US foreign aid to subsidize outsourced jobs in South Asia

By Daniel Tencer
Wednesday, August 4, 2010 19:32 EDT
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Is American foreign aid being used to subsidize the creation of overseas jobs that replace US workers? A recent project announced by USAID suggests the answer may be yes.

The US Embassy in Sri Lanka announced late last week that it will be funding a new program in the South Asian country that will help train workers to speak English and business managers to take advantage of business outsourcing.

The program will be involved in “training companies to establish professional IT and English skills development training centers in each of the five districts in the Northern Province,” the Embassy announced on its Web site. “Courses in Business Process Outsourcing, Enterprise Java, and English Language Skills will be offered at no charge to over 3,000 under- and unemployed students who will then participate in on-the-job training schemes with private firms.”

The program to teach Sri Lankans how to benefit from outsourcing joins three other projects that USAID, the State Department’s foreign aid arm, is funding in the country. Another of these projects involved USAID helping “a major garment manufacturer to expand its operations to northern Sri Lanka. This alliance is expected to initially employ 750 full-time staff and market its finished apparel to such firms as Tommy Hilfiger, Polo Ralph Lauren, Columbia Sportswear, Next, Tesco, and Burberry.”

All told, the projects are expected to create 10,000 jobs in Sri Lanka.

InformationWeek reports that USAID will spend $22 million on the projects. But the US Embassy announcement says the US’s share of the costs amounts to 1.1 billion Sri Lankan rupees, or about $9.8 million. IW also points out that President Barack Obama has long argued against the offshoring of high-skilled American jobs.

[I]t’s the outsourcing program that’s sure to draw the most fire from critics. While Obama acknowledged that occupations such as garment making don’t add much value to the U.S. economy, he argued relentlessly during his presidential run that lawmakers needed to do more to keep hi-tech jobs in IT, biological sciences, and green energy in the country.

Just this week, Obama told a Democratic Party fundraiser he has been working on policies that are focused on “making our middle class more secure and our country more competitive in the long run so that the jobs and industries of the future aren’t all going to China and India, but are being created right here in the United States of America.”

He echoed those words Thursday, telling the AFL-CIO that this fall’s mid-term elections will be a choice between “polices that encourage job creation here in America or encourage jobs to go elsewhere … The choice is whether we want to go forward or we want to go backwards to the same policies that got us into this mess in the first place.”

For USAID, the issue appears to be about providing economic stability to a part of the world that has seen little of it in recent years. Sri Lanka last year ended a brutal 26-year civil war between its Buddhist majority and Tamil minority. Much of the aid efforts announced last week are focused on the country’s Northern Province, where the Tamil minority is largely concentrated and which suffered the worst devastation of the war.

“We are committed to helping conflict-affected communities return to normalcy through the creation of sustainable jobs and increased business opportunities,” USAID Mission Director Rebecca Cohn said. “USAID strongly believes that the private sector is the most important engine for economic growth.”

Rajiv Shah, the Obama-appointed director of USAID, said last month that he is working to rebuild the agency’s capacities after what was presumably an earlier era of neglect.

“We will rebuild USAID’s budget accountability with a strong focus on getting better results for U.S. taxpayers,” he said. “We will pursue a development strategy that is based on focus, scale, and impact. We will focus in fewer sectors in each country of work. We will pursue those efforts that can scale to reach a large percentage of people in need.”

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