Visa Restrictions: Need to Trigger Total Deglobalisation

Unmasking Tax Havens U
July 9, 2018

The industrialized countries have very regretfully been pursuing the course of selective deglobalisation by restricting the entry of human resources from India and other developing countries, after having captured or grabbed the markets of the developing countries for their goods and capital through free access into developing countries with the offer of free access to human resources from developing countries in return for the free mobility of goods and capital, they got in the name of globalisation. After getting free and irreversible access for their goods and capital through various multilateral and free trade agreements, they have tactfully kept the free mobility of manpower, off the agenda of all such multilateral as well as free trade agreements. Now, they are completely backing out of their offer, and denying work visa to the people from India and other developing countries.

Visa Restrictions would Prove Counterproductive for Them:

The visa restrictions being imposed on Indian IT professionals and other skilled people by several countries, including the US, UK, Australia, Singapore etc., by stringent visa norms, in the name of saving jobs for native-born citizens, are bound to prove more counter-productive for them, as well as for the overall global economy as a whole. Indeed, every advanced degree-holder as well as the skilled Indian immigrant, as a consumer, entrepreneur or executive in the host country, facilitates to generate twice more jobs for the native-born citizens, contributes economic value, advances intellectual wealth and enriches entrepreneurial ecosystem of the host economy. Besides, while negotiating this free access for their goods and capital in the name of globalisation, they (industrialised nations) had promised to give free access to the human resources from the developing countries. So, now the industrialized nations should not regress and betray the developing countries.

Moreover, the industrialized countries should also not forget that the knowledge based Indian Diaspora, serving across the world from Singapore in the far east to the US in the far west, has been visibly contributing to sustained progress and prosperity of the host countries by adding net economic value, raising the GDP, creating extra jobs, generating intellectual wealth, and nurturing entrepreneurial ecosystem for them. So, the restrictions being imposed on the immigrant technocrats and skilled manpower from India by several countries these days would cause unwarranted slowdown in the host economies as well as dampen the overall economic growth worldwide. Indiaborn people and persons of Indian origin are largely behind the success of a vast number of host countries and hundreds of their multinational companies having multi-billion dollar turnovers in these countries already suffering from huge demographic deficit for a variety of knowledge based sector. Indians are either the key executives or even Chief Executive Officers (CEOs) and at least as the key professionals, responsible for several thousand companies of global repute. Though, the Indian CEOs of hundreds of such companies like the Microsoft, Google, Adobe, Soft Bank, MasterCard, PepsiCo, Citibank, Birkshire Hathway Insurance, Global Foundries, Cognizant, Net App, Herman International etc., are drawing hefty salaries between Rs 100-1000 crore per annum, they add manifold and several trillions of dollars in the turnovers, net worth and revenues of these C.L.Salvi companies and GDP of the host countries. In the US, even IPOs of those companies get more oversubscribed, which have Indian co-promoter(s). Thus, the Indian immigrants constitute the core for economies as value adding talents in the host countries.

Immigrant are not the sole cause of Unemployment:

The industrialized as well as industrilising countries are equally dependent on the Indian immigrant talent as well as the skilled manpower for a broad spectrum of knowledge based or capital based sectors, to sustain employment, maintain economic growth and balance in the trade. As per the latest available data on immigrants, provided by the World Bank and the UN, India leads the world in sending immigrant manpower worldwide, with an outflow of 26 lakh people in 2015 alone, followed by China (18 lakh), Columbia (14.5 lakh), Lebnan (12.5 lakh) and Pakistan (10 lakh). The biggest host country has been the US, accepting 40 lakh in 2015 alone. There are countries, having unbelievably high percentage of immigrants in their total populations upto 80% and above, with all the riches and a very low rate of unemployment. The table 1 reveals that countries having very high ratio of immigrants in total population have a very low unemployment rate. Therefore, the restrictions being invoked on the entry of Indian technocrats and skilled manpower is futile and would prove counterproductive.

Scores of studies reveal that immigrants do not kill jobs in the US or any other host country. But, on the other hand, immigrants help to create more jobs as consumers, entrepreneurs and executives in the host country. They also create huge demand for housing wealth into the country to trigger the entire construction value chain. A new research by Americas Society/Council of the Americas (AS/COA) and Partnership for a New American Economy (PNAE) has found that the 40 million C.L.Salvi immigrants in the United States have created $3.7 trillion in housing wealth to generate manifold turnovers and employment into several allied sectors and downstream or front end value chain. According to a 2011 study, immigrants with advanced degrees or even with some skill, after going to the US, even on temporary visas have created more jobs for native-born workers

