Column by Dr YRK Reddy - HRD Newsletter

I FLEX BUT WILL THEY?
THE DYNAMICS OF LABOUR MOBILITY

The Malaysian and Netherlands/London episodes “shocked and awed” the IT communities in India and have given our policy makers and bureaucrats a unique chance to be proactive and yield creditable results. It has become apparent that while we may be prepared to flex and be generally accommodative, others may not reciprocate. We have droves of musical groups, management consultants, movie producers, policy analysts, software specialists coming into the country earning fees, honoraria and also adding value to software, testing their quality and marketing. Do they come in on work permit or are they happy on a visit or business visa, one wonders?

It is apparent that even as the rhetoric of globalization refuses to whine away, the world is actually becoming hawkish and protectionist. The conception of a global village where resources flow without restrictions and where the consequent benefits of efficiency will raise the standard of living of all people is romanticism than reality.

The ILO’s initial World Labour Report wondered as to the possible benefits in a world which will have no visa restrictions and people could move freely for employment. It estimated that the developing world would be benefited by US$50 billion, which exceeded the then total official development assistance (ODA). It meant that instead of the reluctant ODA, the world would be better of by removing the restrictions on labour mobility. The numbers now are even more attractive to build a case for labour mobility. Dani Rodrik of Harvard University, an eminent proponent of labour mobility, estimates that the developing world would have a positive flow of about US$200 billion every year if the developed world offers a mere 3 % per cent access through a temporary (3-5 years) visa scheme.

One could dream of taking a plane load of our carpenters, plumbers and electricians to rebuild a World Trade Center or redo the wiring in the Windsor palace. If there are long queues of patients to get operated for cataract in the UK, we could fly down a bunch of our surgeons who can quickly reduce the backlog. We could also fly down a bunch of teachers in mathematics, physics, and chemistry and tutor the students in the US during the summer vacations by running specials camps. We handle wedding parties and official banquets in Paris by flying down, if not stationing, our chef’s, cooks and waiters. We can have our CISF handle their security in airports and museums. But such a prospect may remain a dream.

Ironically the world 100 years ago, was far more open and integrated as Michael Mussa formerly of the IMF noted, by many measures. It is common knowledge that till about the 1920’s, there were no visa restrictions in the world and people had the freedom to go and seek employment in any country to better their lives. 2% of the world population or about 120 million people now live in countries to which they have emigrated as against 10% a century ago before the restrictions started. Against the severe discouragement now, more than 20 million people moved to the United States in the four decades preceding 1910. The “Depression” induced restrictions have only increased with the ethnic consciousness post 9/11 and the potential events post-Iraq.

The hawkish countries in the developed world do not want such free flow any more despite the findings of the World Bank that there is an urgent need for ease of movement not merely in the skilled class but also in the others, if the Western hemisphere is required to overcome the demographic crunch of an aging population. This year, over 83 million will be born of whom only 1 million will be in the developed world. The ratio of retirees to working population is expected to decline from 1:5 now to 1:3 by 2015 in Japan. In Germany, over half the population will be above 65 years of age by 2030. Due to the demographic dynamics, India is expected to emerge as the largest contributor to the world’s accretion of work force by 2025.

The question of labour mobility has not figured in the agenda of the Doha round of the WTO and the only reference is in the General Agreement on Trade related Services (GATS) in respect of "the supply of a service… by a service supplier of one Member, through presence of natural persons of a Member in the territory of another Member" which comes with riders that even permit discriminatory visa requirements.

At the apparent level it appears logical that the professionals in India, particularly the HR community, should pressurize the government to lead a movement on behalf of the developing world for inclusion of labour mobility as a subject in the next round of WTO meetings and be able to “pry open” their labour markets.

Is there a downside? There are fears, despite the arguments that our brain-drain is actually investments abroad. The country may lose important skill sets to supply neo-indentured labour with adverse impact on the economy as well as the prospect of creating intellectual properties for others while remaining labour. Incidentally, Africa finds that there are more of its scientists and engineers in the USA than at home – Zambia has lost 75% of its trained doctors in just a few years leaving their health system in shambles and the Philippines as well as Canada are worried that all their nurses are migrating to the USA!

By opening up labour markets - which is a two-way Street – India has a prospect of having to suffer the labour from the neighboring countries in the region who may want to move to our metro cities. We may also have the prospect of “phirongi” maids, cooks and butlers in the high-income houses. We may have loads of belly dancers from the Mediterranean and West Asia to entertain our Karnatak musicians and cultural evenings putting our Gazal singers out of their meager earnings

We may also have masseurs who might land up from the Far East periodically to do their artful work in our metros. Worst is the prospect like the one people witnessed in the football clubs. The second rate professionals who are unable to make the grade in their own country may be willing to sign up and play for our clubs, and even States. Likewise, Corporates might be tempted to engage the fair complexioned Europeans or Americans to replace the HR, production and marketing managers for reasons of snootiness, reputation or fashion, if not for efficiency.

Obviously, trade is a two way street. But if you are powerful enough, you can manage to move down the road while obstructing the traffic in the opposite direction. It needs big clout and ability to play different cards that will create a basket of incentives and disincentives to be able to win one’s way. While we certainly do not have much muscle, will we have cleverer tackle to address these issues in the next round of trade negotiations?

(Another version of this column is being published in the Financial Express for wider debate.)

May, 2003 Issue


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