WHAT NEXT?

What is it?

With a tool manufacturing company in Wisconsin as the backdrop, U.S. President Donald Trump has issued an executive order that pushes his slogan, ‘buy American, hire American’ into administrative action. Under the order, several federal departments have been directed to come up with a plan to meet the twin objective. The first objective is to give preference to American companies when the government buys stuff and the second aims to reform guest worker programmes that allow foreigners to temporarily work in the U.S. The H-1B guest worker programme that brings in thousands of Indian technology workers is particularly in focus. Senior administration officials named Indian companies such as Tata Consulting Services and Infosys while discussing how the programme is being gamed.

How did it come about?

The U.S. admits 85,000 foreign workers under the H-1B programme every year, 20,000 of them advanced degree holders. About 1,00,000 are reissued or extended, making a total of above 1,85,000 visas every year. In 2016, 1,26,692 of them went to Indians. The beneficiaries are selected through a lottery system as demand surpasses supply every year. The programme was established to bring high-skilled workers not available in the country. Critics of the programme, including Mr. Trump, say the programme is being abused to bring cheap foreign workers to the U.S. to undercut salaries and displace American workers.

Why does it matter?

Wisconsin is a swing State that Mr. Trump won by less than than 23,000 votes in November. About one in six jobs in the State is a manufacturing job, compared with one in 11 for the entire country.

For Mr. Trump, keeping the promise of working towards creating and protecting American jobs, or at least appearing to do so, is crucial for political survival. Reviving the American labour market is at the core of Mr. Trump’s America First political platform. The trickle of foreign workers is a minor factor in the overall disruption of labour, caused primarily by rapid automation of manufacturing and services.

But a series of high-profile IT servicing contracts that involved displacement of long-serving American workers by Indian workers on H-1B visa in recent months, which angered the American electorate, made reforms of this programme inevitable.

Both Democratic and Republican lawmakers agree that its original intent has been compromised, and American workers are being affected. They might disagree on details but lawmakers across the ideological divide are clamouring for reforms.

What next?

The next season for H-1B processing is in April 2018. Some changes are possible only through Congressional decisions, but the executive can make some changes by itself. For instance, the number of foreign workers can be changed only by Congress, but the lottery system that selects them, the wage slabs that guide the process to ensure guest workers do not undercut American workers, and the enforcement of regulatory provisions are all executive decisions.

Regardless of what happens to the several legislative proposals in Congress, some radical changes through executive action are almost certain before the next processing season. The better qualified and better paid among the applicants would be more likely to get an H-1B visa next year.

From the visa seeker’s perspective, the number of Indians leaving for America under this programme is unlikely to change any time soon, but the composition of that crowd will change. The better and the brighter will find their route to America easier.