How to de­ploy the avail­able ta­lent more ef­fec­tively

The Star Late Edition - - BUSINESS REPORT - Hamish McRae

E ARE shift­ing to a world where it will be more dif­fi­cult for peo­ple to move to jobs in other coun­tries. We don’t yet know how rigid the bar­ri­ers will be­come, but it is fairly clear that the high point in global labour mo­bil­ity has been passed.

It is tempt­ing to as­so­ciate this with the elec­tion of Don­ald Trump and to Brexit, but ac­tu­ally the shift was ev­i­dent a decade ago. It comes from the po­lit­i­cal left as well as from the right.

Re­mem­ber Gor­don Brown’s “Bri­tish jobs for Bri­tish work­ers”? That was at the party con­fer­ence in Septem­ber 2007. He was crit­i­cised for that re­mark, but he was a con­sid­er­able politi­cian.

He knew the way the wind was blow­ing even then. How will com­pa­nies, ac­cus­tomed to an ever more global econ­omy, adapt? Brexit had yet to hap­pen and we don’t know what other re­stric­tions on labour move­ment will be in­tro­duced in Europe. So the first ex­pe­ri­ence of what they will do will come in the US. Pres­i­dent Trump made this prom­ise: “Buy Amer­i­can and hire Amer­i­can. It’s not just a motto, it’s a pledge.”

So what might that mean for the fu­ture of im­mi­gra­tion into the US? Start with the H-1B visa, now be­ing re­viewed fol­low­ing an ex­ec­u­tive or­der by the pres­i­dent. This is a non-im­mi­grant visa that al­lows US com­pa­nies to em­ploy grad­u­ate level work­ers in spe­cial­ity jobs for up to six years. Hi-tech It is used mostly by the hi-tech in­dus­tries on the west coast, but in the­ory it can be for any pro­fes­sional job.

It is eas­ier to get than an im­mi­grant visa but there are only 85 000 of­fered each year, with an ad­di­tional 20 000 for work­ers who have done an ad­vanced de­gree at a US ed­u­ca­tional establishment.

The hi-tech in­dus­try finds it ex­tremely use­ful, be­cause it can tap into the global skills mar­ket, but in the con­text of the US econ­omy of 322 mil­lion peo­ple, the num­ber is tiny. So would re­strict­ing it mat­ter? The an­swer is prob­a­bly yes, but not in the ob­vi­ous way. Shares of hi-tech com­pa­nies fell sharply as a re­sult of the pres­i­dent’s ac­tions.

But it is hard to see the great en­gine of US growth lan­guish­ing for long and the big es­tab­lished com­pa­nies will find other ways to carry on the work.

At the mar­gin more work will be done over­seas, mostly in Asia, be­cause that is where most H-1B ap­pli­cants come from. The US higher ed­u­ca­tion lobby will seek to in­crease the 20 000 cap and peo­ple study­ing then stay­ing on gives a dou­ble boost to the econ­omy.

The big­ger chal­lenge will be the threat to start-ups. It has been es­ti­mated that half the hi-tech start-ups have come from im­mi­grants.

That does in­clude peo­ple who have come with their fam­i­lies as chil­dren rather than those sim­ply on H-1B visas, but the broader point stands: the west coast of the US has be­come a mag­net for global ta­lent.

That is the place you go to make it in the hi-tech world. It is the place where the money goes too. Noth­ing much will hap­pen for a few years for the stock of peo­ple want­ing and able to found com­pa­nies won’t dis­ap­pear overnight. The peo­ple who are there are there. But the longer the re­stric­tions last the greater the dan­ger, but by the time the dan­ger is ev­i­dent some dam­age – we can­not know how much – will have been done. Un­doc­u­mented And other im­mi­gra­tion into the US? Most im­mi­grants are com­ing in for low-skilled jobs, not hi-tech ones. There are an es­ti­mated 11 mil­lion un­doc­u­mented mi­grants, of which 8 mil­lion are in jobs.

That 11 mil­lion fig­ure sounds huge and is com­pared with the 3.5 mil­lion back in 1990. But for the past few years the num­ber has been fall­ing from a peak of more than 12 mil­lion in 2007. More than half are from Mex­ico.

In to­tal, un­doc­u­mented mi­grants ac­count for just over 5 per­cent of the work- force, but ac­cord­ing to Pew Re­search, they are more than a quar­ter of the peo­ple work­ing in farm­ing and 15 per­cent of those in con­struc­tion.

That is huge, and in eco­nomic terms it would make sense to bring these peo­ple into the for­mal work­force with some kind of amnesty.

As it hap­pens, it would be a rather good time to do so, for the US labour mar­ket is quite tight at the mo­ment, and as growth con­tin­ues it is get­ting tighter. There are in­deed some dis­cour­aged work­ers, peo­ple who have dropped out of the work­force, but there is no way they could fill a quar­ter of those farm­ing jobs.

There’s the rub. Hi-tech Amer­ica can at a pinch cope with more re­stric­tions on mi­gra­tion. Low-tech Amer­ica re­ally can’t. My guess is that eco­nomics will even­tu­ally trump pol­i­tics, but not with­out a strug­gle. There will be some more re­stric­tions at both ends of the labour mar­ket and as a re­sult the com­ing squeeze will come ear­lier and be more se­ri­ous than it oth­er­wise would have been.

That is the ob­vi­ous down­side. The po­ten­tial up­side is that the US econ­omy will, as it has in the past, learn how to de­ploy the avail­able ta­lent more ef­fec­tively and in­crease its ef­fi­ciency as a re­sult. As in the past too, the rest of us will learn from the US how to do it. - The In­de­pen­dent

The west coast of the US has be­come a mag­net for global ta­lent. That is the place you go to make it in the hi-tech world.

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