Increasingly, countries are putting restrictions on the borders to both unskilled and skilled migration, to the detriment of themselves.
Leading HR practitioners express that this inward-looking phenomenon, particularly exemplified by Brexit and Trumponomics, is causing the majority to be nationalistic.
A clear distinction is needed between mass unskilled immigration and skilled immigration to ensure businesses globally have the talent they need for success, says Hays CEO, Alistair Cox, in his latest LinkedIn Influencer blog.
Global businesses such as MNCs have been affected, as it is difficult and complicated for companies to investigate the various FTAs ( Free Trade Agreements) formed. To date, there are existing dissimilarities in the standards of FTAs in certain aspects such as patterns of tariff elimination and definitions of rules of origin, since such non-standardisation can hinder the level of market integration among the various countries significantly. The ‘Noodle bowl’ problem refers to the complication that arises due to differences in technical standards and the scope among various countries or FTAs on trade-related issues. (source : ISAS Insights)
Further, inward-looking economies have suffered from a backlash. Many organisations rely on access to the global talent pool to run their businesses. Organisations unable to find the skills they require at home, being denied access to overseas talent, will find themselves exposed to skills gaps – making it harder for them to achieve continual goals. This is a rising phenomenon in Singapore. The result of this can be higher labour costs.
From Brexit to Trump to Tharman
Growing insecurities about globalisation and freer economy are epidemic. In particular, immigration is often associated with criminal activities, terrorism and pressures on job market. The changing geo-economic landscape is yet another contributing factor, such as CECA (Comprehensive Economic Cooperation Agreement).
“There will be less push for businesses to be more productive, and more fundamentally, you become a society where people don’t feel it’s their own society”, said Deputy Prime Minister Tharman Shanmugaratnam at the Delhi Economics Conclave held by the Indian Finance Ministry in India, 22 July.
In recent years, many countries have implemented tighter immigration policies. For example, Singapore blocks Indian IT professionals (Link). Visas for IT professionals to work in Singapore have dropped “to a trickle”, prompting the Indian government to put on hold the benefits of the CECA citing violation of the trade pact. This is also not uncommon in other developed counterparts, such as UK and Australia. In the US, President Donald Trump has said that he would not allow Americans to be replaced by immigrants, in an apparent reference to companies wherein people were hired on H-1B visas, particularly Indians, displaced US workers. Steven Woolfe MEP also believed that reduced immigration brought by Brexit will “lessen the strain on our public services and help build a more cohesive society” (Link).
Earlier this year, India had expressed concern that restrictions on the movement of Indian professionals to Singapore have breached the terms of the CECA signed by the two countries in 2005. A review of the agreement to update the terms has been under negotiation for more than six years as India seeks more access for its professionals and banks.
From the perspective of economic efficiency and people’s welfare, a global trade regime should be the prime option for freer global trade—curbing trade diversion and costs from noodle bowl effects. Alistair says, “We need free movement of skills in order for economies to run at their full potential and in turn for society to enjoy the many benefits it brings. Put simply, countries need to be opening their borders to skilled workers, not closing them.”
Implications: short-term solution
Alistair states, “We know that diverse teams often perform more strongly than those made up of people with a similar background or set of experiences. Hiring in external talent often raises the skill level of current employees. This can only ever be a good thing.”
Bringing highly-skilled professionals in from overseas is seen as the immediate solution to the skills crisis, whereas the long-term solution lies in education and the reskilling of workers.
Alistair explains, “Educating our young people is an excellent long-term approach, but it doesn’t plug the gap that is already apparent to many businesses currently trying to hire skilled workers. Establishing a talent pipeline for the future is something that takes time and can’t simply happen overnight. If education is the long-term solution to the skills gap, then skilled migration seems to be the only shorter-term solution.”