Debts, Delays & Deductions

This report summarises research that TWC2 undertook in 2006 on salary issues for foreign domestic workers. It was based chiefly on the results of a survey of domestic workers in the street as well as focus group discussions. It identified serious problems faced by the women, and reflected in the report's title: workers begin their employment with a large burden of debt; they are often paid late and it is not unusual for employers to impose arbitrary or unreasonable deductions from salaries that are already at a very low level.

The full report is available in printed format at TWC2's office for $10.

Excerpt from: ‘Debt, Delays, Deductions: Wage Issues Faced by Foreign Domestic Workers in Singapore’, a research report by Transient Workers Count Too (TWC2), Sept 2006

EXECUTIVE SUMMARY

Debt. Foreign domestic workers in Singapore arrive with heavy debt burdens. In their first months of work here, most workers receive only $10-$20 income a month; the rest is deducted by the employment agency for fees which can be as high as $2640. Filipina workers forgo around six months of salary payments and Indonesian workers around six to eight months. The few Sri Lankan workers interviewed reported anything from one to nine months of salary deductions.

Deductions

In addition to heavy loan repayments, workers can be subjected to arbitrary salary deductions. Existing legislation does not establish minimum labour standards for foreign workers regarding rest days, superannuation provision and healthcare, so it is not clear what kinds of deductions are legitimate. Deductions of workers’ salaries can be applied for medical costs, rest days taken, informal savings schemes and living expenses. Workers themselves accept deductions for anything from breakages to paying for drinks in the home. These non-standard deductions constitute financial abuse of foreign domestic workers.

Delays and deception

Workers’ periods of indebtedness can extend for longer than they anticipate, due in part to these informal deductions, job transfers requested by the employer, and longer repayment schedules than were initially offered.

Rising costs

The cost of recruiting and placing foreign domestic workers is rising. These increases contribute to the longer periods of indebtedness faced by workers. Indonesian workers in particular have experienced steep increases over the past few years. Competition between employment agencies may be reducing some costs to the employer by passing them on to the worker.

Risks

Workers have limited ability to challenge contract infringements. Those who remain in Singapore while their cases are being investigated may forgo many months of income. Those who do not get rest days cannot seek avenues for help.

Market mechanisms are insufficient to secure fair working conditions for foreign domestic workers. It is often presumed that workers are able to negotiate acceptable terms and conditions for themselves with both agencies and employers. Evidence from this study shows that this is not the case, as workers are likely to accept terms offered even when they view them as unfair.

Recommendations

Regulate agency fees so that relocation costs and service fees are not disproportionately borne by the worker.
Recognise domestic work as equal to other forms of labour and equally entitled to basic labour standards as established for other workers in Singapore’s Employment Act.
Include protection for migrant workers’ rights as part of bilateral and multilateral agreements with source countries.
Incorporate a transnational and long-term perspective in policy-setting relating to foreign domestic workers, taking account of needs such as healthcare and contributions towards pension provision.

On Labour Standards

Provide one rest day a week. Not only is this important for physical and mental health, the worker’s access to the outside world enables her to access other rights.
Cap salary deductions for loan repayments at 50 per cent of monthly salary, in line with current provisions for Singaporeans under the Employment Act.
Provide comprehensive health insurance to cover general medical costs, not only accident insurance.
Reinstate superannuation for foreign workers, with mandatory contributions by the employer drawn from existing levy payments, and optional contributions by the worker.
Set a minimum wage level consistent with the cost of living and in proportion with placement costs. The wage level should take into account long-term needs including health insurance and superannuation contributions. Review the wage level periodically to account for inflation and other changes.

On Dispute Resolution

Introduce a pilot scheme for mediation and dispute resolution services that can liaise independently with the Ministry of Manpower, the police, and other parties involved. This may be done through seed funding for relevant civil society initiatives. Review the findings after an agreed period of time to see how dispute resolution processes can be improved.
Permit foreign workers to undertake temporary employment while disputes are being investigated.

On Government Levy

Redirect part of the levy paid by employers towards superannuation contributions, health insurance and sharing of placement costs with worker.

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Debts, Delays & Deductions