Context: The US administration recently extended the 60-day ban on immigration and non-immigrant worker visas till the end of 2020.
More on the news:
- Popular work visas including the much-coveted H-1B and H-2B, and certain categories of H-4, J, and L visas shall also remain suspended for the same period.
- Apart from the suspension of these work visas, the executive order has also made sweeping changes to the H-1B work visa norms, which will no longer be decided by the currently prevalent lottery system.
- The new norms will now favour highly-skilled workers who are paid the highest wages by their respective companies
About H-1B, H-2B, L and other work visas:
- Purpose: In order to fill a vacuum of highly-skilled low-cost employees in IT and other related domains, the US administration issues a certain number of visas each year which allows companies from outside the US to send employees to work on client sites.
- Of these work visas, the H-1B remains the most popular among Indian IT companies.
- The US government has a cap of 85,000 total H-1B visas for each year - 65,000 H-1B visas are issued to highly skilled foreign workers, while the rest to highly skilled foreign workers who have a higher education or masters degree from an American university.
- H-1B: Person is Specialty Occupation: To work in a specialty occupation. Requires a higher education degree of its equivalent. Includes fashion models of distinguished merit and ability and government-to-government research and development, or co-production projects administered by the Department of Defence.
- H-1B visas are generally approved for a period of three years for a person, but many visa holders change employers to extend their US stay.
- L1 visas: Allows companies to transfer highly skilled workers to the US for a period of up to seven years.
- H-2B visas allow food and agricultural workers to seek employment in the US.
- The J-1 Visa offers cultural and educational exchange opportunities in the United States through a variety of programs overseen by the U.S. State Department.
Reasons for suspension:
- Depends on the economic situation of the US: Since it was started in 1952, the H-1 visa scheme has undergone many changes and revisions to allow or disallow certain categories of skilled workers in the US, depending on the economic situation of the country.
- The technology boom and low cost workforce: Coupled with the arrival of the internet and low-cost computers in developing nations such as India and China saw a large number of graduates willing to work at relatively low costs in the US, a win-win situation for both the employer and the employee.
- Hurts domestic workers: However, it has since often been criticised for sending low cost workers to the US at the expense of domestic workers.
- Economic contraction due to Covid-19: Which has resulted in job losses to the tune that some economists compared this slow down with the Great Depression of 1920s.
- America First: Clarion call given by the US president as part of his campaign to the presidential election to be held soon.
Since the ban is effective immediately, the processing of all new H-1B, H-2B, J, and L visa categories stand suspended.
- Adversely affect: Those who do not have a valid non-immigrant visa as of now, and are outside of the US, will not be allowed to enter the country until the ban is revoked.
- Some reprieve to:
- Workers in essential services: In the food sector have been given some reprieve, and their entry shall be decided by the consular officer of immigration services.
- 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.
- Impact on Indian IT companies:
- Increase their cost of operations: Though the large Indian IT companies have cut down their dependency on H-1B by hiring as much as 50 per cent of staff locally, they still rely on these visas to keep costs in check.
- Indian IT companies are amongst the biggest beneficiaries of the US H-1B visa regime.
- As of April 1, 2020, the US Citizenship and Immigration Services (USCIS) had received about 2.5 lakh H-1B work visa applications.
- Indian IT companies also offer subcontracts to Indian nationals already present in the US with valid H-1B visas.
Hence the suspension 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.
Image Source: IR