In 2010, I wrote a blog on the situation of the H1-B visas. At that time, the slow recovery of the US economy was affecting the hiring of high-skilled immigrants. Now, that the U.S.
(With Roberto Ponce)
Migration issues have been at the center of discussion in the international agenda, mainly because of the financial crises and the new protectionism measures implemented by developed countries. Despite these current issues, there are several long-term topics that will require further research and attention within next decades.
Regarding demographic changes, developed countries (Europe, Japan) are aging whileAfrica, Middle East, and South Asia still experience a transitional demographic change. The challenge will be to meet the needs of migrants with their specific requirements of skills in developed countries, and the offer of youth labor with their specific stock of skills from developing countries. Countries need to be ready to meet these demands.
The very name “brain drain” suggests that high-skilled migration can be nothing but bad for developing countries. Indeed, the prospect of a harmful effect of brain drain is often one of the first concerns raised in policy discussions around migration, and every day the news is filled with statements such as “the Philippines is suffering a crippling brain drain”, “brain drain still a big concern” in India; and that Bangladesh “must stop brain drain to take the country forward”.
However, recently there has been a surge of more optimistic views of highly skilled migration, ranging from theories of “brain gain” in which the prospect of migration in the future induces people (including those who end up not migrating) to get more education; the idea of “brain circulation”, in which migrants are meant to do wonders for their home countries once they return with knowledge and ideas from abroad; and the “create-your-own Silicon Valley” view of diaspora as a source of trade, investment funds, and inspiration.
Due to the global recession, migration to the EU slowed down in 2009, for a net migration of 1,464,059 in 2008 to 857,186 in 2009 (a 40% decline). The reduction in migration flows is due to employment losses in countries of destination (especially Spain, Italy, UK) and to more restrictive immigration policies devised by European countries (e.g. UK points system, Italy prohibition on access to health service for undocumented migrants, Spain’s reduction in the number of positions available for immigrants).
Amidst a cacophony of vuvuzelas, expectations for the African teams in this World Cup had never been higher. For the first time the tournament was held on African soil and many African teams had famous coaches - Sven Goran Erikson for Cote d’Iviore being one example. Most importantly, there have never been so many African players signed to the top European clubs in the world; perhaps none more famously so than Samuel Eto’o of Inter Milan or Didier Drogba of Chelsea. And yet, the African teams were knocked out of the competition in the group stages, one by one. That is, all except Ghana, the team on which all African hopes now rested.
Last week I participated in the World Economic Forum Global Redesign Summit at Doha (see program ). In a brainstorming panel, the kind where you hit your head against the wall, I was asked the following question:
|Photo © Yosef Hadar / World Bank|
Despite the leftist tone of this question, it is important to note that being pro-labor does not imply a bias against capitalists. My response to this question can be summarized as follows:
1) Let labor markets work
2) Let's make realistic policies but not lose the long-term perspective
3) Let's think on a global scale.
Immigration reforms are the focus in the UK elections and in the USA Senate elections for this year. Both countries are yet to come to grips with the need to develop consistent policy frameworks in which immigrants can effectively and productively utilize their skills, knowledge, and previous work experience. Both countries are trying to identify measures on how to better deal with undocumented migrants and how to devise laws for low-skilled workers and for high-skilled workers.
In the UK, prime ministerial candidates have proposed the following approaches to undocumented migrants: 1) Gordon Brown’s proposal is to ban unskilled workers from outside Europe and cut the numbers of semi-skilled and skilled workers to enter into UK; 2) David Cameron proposes that “new countries that join the European Union should have transitional controls so not everyone can come at once. Regarding immigration from outside the European Union, there needs to be a cap”; and 3) Nick Clegg puts forward a proposal for "earned citizenship" for those who have lived illegally in Britain for at least 10 years, who speak English, who want to pay taxes and who want to play by the rules. (Boris Johnson, the Mayor of London, is promoting amnesty for undocumented workers.)
The slow recovery of the US economy is affecting the hiring of high-skilled immigrants. This lower demand is reflected in fewer applications for H1-B visas. The current annual cap is set at 65,000, with an additional 20,000 for holders of advanced degrees. The present crisis is exhibiting similar characteristics as the 1991 downturn: 1) Lower demand for new foreign high-skilled workers. US firms are not recruiting overseas; and 2) Lower demand for foreign high-skilled graduates of US universities.
The U.S. Citizenship and Immigration Services (USCIS) put out a statement on April 08, 2010 that “it has received approximately 13,500 H-1B petitions counting toward the Congressionally-mandated 65,000 cap during the first two weeks of April 2010.” (See USCIS - USCIS Continues to Accept FY 2011 H-1B Petitions). That’s far fewer than the 42,000 requests filed during the same period last year (See post). Unlike in previous years, foreign graduates of US universities are not finding jobs in US. The applications for foreign workers with advanced degrees have only reached 5,800 applications by April 15, 2010.
This is the second year that the annual quota for H1B visas has not been filled during the first week of April. Since the recession worsened in late 2008, the annual quota has remained open longer than in the previous years (see graph below). For the US 2010 fiscal year (the fiscal year begins on October 1 and ends on September 30), it took until December 21, 2009 to fill the quota (280 days). In 2009, it closed in one day and in 2008, it closed in two days. Only in 2004, when the quota was reduced from 195,000 to 65,000, there were still visa slots available as of October 1, 2003 (323 days). It seems that for the 2011 fiscal year, the annual quota will remain open longer than last year.
On December 08, 2009, President Obama outlined a proposal to encourage small business to hire workers in 2010 by opening lines of credit and offering tax breaks. The impact of this proposed measure will be different for foreign-born low-tech entrepreneurs and foreign-born high-tech entrepreneurs. Prior to the crisis, self-employment was spreading among foreign workers in USA and in Europe. According to the U.S. Small Business Administration (2007) “the self-employment rate for foreign-born residents of the Unites States has grown faster that of native born residents over the past ten years”. Lack of access to employment opportunities commensurate with immigrants’ human capital may encourage them to look for self employment, business alternatives.
High-skill and low-skill immigrant entrepreneurs tend to concentrate in certain niches. For example, Salvadorian, Colombian and Dominican firms are concentrated in retail sales and business services (Robinson, 2005). Immigrant-owned firms are mainly retail, wholesale, personal and professional service enterprises and are typically operated by family members. The management structure is comprised of the immigrant owner and his/her close family members and relatives (Page and Plaza, 2006). Foreign-born founders of “high-impact” companies in high tech sectors are concentrated in business services and engineering services and located in the states with large foreign-born residents such as California and Texas. (Hart, Zoltan and Spencer, 2009).