The study of American Enterprise Institute and the Partnership for a New American Economy, has analyzed state-level employment data from 2000 to 2007 and found that every 100 foreign-born workers, working with advanced degrees had helped to generate additional 262 jobs for native-born workers. The study also found “that American States with greater numbers of temporary workers in the H-1B program for skilled workers and H-2B program for less-skilled nonagricultural workers had higher employment among US natives.” According to this study, the addition of 100 H-1B workers was associated with an additional 183 jobs for native-born workers, while the addition of 100 H-2B workers was associated with an additional 464 jobs for native-born workers. Moreover, it has also been found that the immigrants are more likely than natives to start their own businesses. According to a report from the Kauffman Foundation, “immigrants were more than twice as likely to start businesses each month than were the native-born in 2010.” Besides, the immigrants fuel technological and scientific innovations. Even according to a report from the Brooking Institution, “the immigrants with advanced degrees are three times more likely to file patents than the U.S.-born citizens. This higher probability of investments in new businesses as well as in generating intellectual wealth through research provide huge spillover benefits to U.S.-born workers by enhancing job creation and by increasing innovations.” Likewise, a study of PwC and London First of immigrants in London reveals that each migrant worker in London alone, with full time jobs contribute an additional £46000 (equal to Rs 32,20,000)in gross value added (GVA) per year to the economy. According to this study, a combined total of £83bn for all of London‟s 1.8m migrant workers is added, making up approximately 22 per cent of the British capital‟s GVA. The additional value generated by 10 migrant worker jobs will support additional four jobs in the wider economy, according to this report.

However, the migrants from Islamic countries, especially refugees, creating a rape scare and jehadi activities including suicide bombings in Europe etc. should not be clubbed with Indian Diaspora, the latter has been powering the economies of the host country. Even there are Nobel Laureates like Hargobind Khorana, Subrahmanyan Chandra Shekhar, Venkatraman Ramakrishnan, Amartya Sen who had migrated to the US with Indian degrees and earned Nobel Prize for their innovations. Indeed, from healthcare to space research and from FMCG sector to biotechnology and IT, the people of Indian Origin are the prime resource, not only for the US but several industrialized nations.

Restriction would Affect the Host Economies More

So, by ignoring to see the contribution of Indian diaspora, the countries ranging from Singapore to the US imposing restrictions over Indian immigrants would dampen their growth. It would less affect the bottom line of Indian Companies than the domestic companies of the host countries opting to restrict immigrants from India. If the US proposal to double minimum pay requirement for the H1B visa to $ 1, 30,000 is enacted, it will severely affect the US corporate performance as well as the economy as a whole. Likewise, Singapore has also recently stopped issuing visas to Indian IT professionals and in November last year, the UK government has also tightened visa rules, making it C.L.Salvi difficult for Indian IT professionals to work there. Recently, on April 18, 2017, Australia has also abolished the 457-visa category, in vogue since 1996 allowing foreign workers to stay for 4 years permitting them to work in 650 occupations. Visa holders could also bring family members to Australia on 457 secondary visa. Now the government is replacing the 457 visa class with 2 new visas. One of them is a two year visa, which can be renewed for another two years and a 4-year visa targeted at specific high level skills. However, the overall protectionist restrictions being applied by countries deriving high economic value from the skills of Indian diaspora would no doubt hit the bottom lines of Indian as well the domestic companies of the host countries. These would also affect the remittances for India to some extent. But the impact on the economies of host countries applying these restrictions would be much more severe.

Indian Diaspora is the largest Contributor of Economic Value

According to the latest United Nations estimates, 244 million people, or 3.3% of the world‟s population, have been living in a country different than the one where they were born. Their number is even growing at a faster pace than the growth in world population, with enormous economic, social civilisational, cultural and demographic repercussions for native and adopted countries. Mostly, they are concentrated in just 20 countries. Indians make up the largest diaspora as 16 million Indians are spread across the world, which not only reflects the country's demographic size (1.2 billion) but, it youth fullness with median age around 26 and top of all it constitutes the cream of talent to power those host economies. The effect of their absence can be enormous for those host economies. These, migrants tend to be mostly young, working-age people with high qualifications of high end skills, which can be a boon to countries like those in Europe where the native population is swiftly aging. India needs to evolve a proactive diaspora strategy with an anticipatory vision.

