Thu, Apr 27, 2017 - Page 8 News List

Invest in caregivers to boost economy

By Lin Kien-tsu 林健次

In the eight-year, NT$880 billion (US$29.2 billion) Forward-looking Infrastructure Development Program proposed by the Cabinet, each subprogram might bring specific economic benefits.

However, whether this program can expand domestic demand and increase prosperity remains in doubt.

Imports account for about half of Taiwan’s GDP. Without a basic understanding and screening of the sourcing of raw materials and labor for the program, more than half of the demand created will inevitably flow overseas.

If we take into consideration the high degree of collusion between government and business, and the transfer of benefits between the public and private sectors in Taiwan, the multiplier effect of Keynesian economics is likely to be small. This means that proposing a blind stimulus without proposing a direction is like throwing money into the sea.

If the government wants to create a significant multiplier effect and transform the economy through the expansion of domestic demand, the best strategy is to develop a complete care industry including long-term care, elderly and childcare, and early childhood education.

Government subsidies for these sectors would see very high returns.

If Taiwanese and the government can change their way of thinking and take a square look at the true value of the elderly and children being taken care of by local caregivers, it would not be impossible for domestic providers to meet demand.

Take long-term care for example: If the government is willing to provide subsidies to guarantee that long-term caregivers receive a monthly wage of more than NT$50,000 without having to work overtime, both their income and social status would rise. Well-trained long-term caregivers would then be quick to come back, while newcomers would be willing to take up the required training.

Developing long-term care based on local workers has the following economic benefits:

First, with the exception of the unavoidable “hardware” expenditure during the initial stage, government expenditure would benefit local workers first and foremost, instead of foreign suppliers of raw material or labor. This means that the multiplier effect would likely be very large.

Since local long-term caregivers spend their wages domestically, they would also help raise domestic demand. That is different from foreign caregivers, who seldom spend their wages here.

Second, the incomes of local long-term caregivers are a source of domestic tax revenue, while incomes of foreign workers generally fall below the tax exemption threshold and make no contribution to fiscal revenue.

Third, free or inexpensive long-term care provided by the government could help relieve the financial burden on many households, freeing up labor currently tied down at home and increasing the employment rate, fiscal revenue and demand.

Finally, the income that many families now spend taking care of disabled family members would be reduced lowering the pressure to save money. This would increase people’s willingness to make purchases, which would expand domestic demand steadily in the long run.

The above arguments in support of long-term care also apply to elderly and child care, as well as early childhood education.

If Taiwan were to take the eight-year, NT$880 billion program as the starting point of a people-oriented infrastructure development program, the nation could move away from export-oriented manufacturing, which consumes environmental resources, while at the same time reducing dependence on other countries.

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