The solution here I think is to open the market for more private providers and let the refugees pick and pay for their service, with the government providing a certain amount of financial assistance to the individual asylum seekers. This way the reputation of a certain firm will rapidly hit rock bottom as word about bad service gets out. This will keep pressure high to provide good service.
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Solution to what? The profit margins the article quoted seem fairly reasonable, for all we know the Government is already willing to deal with others and no one else can compete. Seeing as the Government is the customer I don't really see why they would want to move purchasing power over to the refugees. There's no reason to assume they share goals.
I wasn't so much disputing the reasonable-ness of the profit margins as much as the policies of the providers. How are you supposed to keep track of how much profit is actually earned? Balance sheets etc. are notoriously easy to manipulate. By letting the refugees vote with their money we need not be concerned with profit margins as the market would(ideally) take care of itself. Win-win for both parties if this kind of system could be made to work. It would essentially be removing the government as an intermediary.
That profit margin seems really low, unless the contract they have is a cost-plus type where they are guaranteed to have their costs paid plus 3.5% profit. Otherwise the risk seems too high to settle for a profit margin that low.
I'd say it's to avoid a monopoly.
I went to a meetup a few months back and learned how the system works here in Norway. The main reason this is a private industry is scalability issues. There are huge costs connected with establishing the refugee centers, and it's hard to know for how long the center will be in use. At least that's how things used to be. For the the most part of the last 35 years there have been 5-year cycles between 5-15k refugees coming to Norway, but after 2010 it has stabilized at 15k and last year it started rising. Norway accepted 30k refugees last year, and will probably receive another 100k this year. So the industry is "good" now, but at the same time the requirements for these centers and the maximum price the state pays are disproportionate. As noted in the other comments: not much room for profit.
> The solution here I think is to open the market for more private providers and let the refugees pick and pay for their service
Good news, the service you describe is already there! It's called "people smuggling".
Fair point actually. But I think we can prevent money being poured in those kinds of "services" by implementing some kind of voucher system or one where the money flows directly from the government to the providers, while the refugees still get to decide.
Thanks. I actually do support government helping refugees (although I don't see reason why not do it directly), but my point was that I am pretty skeptical about the "This way the reputation of a certain firm will rapidly hit rock bottom as word about bad service gets out. This will keep pressure high to provide good service." claim. The traffickers actually operate under the condition that you claimed as sufficient for this to happen, i.e. "open the market for more private providers and let the refugees pick and pay for their service".
So unless there is some additional framework that lets people evaluate the results, and takes care of fraudulent offers, I don't think empirical experience shows that the condition suffices.
Here in Czech Republic there is a cottage industry of providing lodging to poor people and immigrants (from government support), and it's not very pretty - expensive with poor quality.