Obama may influence UK job protectionism

Written by Rachana Khanzode | Mumbai | Updated: May 9 2009, 03:25am hrs
An international columnist on economic development recently wrote, It seems these days that nationalising jobs is a more popular proposition than nationalising banks. He is not too off the mark.

US president Barrack Obamas moves to bring back jobs and tax money into the country could influence similar moves in other countries, especially the UK.

For Indian IT companies, this is probably just the tip of the iceberg as the UK government touts new domestic measures that look uncannily like labour protectionism. Not to forget UK PM Gordon Browns first speech to the Labour party conference in September 2007 when he said, Create British jobs for British workers.

Interestingly, both Obama and Brown had spoken against protectionist policies in the G20 Summit held in April. But there are indications that IT companies in the UK might now be forced to take up local employees or move to countries like Poland and Romania where labour is cheaper.

In its initial steps, the UK government has become stricter in implementing its existing rules that makes it mandatory for companies to advertise locally for any position.

Companies in the UK will now route their advertisements through the local employment bureaus or job center plus as they are popularly known. People familiar with the job processes in the US and the UK say that major IT companies would end up placing advertisements on the internet or paste hardcopies of paper advertisements at the back of their office entrance door for a single day and then finally recruit someone from India on a H-1B or L-1 visa.

In another move, UK home secretary Jacqui Smith has put forward a proposal to figure out how the dependent worker is impacting the UK economy and observers based in the country opine that she wants to bring new regulations that would disallow dependents from working.

And therein hangs a tale. The UK is the second largest market for Indian IT companies and accounts for almost 30% share of IT export revenues.

Of course, one can take some solace in what British deputy high commissioner, Western India, Vicki Treadell, told FE, during a recent visit to India, UKs immigration policies are already in place and the government doesnt feel any need to bring changes at the moment, he said. But it is also a fact that the issue of foreign labour in the UK economy has intensified amid mounting job losses across industry and a fall in vacancies.

A senior consultant based in the UK says the country is influenced by the moves of US and will not take much time to follow suit. But other European countries will probably hesitate to toe the line. Indranil Deb, principal, Mobius Strip Capital Advisors, says, Germany and France might not just follow what the US and the UK doing because they are not as badly affected (by the slowdown). They are export driven and, in fact, would now want to open up to China and India.