Monday, June 27, 2016

Brexit…Is it an alarm against Immigration?

After much anticipation Brexit has happened!

Amid various reactions, one was noteworthy. It is the reaction of US presidential candidate Mr. Donald Trump. He called it as ‘Anger in response to High Immigration, which is a worldwide phenomenon now.’

His remark cannot be ignored as the campaign to leave EU (European Union) had heavily argued against Immigration. EU law guarantees that citizens of one EU country have the right to travel, live, and take jobs in other EU countries. As a result, majorly after the downturn of 2008, hundreds of thousands of East European migrated to Britain for job.

It did impact the native working population of the country. Increase in number of people ready to work at lower wages, depressed the wage market in the country. Leave campaign also argued about growing strain on scarce public services and changing social atmosphere of the country.

Though the ‘Leave Campaign’ won by a thin margin of 4%, It, does bring an end to the era of Free Movement in UK (United Kingdom) from its neighbour countries.

The same pinch of migration is felt in other countries as well and we can hear voices against immigration now. Surprisingly, they are the same countries who brought forward the concept of ‘Free trade’ and ‘Free movement’ to the world. Which we know today as ‘Globlisation’!

Globalisation, became popular as it was win-win for most of the countries. The ever growing production due to industrial revolution and new innovations due to technological revolution needed newer consumers. The developed world offered products and technology and developing world offered consumers and skilled workforce. The companies started setting up their offices and shops across geographies. People were encouraged to fill these offices and move to the respective work location. Cheaper and faster travel options facilitated the movement.

Recent years have also seen increasing number of students travelling to get higher education in different parts of the globe.

People who moved to locations like US and UK from countries like India and China were impressed by the ease of life and freedom to explore their professional aspirations in these countries. And a lot of them preferred to extend their stay and permanently settle down in their adopting countries.

The arrangement has been working well for past 50 years. As per a study, there are around 191million immigrants worldwide as of now and out which more than 50% are in US and Europe alone.

The arrangement worked well as long as local population in these countries perceived the low cost skilled workers as an extra pair of hands working to enhance their economy. Immigrants also tried to assimilate in the adopting country and were ready to make more sacrifices than the local population to make a place for themselves, as any new comer would do.

But as cited as one of the reasons of Brexit, it depressed the wage market for everyone. Lack of compensation that could meet increasing living standard supplemented with lack of job opportunities is making local population unhappy in these countries. And we can hear growing sentiments against immigration.

It is a matter of time before we can see a change in ‘Free movement’! The question remains ‘will the governments of the countries effected by high immigration become protectionist and increase the entry barriers’?

But it will not be easy for them to do so as the younger population who can easily be termed as ‘internet population’ see world differently than older population. It was evident in case of Brexit as well. As per analysis of voting pattern on the referendum, majority of younger population voted to remain as part of EU. Contrary to traditional approach of ‘I am comfortable only among similar social set up as mine’…Internet population is open to experiment. They have friends across the world, they explore work opportunities across boundaries and love to globetrotter. They do not do it because of lack of opportunities in their respective countries but because of change in their outlook which sees world as one big family!

Whatever may be the policies in coming years, we cannot completely close our eyes to the rising concern over migration.

Indian diaspora constitute sizeable immigration population across the world. Last 20-25 years have witnessed an escalation in Indians travelling and settling abroad. Those who did not go are open to send their children if need be. Brexit, which was campaigned as the case against immigration is an alarming bell for Indians who want to explore possibilities of migration or have already migrated. There is an unease among them.

There are questions like:  Will I get Visa (Indians need visa to travel to most of the countries particularly developed countries like US, UK, Canada, Germany, Japan)?
Will my visa get extended?
Will my citizenship application be approved?
Will I be allowed to stay and apply for job after finishing my expensive education in these countries?
Should I shift my family out of India…how will they be accepted by natives?

Till the questions remain unanswered, let us be prepared for either kind of outcome. Here are some quick action items to keep alive your connections back home in case you need to come back home.

1.    Re-Connecting with India:

Your friends, college mates, relatives will be source of first hand knowledge about the various developments in the country. They will be your support system if you wish or need to come back.

2.    Understanding work culture in India:

Like any developing country, Money is a scarce resource in India and hence Indian companies are cost sensitive. Also being justifying its traditional roots, work culture in Indian companies is dominated by hierarchical organization structure.  Along with it, In India, personal side of a person is given equal importance as its professional excellence, hence there is overplay of emotions in decision making. These three aspects make work culture in India unique.

3.    Exploring job opportunities in India:

India is fighting hard to get back its original ancient sheen of being one of the most sought after countries in the world. Various initiatives like Skill India, Make in India, Startup India are aimed at creating job opportunities across all type of workforce.

4.    Investing in India:

India the fastest growing major economy of the world. The high expectations are based on the sound fundamentals of India’s growth and steps taken by government to ensure it. Like various continuous Infrastructure projects like complete electrification of the country, modernization of ports, railways, defence many more. Government is ensuring uninterrupted progress through steps like FDI liberalization.

There are and will be short term setbacks like plummeting stock prices of some of the companies whose business like IT services companies, Auto and component companies who export to UK. But as per Government’s assurance India is insulated from such events and there will be no

major effect. Although it has revised the GDP growth projection to 7.3% from 7.6%.

In such an atmosphere where India is a bright spot, investing in India can be explored.

There are various encouraging options for NRIs like Tax free Fixed deposits in their NRE and FCNR accounts which give 4% to 9% returns depending upon the tenure and bank. Equity Mutual funds which gave average returns as high as 12% to 15% depending upon period, market conditions, portfolio, fund manager etc. (Past performance is NO indicator of future performance), Real Estate, ETFs (exchange traded funds) etc.

(Disclaimer: You are advised to do your own research before investing in any of the instruments, returns in the article are indicative only.)
You can spread your investments across various asset classes to balance positive and negative impacts.

Being an Immigrant is a challenge! You can leave the home country behind but leaving the culture of the home country is difficult. It becomes more difficult if you belong to a country like India where family ties are very strong back home. Whatever are your circumstances and aspirations New India under the leadership of our dear PM Modi is providing opportunities to all.

And of course You are always Welcome back Home!