Saturday, March 06, 2010

Some solutions to population growth and foreign workers.

Today I will present a solution for population growth and foreign workers.

Population Growth

Population growth can stimulated by asking ourselves firstly, how much GDP will we allocate into having future generations of Singaporeans. Russians, apparently, are willing to allocate 1% of to stimulate population growth. Whether this 1% comes from education or defense, it does'nt matter, figure this number out and stick with it for the next 10 years.

When a Singapore couple have a baby, the mother gets up to 6 months no-pay leave. They need to raise the kid for a year on their own, but one year later, the parents can receive a bonus equal to the pool divided by the number of new babies made last year. This is a one-shot, bullet payment into their bank accounts. At 1% GDP, this number should be quite significant.

This will incentivise Chinese couples to have kids in inauspicious years, prevent overcrowding of resources and eliminate discrimination against working mothers.

Foreign workers

Yes, foreign workers keep many Singaporeans poor by lowering costs but they also contribute to the dynamism of the Singapore economy. When the government raise the levies, they get hammered and lose votes.

Let's look at Low Thia Khiang's solution of the dependency ratio and then add a price setting mechanism to push the onus of cost setting to employers. This is much like the COE mechanism but now its applied to foreign workers.

Governments should only decide how many foreign worker permits Singapore can accept based on the tolerance of the citizens. Every year, HR companies will bid for foreign worker permits. They will set a number of licenses and how much they are willing to pay. Bidding is done in one pool and banks bid in the same category as the construction sector. Minimum bid per head is a low $100.

Price discovery of the value of the foreign worker is based on the bids of the employer. They decide how much they are willing to pay for foreign workers, after which they will pay in one lump sum of the bid.

The government will stop screening foreign workers and instead screen for criminal records and diseases. Employers will bid for licenses and then hire from abroad, approval will be streamlined and determined by whether employers have the permit or not.

Proceeds from the bids will determine how much governments should pay for productivity improvements.

By the same token, rather than spend money paying civil servants to screen foreign workers, allow them to pay for PR status. Allow about 10k to 15k of foreign workers who have spent at least 2 years in Singapore to take up PR status by bidding for this. When they succeed, their employer will no longer need to have a permit to hire them so they can get higher pay. This may even force competitive bidding to become more than $50,000 per PR status.

For citizen conversion, allow PRs of at least 2 years to bid for citizenship. Have a low number 1,000 citizenship licenses for bidding. This number can even hit $200,000 in a bullish economy.

Share proceeds with existing Singaporeans with income tax offsets or CPF credits.

Regards

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