program. In 2020, Apple held 43 percent of open leadership roles and 29 percent of research and development roles with people from underrepresented communities—female, black, Hispanic/Latino, multiracial, and indigenous. URC comprises more than 50 percent of the American workforce at Apple and Microsoft according to the latest Diversity and Inclusion report from two tech giants. Black and African American employees alone represent 5.7 percent of Microsoft’s workforce in the United States. Can any major Indian company claim that 50 per cent of its workforce is from the S, S, and other backward classes, minorities and women? Microsoft recently announced that it will double the number of its black and African American managers and senior staff by 2025. Twitter has set a goal of having at least 25 percent of URC employees in its U.S. workforce by 2025. Have we ever heard of An Indian CEO setting a similar goal for appointing Dalits or members of other socially disadvantaged groups to senior executive positions?

More than 48 percent of the tech company’s workforce, Cisco, are URCs. Of the 11 directors on the GE board of directors, five are from underrepresented identities. There is an increasingly acute awareness in much of the corporate world in the USA that racial discrimination is systemic, widespread and insidious, harming blacks and racial minorities at every step of the corporate ladder. In the wake of the Black Lives Matter movement, major US corporations have accelerated affirmative action in their hiring and promotion policies. Many US multinationals have adopted a “commitment to social justice” among their core beliefs. They are taking drastic measures to fight racism and make their executive leadership more diverse.

By contrast, Indian companies remain isolated from the country’s social inequality. For most of the Indian private sector, affirmative action based on caste is synonymous with anti- meritocracy. The argument goes that private enterprises, unlike government enterprises, thrive on talent and merit and by actively recruiting and promoting Dalits and marginalized groups of the population, the private sector will lose out on productivity, profitability, and competitiveness. The important question is: Does the Indian private sector provide a level playing field for people of all castes? Is there no discrimination and bias in hiring and promotion practices in private companies? Is affirmative action necessarily anti-meritivism? Let’s deal with each of these questions sequentially.

Previous studies by economist Ashwini Deshpande and sociologists Catherine Neumann and Surinder S. Private sects and tribes face both wage and job discrimination in the formal sector and in private employment. Dalits are largely excluded from decent jobs or are included on unfavorable terms. In a field experiment conducted to test the prevalence of discrimination in the hiring process in the private sector, two economists, Paul A. Backgrounds and discrimination against lower class and Muslim job applicants with equal qualifications. Based on a sample of the top 1,000 companies listed on the Indian stock exchange, a 2010 study showed that caste diversity did not exist in the Indian corporate sector and that 65 per cent of Indian corporate board members were from only one caste group. . A study published by Azim Premji University in 2019 found that SC/ST communities were “overrepresented” in low-paid jobs and “underrepresented” in higher-paying jobs. This massive under-representation of marginalized sections of private sector employment would not have been possible without the companies’ discriminatory and biased HR policies.

Next comes the question of whether affirmative action kills merit. Massachusetts Institute of Technology, Stanford University, the University of Chicago, and seven Ivy League universities believe that race-focused admissions policies advance educational standards and prepare students for leadership roles in an increasingly pluralistic society.

In an amicus brief filed in May in a US court in support of Harvard’s admissions practices, 14 US companies stated that they needed diversified workers and thrived in an inclusive environment. Homogeneous groups tend to resort to ‘groupthink,’ she says, while ‘differences of opinion drive individuals to think critically.’ These 14 companies, most of which are in technology and pharmaceuticals, said they need universities to provide them with recruits with these qualities. They cited a 2018 study that found that companies in the top quartile for “ethnic/cultural” diversity were 33 percent more likely to outperform their peers in terms of profitability.

Talent is not restricted to any particular class or society. A workforce with diverse socioeconomic backgrounds and experiences stimulates innovation, thinking, creativity and productivity. A study by consulting firm McKinsey, which included 15 countries and more than 1,000 large companies, emphasized the direct relationship between diversity in executive teams and financial excellence. McKinsey found in its 2020 report titled: Diversity wins. Thus, there is a strong economic and business case that supports affirmative action.

Political parties have always been conservative in the private sector. “The government is very sensitive to the issue of affirmative action including reservations in the private sector,” states the UPA’s Joint Minimum Program. But, until now, affirmative action has been confined to mere symbolism. In 2006, the UPA government formed a Committee for “Affirmative Action for SC/ST Communities” to increase its representation in the private sector. The committee decided at its first meeting that the best course of action “would be through voluntary work by the industry itself”.

Pushed by the UPA, some corporate groups such as Tatas have claimed to have adopted voluntary affirmative action policies. Chambers of Industry also started vocational training and scholarship programs for SC and ST communities. Between 2006 and 2014, the Affirmative Action Committee held seven meetings but little was achieved. In 2018, in the wake of nationwide Dalit protests over the job quota and promotion, Prime Minister Narendra Modi convened his government’s first ever meeting to discuss affirmative action in the private sector. The data presented at the meeting shows that everything industry associations and company groups have done since 2006 amounts to nothing more than token. In a 15-year period, Assocham, CII, and Ficci claimed to have provided scholarships, free education, and vocational training for 1.73 lakh, 1.36 lakh, and 6.5 lakh SC/ST students, respectively. Only 1.27 lakh students were given job opportunities in the same period. There is no breakdown over how many have been employed in executive or senior positions. There is also no publicly available data on the stratification of the workforce in Indian private sector firms. It can be argued that volunteering by the industry has failed spectacularly 15 years after the establishment of the Affirmative Action Committee. The constitutional vision of economic equality for the disadvantaged sections still seems like a distant dream.

India Company is doing great harm to itself and the nation by wasting a large pool of talent. It’s time for Parliament to pass into law, making it legally mandatory for the corporate world to invest in and commit to affirmative action. For this very purpose, the scope should be extended to minorities as well.

First of all, organizations that exceed a certain threshold (which can be determined in terms of the number of employees and total revenue) must compulsorily submit a class and societal deconstruction of the entire workforce each year. Second, on the basis of imbalances in the representation of disadvantaged communities revealed by their own data, private companies should compulsorily set quantifiable targets to increase the share of SCs, tribes, and minorities in the workforce. Third, they must allocate a certain percentage of their profits to training, education and skill for historically disadvantaged departments.

Companies should be left free to set their own goals for affirmative action, both in terms of representing marginalized classes in the workforce as well as investing in their education and training. But companies that exceed a certain threshold must have a plan and must be accountable to goals voluntarily set by law. Transparency and public disclosure of the above data should create enough social pressure on companies to perform well on measures of inclusion and diversity. In the long run, it will make good commercial sense as well.

Ashish Khitan is Associate Professor at Jindal School of International Law and a specialist in International Economic Law

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