Reforms and not caps is the answer

Reforms and not caps is the answer

How far has globalization made our world flatter? If a flat world is to be a reality, then enabling cross-border movement of skilled professionals should not be the subject of debate. Instead, what we seem to be grappling with is archaic visa laws, stereotype mindset, and political rhetoric that is counterproductive.

The services sector accounts for almost three-quarters of the gross domestic product (GDP) in developed countries and nearly half the GDP in the developing world. The information technology (IT), finance, legal, consulting, education and telecom businesses are globalizing—providing access, cost efficiency and innovation across borders.

Also See | Indian IT’s immigration experience (PDF)

In the past 15 years, the benefit of the services sector to individual economies has been recognized, but many countries, including India, have not moved with speed to change their policies to reflect this changed reality. The US has championed the cause of free movement of goods, but has been reluctant to adopt the same line of argument when it comes to the services sector.

Data on population profile from across the globe shows that many countries in the developed world will see the proportion of old people in their population rise and will need people of working age to keep their economic engines running. Countries such as India, with over half the population under the age of 25, can provide alternative solutions for this skill shortage—not by moving work, but by improving efficiencies.

Keeping this in mind, the issue of movement of highly skilled people can no more be analysed through the prism of a pre-globalized world.

In most countries, including India, immigration and visa rules were defined in an age where export of goods and not services dominated global economy.

This worldview needs to change with the changing economic reality across the world.

Visa regimes in most countries, including the US, were framed in the late 1980s and early 1990s. Much has changed since.

Merely tweaking visa rules cannot be a solution when there is need for a comprehensive review of what exists today. This is not to say that countries relax their concerns on the need to secure borders, restrict immigration and ensure that its own citizens are not deprived of opportunities.

Such concerns need to be addressed and visa rules for work have to be different from those for people seeking to migrate. Just as there is a right of establishment and commercial presence for capital, so should labour have a right in terms of temporary presence for a specific purpose across national boundaries.

Before the global economic slowdown, most countries managed their need for high skilled manpower by liberal interpretation of the visa rules, resulting in practices becoming policies.

It is only now that the same practices are at times being interpreted as non-compliance.

The 2008 slowdown caused a structural shift that created concerns of unemployment in key markets leading to protectionist tendencies, with legislative, administrative and procedural hurdles being created for labour movement.

The slowdown impacted sectors such as construction in the US, where less educated people are employed.

Even President Barack Obama has acknowledged that US firms are having a tough time finding the right candidates for jobs in science and technology, and that it is time for a comprehensive reform of US immigration policies.

Still, the US in the last one year has taken steps that have been counterproductive: the border security Bill and the James Zadroga 9/11 Health and Compensation Act that increased the visa fee for overseas companies; interpretation of visa compliance rules; and a stated objective of increasing rejection rates of visa applicants.

Much has been said and written about the Indian IT industry and H-1B visas being synonymous with creating massive unemployment. Statistics speak differently.

Indian IT companies get 10-12% of all H-1B visas issued, which surely cannot cause any dent in the working population of 150 million in the US. Since the last two years, visa demands of the Indian companies have been less than 10,000, still the US unemployment rate is stagnant around 9-10%.

Countries have addressed this issue differently. Recognizing the UK’s need for highly skilled workers, the government has made intra-company movement simpler for high skilled people to move from India to the UK, work for a finite tenure and then return home.

The European Union (EU) is also working on a blue card scheme intended to attract talented people to work and stay in the EU for long term. Nasscom is engaged with EU policymakers and is in discussion with them to create a new category that will permit skilled workers to work on a single work visa across EU countries.

Australia is yet another country that has changed its work visa rules to adapt to the new world. India is no exception. India has adopted a more realistic work visa regime where there is no cap on highly skilled workers with an annual salary of at least $25,000 (Rs11.2 lakh today).

President Obama has said that his country must continue to attract the best and the brightest.

Clearly, a comprehensive legislation must be introduced that is innovative to attract skilled talent for specific objectives, but precludes immigration. The time for a “services visa" is now.

Som Mittal is president of Nasscom, India’s software lobby group. Mint asked him to write a piece explaining his organization’s position on the ongoing controversy.

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