The US and UK Should Be Welcoming Talent, Not Driving It Away

(Bloomberg Opinion) -- The United States and United Kingdom each hope their technological sophistication and competitiveness in advanced sectors will secure their position in the 21st century. Their governments have set aside billions they can ill afford for industrial policy meant to give these sectors an edge; the US is even risking conflict with harsh export controls aimed at preventing China from catching up.

Yet both countries are also threatening their long-term prospects with foolish policy. Specifically, their inability to enact sensible immigration reforms means that the sectors they rely on to power their growth -- from tech to higher education -- may well run short of resources.

The US is the most egregious offender. Silicon Valley -- not to mention every other high-tech sector in the country -- continues to be held hostage to its antique and unreformed H1-B work visa system. Just 85,000 H1-Bs are handed out a year to those earning at least $60,000; that’s the same number as two decades ago. The figure is obviously inadequate: In April, US immigration authorities announced that they had already received almost half a million applications for 2023 from companies hoping to import workers.

Yet the program’s problems don’t stop there. The current round of tech layoffs -- in which tens of thousands of engineers and other employees have been let go by Twitter Inc., Meta Platforms Inc. and others -- highlighted another problem with the US work visa program. Laid-off H1-B holders -- among the highest paid and most skilled migrants in America – are expected to find new jobs within 60 days or leave the country. In the past, this requirement hasn’t been as much of an issue, as the sector was booming and anyone laid off could get re-hired within weeks. Yet, at a time like this when a few large employers shed employees simultaneously, the 60-day deadline begins to bite.

There’s a very real danger that thousands of highly productive workers, many of whom have lived in the country for years, could be lost to the US economy. This would mean that a purely transitory downturn could cause permanent damage to future growth.

Unlike the US, the UK has made concrete efforts towards immigration reform in recent years; during his tenure, former Prime Minister Boris Johnson championed points-based migration rules that he said would attract “the best and brightest from around the world.”  The new system helped increase the number of work visas issued to those from outside the European Union  by 80% in two years. Of course, some of those immigrants may have been taking jobs that would otherwise have been filled by EU nationals, many of whom are no longer willing to jump through post-Brexit hoops to work in Britain.

Johnson’s exit has left his Conservative Party an uneasy coalition of pro-business reformers and antediluvian Little Englanders. Unsurprisingly, its immigration policies are incoherent. Faced with a budgetary crisis, Chancellor Jeremy Hunt had to look for growth wherever he could find it -- and, as an appalled Daily Telegraph put it, he wound up “relying on a surge in net migration to more than 200,000 people per year to help deliver economic growth.” Meanwhile Suella Braverman, Hunt’s colleague in charge of migration, says she intends to bring those numbers down to less than 100,000. This year, the UK exceeded her target by more than 400,000 people.

We have now learned that the government intends to balance these priorities by sharply reducing the number of foreign students in the UK. One problem is that these students pay vastly higher fees, thereby subsidizing British students and keeping the country’s higher education sector afloat.

The government doesn’t seem concerned: Braverman has complained that foreign students are “propping up … substandard courses in inadequate institutions.” But that’s a somewhat cavalier way of talking about a sector that supports “in excess of 815,000 jobs” in Britain. While the student-to-work-visa pipeline may need reform, no country that hopes to develop its high-tech sector would over-regulate the flow of bright young immigrants in the manner the UK intends.

Ironically, it may be the Anglosphere economies’ very attractiveness to students, workers and entrepreneurs that allows its politicians to continuing putting off real reform. In the somewhat more sensible political climes of Germany, where the government officially targets 400,000 qualified foreign workers a year, only around 30,000 apply.

Still, the US and UK are foolish to undercut their natural advantages in the race for the future: their English-speaking businesses and universities. If they truly hope to maintain their lead over rivals, they need to be be stockpiling as much talent as possible, not driving it away.   

More From Bloomberg Opinion:

• Rishi Sunak Is Trapped in a Tory Civil War: Martin Ivens
• Economic Necessity Will Force Immigration Reform: Eduardo Porter
• Fear of China Gives Bipartisanship a Chance: Niall Ferguson

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mihir Sharma is a Bloomberg Opinion columnist. A senior fellow at the Observer Research Foundation in New Delhi, he is author of “Restart: The Last Chance for the Indian Economy.”

More stories like this are available on bloomberg.com/opinion

©2022 Bloomberg L.P.