Trump extends ban on H1B, other visasApprox Read Time: 6 minutes
- The US President Donald Trump signed an executive order extending the ban on immigrant and non-immigrant worker visas until the end of this year.
- In April this year, President Trump had signed an executive order banning the entry of workers on non-immigrant visas for a period of 60 days.
About: H1B and other Work Visas
- The US administration issues a certain number of work visas each year which allows companies from outside the US to send employees to work on client sites.
- This facilitates to fill a vacuum of highly-skilled low-cost employees in IT and other related domains. It is a kind of win-win for both the employer and the employee.
- However, it has since often been criticised for sending low cost workers to the US at the expense of domestic workers.
- It is given to a person who is in a Specialty Occupation. It requires a higher education degree of its equivalent.
- Of all the work visas, the H-1B remains the most popular among Indian IT companies.
- The US issues 85,000 H1B visas annually. Of these, 65,000 are issued to highly skilled foreign workers; the other 20,000 can be additionally allotted to highly skilled foreign workers who have a higher education or Masters degree from an American university.
- The visas are generally approved for three years, after which holders often change employers and continue working for other companies based in the US.
- It allow companies to transfer highly skilled workers to US for a period of up to seven years.
- It allows food and agricultural workers to seek employment in the US.
Indian IT Sector and H-1B Visas:
- Indian IT companies are amongst the biggest beneficiaries of the US H-1B visa regime, and have since 1990s cornered a lion’s share of the total number of visas issued each year.
- As of April 1 2020, Indians had applied for 67% of the total H-1B work visas for the current financial year ending March 2021.
- However, the dependence of Indian companies on H-1B visas has been reducing in recent years. For example, as per US government data, in 2018-19, the top five Indian IT companies (TCS, Cognizant, Infosys, Wipro, and HCL Tech) together sent about 5,000 high-skill IT workers to the US on H1B visas, far fewer that the nearly 16,000 they sent in 2014-15.
- Despite the large Indian IT companies cutting down their dependency on H-1B and other worker visas by hiring as much as 50 per cent of staff locally, they still rely on these visas to keep costs in check.
News Summary: Trump extends ban on H1B, other visas
The new Work Visa Order:
- As per the US official release, work visas, including H1B and H2B, as well as certain other categories of H4, J, and L visas too shall remain suspended until December 31, 2020.
- The order also replaced the current system of awarding H1B visas by lottery with a system that privileges applicants who are paid higher than others.
Implications of US President’s Work Visa Order:
- Since the ban is effective immediately, the processing of all new H-1B, H-2B, J, and L visa categories stand suspended.
- This implies that those who do not have a valid non-immigrant visa as of June 23, and are outside of the US, will not be allowed to enter the country until December 31.
- H-1B, H-2B, J and L visa holders, and their spouse or children already present in the US shall not be impacted by the new worker visa ban.
Reasons of the Decision:
- This move is to be seen in the backdrop of slowing down economy and rising unemployment levels in the US due to Covid-19 pandemic.
- As per the White House, many American workers have been hit by the pandemic and should not remain on the sidelines while being replaced by new foreign labour.
- Thus, the objective of this decision was to protect domestic workers who had been impacted due to a contraction in the economy in the wake of the Covid-19.
Impact on India’s IT Companies:
- The ban on the entry of non-immigrant workers with H-1B visas is likely to have the biggest impact globally, and especially on Indian information technology (IT) companies and workers.
- This could result in a significant impact on margins and worker wages of Indian IT companies which send thousands of low-cost employees to work on client sites in the US.
Reactions to Trump’s Decision:
- Trump’s decision drew reactions from all stakeholders.
- For example, Sundar Pichai, who’s an Indian American and CEO of the Google expressed his disappointment with the order.
- Thousands of US corporations, universities, medical facilities, research institutions, aren’t in favour of such action because of the harm it would do now and later as the country reopens and recovers
- NASSCOM which is an IT and IT-enabled services industry body of India called the order as “misguided and harmful to the US economy”.
- All these years, if the immigrants gave gained from US Visa norms, so has US economy gained from the human capital of immigrants.
- Undoubtedly, immigration has contributed immensely to America’s economic success making it a global leader in technology.
- Such kind of moves by President Trump reflects increased protectionism and is against the spirit of globalisation.
- However, populist leaders like Trump often resort to such protectionist policies in times of economic slowdown, more so, as the US Presidential elections are nearing.