Editorial 2: H1B visa debate in US
Context:
Recently, US Commerce Secretary called H1B Visa program a scam, and claimed that the American businesses need to hire more Americans as compared to non-US workers through this scheme. India, which accounts for 70% of these visas, is likely to suffer.
H1B Visa Scheme:
- It allows American employers to hire immigrant workers in occupations that require “a high level of skill” and “at least a bachelor degree”.
- This visa category was created by the Immigration Act, 1990 which allowed the employers who cannot otherwise obtain needed business skills and abilities from the US workforce to employ qualified individuals who are otherwise not authorized to work in the US.
- This program was enacted as a long tussle between industry groups and workers union in the US.
- They are issued for a maximum six years at a stretch, after which the visa holder has to either leave for the US for atleast 12 months, or apply for and receive permanent residence (green card).
- New visas are capped at 65,000 each fiscal year, with an extra 20,000 visas available to those with a Master’s degree or higher from a US university. This annual cap does not include those applications for “continuing employment” or those seeking employment at higher education institutions or nonprofit entities affiliated to such entities.
Benefits of the scheme to the US companies:
- With technological boom in 1990s, companies such as Google, and Amazon were the biggest beneficiary of this scheme. They needed specialized talent to boost their growth, but the domestic supply was not sufficient to meet the demand.
- This scheme allowed these companies to hire lakhs of highly skilled workers from countries such as China, India to meet this shortfall.
- These companies gained and maintained the competitive edge in cutting edge technology research and development. This also have positive effect on both the productivity and innovation, benefitting large number of start-ups.
Criticism of H1B visa scheme:
- Many Congressmen have criticized this scheme as it replaces good-paying Americans with low-wage skilled workers from abroad. This leads to capital concentration in the hands of powerful business companies.
- This scheme is claimed to have led the problems such as high unemployment, low wages, inflation, a housing crisis, and other economic problems.
India and the H1B Visa:
- Indians have been the largest beneficiaries of this scheme, accounting for more than 70% of successful H1B petitions. China, which accounts for 12-13%, are distinct second.
- India has benefitted from this program. It has increased the remittances to India, many Indian companies such as Infosys have benefitted from this scheme.
- Many educational institutions increased their research capabilities by sending their students abroad for job placements and internships.
- An average Indian worker going to US re earning less than $100,000 per annum as compared to average US IT professional earning $105,990 per year.
Way Forward:
India is already facing a 50% tariff imposition by the US. Any unfavorable change in H1B visa scheme will negatively affect India. It will lead to job losses, low remittances, and low FDI inflow. India must negotiate a favorable trade deal covering a provision for a fixed amount of H1B visa to Indian skilled workforce. At the same time, it must increase its domestic manufacturing capacity, it’s spending on R&D, and the laws favoring ease of doing business in India.