Estimates reveal that on account of superannuation alone in the next 5 years, a demographic deficit of 57 million persons is likely to be felt by the industrialized countries alone for manning various knowledge based sectors. Out of which, 43 million would be available from India alone. Even today, if we take the case of IBM, it has 1.12 lakh Indians working in India and 43000 in the US out of a workforce of 1 lakh employed in the US. Thus in a total workforce of 2.12 lakh software engineers hired by the IBM in India and US, one lakh fifty five thousand are Indians, working in India and US together. Since India is also a recipient of around $69 billion as private transfers i.e. NRI remittances. Therefore, Indian think tanks, the government and the Indian diaspora need to undertake and sponsor simulated studies with much more empirical support to elucidate the contribution being made by the Indian diaspora across the host nations, to dither the governments away from continuing these restrictions, as well as from imposing fresh restrictions. Indeed the private transfers of around $ 60-70 billion, made by the non-resident Indians (NRIs) from abroad to India is less than 10% of the net economic value being added into the GDPs of the economies of the host countries, wherever they have migrated. So their direct contribution to these economies in particular and the global economy in general is more than $7 trillion, almost around 10% of the global GDP. The US also needs to be reminded that Indian IT firms have paid more than USD 20 billion in taxes from 2011 to 2015 USD 375 million as visa fees, besides creating 1,00,000 jobs in US. So, US needs to weigh the direct benefits arising from the Indian Diaspora.

An Open Betrayal

The pace at which the industrialized countries have been digressing away from their avowed commitments of giving free access to human resources from India and other developing countries, in the name of globalization for securing free access for their goods and capital into developing countries, is deplorable. After getting free access for their goods and capital into various developing countries they are going back on their words unilaterally and are now imposing visa restrictions. The industrialised countries indeed, at that time in late 80s, when the pushed the world for globalisation were severely ailing from economic recession, unemployment, and balooning deficits in fiscal and trade accounts. So, they had compelled the developing countries in the late eighties and in the early nineties to open up their economies, for imports and foreign investments from the industrialised countries in the name of globalisation to get a breather for their economics. Likewise, India was also forced to open trade and investment since July 1991, in pursuance of the twin reports of the IMF and World Bank (The „India- s strategy for trade reforms‟ and „India- an industrializing economy in transition‟). Subsequently, all these neoliberal economic policies were mandated under the WTO. The industrialised countries were indeed reeling under worst ever recession in late eighties largely due to the ongoing endeavours of the developing countries, aimed at self reliance through import substitution and development of domestic manufacturing. The OECD nations‟ growth rate dipped to almost zero with growing turbulence from the wrath of unemployed youth in the US, Western Europe and Japan. There were rioting by the unemployed youth in Los Angeles in the US, racial riots in UK and eruption of neo-Nazism in Germany. They (industrialised nations) were very desperate to get access into the markets of the developing countries for their goods and opportunities to invest into these economies, so as to use their surplus spares for assembling and selling the products of their companies into developing country markets. In order to get access for their goods and capital, they used to impose conditionalities while extending loans from the IMF and World Bank silver coating these conditionalities with offer to give free access to manpower or human resources from the developing countries. They talked of total free mobility to goods, capital and human resources across the globe. But, the free mobility of human resources, which was to the advantage of the developing countries, was never allowed freely from the developing to the developed nations. Moreover, rather than making such free mobility of manpower rule based, while making the free mobility for the goods and capital totally rule based, unconditional and irreversible under the „General Agreement on Tariffs & Trade‟ (GATT), Agreement on Trade Related Investments Measures (TRIMS) and the Multilateral Investments Guaranty Agency Convention (MIGA) etc., they always maintained a glass wall of visa norms.

India must now lead the world to counter against the one way access of goods and capital from the industrialized countries, when they are moving towards selective deglobalisation by new visa norms to scuttle the entry of Indian techies and skilled persons. The industrialised countries are also subverting the rules of free trade by raising the issue of environmental, sanitary and phyto-sanitary or labor standards. They have also been clandestinely subsidizing their farm produce as well as industrial goods to cause trade distortions. So, it is time for India to lead for total deglobalisation, when the ongoing globalisation aimed at free mobility to goods and capital from the industrialised countries has been leading to rampant inter country disparities in percapita income, standard of living, and the over all prosperity of all developing countries. Almost two thirds of global GDP is C.L.Salvi cornered by 2000 multinational corporates from the industrialised world, coming from mere 30 countries out of the total 204 nations of the world. Out of these 30 countries as well most of the top 500 MNCs are from the US, China, Germany, UK, France and Japan. India has 6 corporates into 500 of the world. So, the ongoing globalisation facilitating free access for the goods and capital of large trans-national corporations to the peril of vast masses, leading to job losses, miseries, malnutrition, high cost of subsistence etc. needs to be reversed to counter the selective deglobalisation by visa restrictions. Total deglobalisation by reversing all the multilateral trade agreements, free trade agreements and draculous IPRs would help the vast masses to prosper, instead of facilitating amassing of wealth by the MNCs alone or those on few high profile jobs.