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Reversing a ban | H1- B Visa in USA | UPSC

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UPSC Syllabus: Mains: GS Paper II: International Relations

News Context:

The administration of former President Donald Trump, a Republican, halted the issuance of non-immigrant work visas of several types, including the skilled worker visa, or H-1B.

What was the Objective of such a ban?

The aim of the policy was to stop foreign workers from cornering American jobs during the economic distress and consequent shortage of economic opportunities brought on by the ongoing COVID-19 pandemic.

The overall unemployment rate in the country nearly quadrupled between February and May 2020 to a little over 13%

Time period of the order –

The original order was valid until December 31, 2020, it was extended by the Trump administration to be valid until March 31, 2021.

Impact of the Ban

It did not lead to any effective improvement in the employment scenario because of the Pandemic led economic slowdown. U.S. firms relying on skilled foreign nationals may have anyway been unable to make new hires.

Until now, the U.S. issued 85,000 H-1B visas annually, of which 20,000 went to graduate students and 65,000 to private sector applicants, and Indian nationals would garner approximately 70% of these.

Analysts predicted that around 2,19,000 workers around the world might have been prevented from taking up work in the U.S.

 What is the Policy under new administration?

The new administration has allowed the ban on H-1B visa issuance to expire,

What would be the Impact?

Potentially it will bring relief to a large number of Indian nationals, especially IT workers who are prospective applicants for the visa. It might restore the inflow of skilled workers into the U.S., a source of productivity-increase for its labour force.

Understanding the H1 B Controversy

The US Economy has been severely hit by COVID-19 leading to increase in the unemployment rate to around 13%. In response, the Trump Administration has decided to restrict the issuance of various categories of non-immigrant work visa, including H1 B Visa for the rest of the calendar year.

The idea behind such a move is to restrict the entry of foreign workers into USA and instead promote greater employment opportunities for the US youths. Now, even though such a move is temporary and valid until the end of the year, such a move would have adverse impact on both Indian and US based IT Companies.

Understanding the H1B Visa

The H1B Visa is a special form of non-immigrant work visa. It enables the companies based in USA to temporary employ the foreign employees for the specialized job designation. They can hire the non-residential worker in the specialized occupations like architecture, engineering, mathematics, science, and medicine which requires technical expertise. Further, the students who are pursuing their higher Education in USA can also get H1B Visa to work in USA after their graduation.

Apart from the H-1B visas, the US government also issues L1 visas which allows companies to transfer highly skilled workers to US to work for a certain duration.

Increasing Importance of H1B Visa for India and USA

The rapid growth of the technology and Internet during the 1990s increased the demand for the highly skilled work force in USA. Accordingly, the number of Indians entering into US on H1B visa also steadily increased. Presently, the Indian nationals receive nearly 70% of the 85,000 H1-B visas issued each year. These Indians are hired in USA by both Indian based Companies (Infosys, TCS, WIPRO etc) as well as the US based companies such as Google, Amazon, Microsoft etc. This benefits almost all the stakeholders:

  1. The US-based Companies are able to have access to highly skilled workforce from India at relatively lower wages.
  2. The Indian-based IT Companies are mainly export-oriented wherein they get number of work contracts from USA. These IT Companies are able to send their employees from India to USA to work on the client site for a temporary period through the H1B Visa. The cost of hiring Indian workers is much lower for the Indian IT Companies as compared to hiring American workers. Hence, H1B Visa significantly reduces their operating cost, enables them to efficiently manage their employees and improve their productivity.
  3. It provides for employment opportunities to highly skilled Indians to work in USA.
  4. It enables the Indian students who obtain Masters/Ph.D. degree in USA to work on H1B Visa

Why is there an opposition to H1B Visa Regime in USA?

Rising Unemployment: The Trump Administration believes that the H1B Visa has led to replacement of US workers with the foreign workers who have H1B Visa.

Misuse of H1B Visa: The majority of the work done by H1B employers is really not specialist work. In spite of having less years of experience, they go on to work for large IT companies in USA.

How the recent move would have an impact on various Stakeholders?

Indian IT Companies: As you can be seen in the figure, the Indian Companies are the major beneficiaries of the H-1B visa programme. Thus, such a move by the Trump Administration would force them to employ US Nationals at much higher wages leading to increase in their operating costs.

US Based Companies: The US Based companies such as Google have also opposed the Trump Administration’s move. The US based Companies have highlighted that it is immigration through H1B visa which has led to America’s economic success making it the leader in Technology. Hence, such a move is counterproductive.

Reduced Employment Opportunities for Indian Nationals in USA: As on April 1, 2020, USA had received around 2.5 lakh applications for H1B Visa. Out of this, Indians alone accounted for 1.84 lakh applications. Hence, the recent move by Trump Administration would lead to reduced Employment Opportunities for Indian Nationals in USA.

Indians Pursuing Higher Education in USA: The new move would make it difficult for the Indian nationals pursuing their higher Education in USA to gain employment in USA after their graduation.

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