Thursday, August 08, 2013

Solving the unemployment problem

To solve the unemployment problem, we need a better way to manage our human resources. This has to be done at a national level. 

Here are my ideas:

1. Those who are unemployed will register in a government managed website. They will be accessed for the type of work that they are capable of doing and the hourly rate of pay that are appropriate for the job.

2. Employers can tap into this pool of workers and employ them at the indicated rate. These employers will enjoy a wage subsidy from the government of 30% for a period of 12 months.

3. If the employer is still not profitable, the employer can apply for extension of the wage subsidy for another 12 months. The aim is to ensure that the employers can continue to keep these workers, and that the workers can enjoy a rate of pay that is appropriate and adequate for the job.

4. Over time, this may create a fair market for labor, where the rate of pay and terms of work are adequate for the workers and affordable for employers. It is better than the uncertain market conditions that is faced today.

I believe that there will be weaknesses in my proposed system, and look forward to contributions on how to make it more robust.

8 comments:

veronika said...

Government has already supplied much to businesses ( employers ).

They have provided:

1. Infrastructure
2. Educated workforce
3. Legal frameworks
4. Tax credits & holidays

How will subsidizing wages help private enterprise?

Private enterprise seek maximum profits with minimum resource.
The component cost of labour is determined by market forces.

The situation here in Singapore is a manufactured one where less expensive labour is readily available.

Then the root cause of the local citizens' inability to keep jobs is:

1. Wrong type of education ( policy )
2. Wrong type of pay structure ( policy )
3. Effect of National Service ( policy )

Subsidizing wages is the lazy route and is highly narcotic hence addictive.

Dixon Ng said...

Based on the 4 points you have mentioned, I do have some doubts on the proposal as follows:

- Is the government managed website really unbiased? Do the staffs handling this website able to be completely unbiased over every unemployed Singaporean?

- The appropriate pay changes time to time, will the unemployed Singaporean able to accept this "appropriate pay"?

- How do the government ensure that the company that is not profitable is not due to incapability of the director/management/better competitors/economics conditions etc.....?

- Why does keeping the company profitable become the responsibility of the government? Isn't that encouraging incapable directors/bosses to leech the government?

I hope you read my above points in a neutral manner, as I am not trying to nit-picking your proposals. I am a fan of you when it comes to insurance.

Thank you.

Kin Lian Tan said...

@Dixon
It is easy to find reasons to reject a proposal, including the use of conjecture.

Kin Lian Tan said...

@Veronika,
Subdizing wages is considered to be a bad idea, until it is implemented by the PAP Government - remember the job credit scheme?
this is the kind of argument that I find to be intellectually dishonest.


Kin Lian Tan said...

@Veronika,
Many of the measures introduced by the Government did not work, because of convoluted reasoning and half hearted measures.
I refer to the baby bonuses 1, 2, 3 and 4, and the two wage subsidy schemes.
The scheme introduced in 2013 is especially bad and ineffective. This is the product of the convoluted thinking that pervades the government and civil service.

Kin Lian Tan said...

@Dixon
I will quote this example.
Let us say that the market rate for dishwasher is $7 an hour.
The government decided to fix it at $9 per hour and to give a 30% subsidy.
There should be many people who are happy to apply for this job, and to have the build up the skills in dish-washing.
Not everybody wants to be a dishwasher, but there should be sufficient supply,if the pay is $9 per hour.
The employer is happy, as the true cost is less than $7.
If a dishwasher can earn $7 an hour, other jobs that require more skill and training will command a better rate. This will set the environment for raising of the wages.
If we do ot introduce a scheme of this kind, we will continue to have stagnant wages and an impossible problem to solve. The government failed to find a solution for 20 years anyway.

Dixon Ng said...

Thanks for publishing and reply my queries.
Yes, the proposals have not been implemented; therefore you can say my queries are baseless, as I have no data to bet it up.
The proposals are basically a minimum sum scheme, with government subsidy, so that the business does not have to foot the full cost and willing to hire the unemployed Singaporean. Let’s say the proposal works, and it creates an increase of wages across the board. However, there are some unintended consequences of the proposal’s successes as follows:
- With the salary increase across the board, the people who is a dishwasher (Note: Use as an example for discussion only, no offences) will still be at the bottom of the food chain and struggle and complain. Prices of most things will increase accordingly, and nothing has really been achieved.
- The increase in salary across the board will likely to create a domino effect for Singaporean to job hop and try to push the salary even higher. When the business cost get too high, many businesses such as manufacturing will leave the country, except jobs such as dishwashing, retail, police etc… that cannot be export remain. Singapore’s unemployment rate will rise and more importantly, Singapore would become useless to the world as it do not produce anything useful for the world.
- More foreigners from third world country will try to get in and compete with Singaporean for a lower salary.
In ideal case, the idea of government managed website sounds good at first sight. It may work if the government staff handling this task, doing with their heart impartially etc... Many communist/socialist ideas really look good and Earth will be like Utopian if it really works. History told us that it is not the case, as human nature does not allow it to happen or last long.
Currently, we have government set-up such as Caliberlink and also private recruitment agencies help to find jobs for unemployed Singaporean and you can easily read a lot of Singaporean complain about them online.
I think the problem average Singaporean is facing is not only low salary/unemployment, but also having a degree and could not found jobs that fit what he/she was trained in university. With the higher education that Singaporean is pursuing, Singaporean will tried to shun jobs such as construction workers, dishwashers, operators, maid even the pay is increased. For eg., many taxi drivers and cleaners do not like their jobs, but do not have the ability to go back to their old jobs due to discrimination or other reasons.
We need a more holistic approach to solve the issue. The current government is losing trust and lost touch with the average Singaporean.

Kin Lian Tan said...

Dixon
Your comment (10.09 pm) is flawed in the following aspects.
Take the case of the dishwasher. Their salary has increased by 30%. But, this increase is only for the low income workers and not across the oard. The high income workers may not see any increase.
The cost of living will not increase by 30%. Maybe, it will increase by 10%, so the low income people will have more spending power.
Another factor is that rental, which now contribute to 50% of total cost for some trades, will not increase due to this factor.

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