Asian migrant domestic workers trapped in debt cycle

A group of women from Yogyakarta in Indonesia.

05 April 2016

Female domestic workers experiencing labour exploitation in East Asia are spending as much as six months repaying debts to recruiters who place them in work overseas and struggle on low wages that make it impossible to save money.

Stricter legislation in Asian countries, aimed at reducing unscrupulous practices by recruiters and employers, is failing to achieve a better deal for these vulnerable workers.

The findings are contained in Modern Slavery in East Asia, a study of Asian women who migrate to work as domestic workers in other Asian countries.

Macquarie Group Foundation funded the research, and approached Farsight, a social enterprise with a migration program that aims to achieve better financial outcomes and autonomy for low-skilled migrant workers, to lead the project.

Macquarie Group’s Asia CEO Ben Way says the report is the first stage of a four  year project, which the Foundation hopes will improve the lives of vulnerable workers across the Asian region.

Researchers surveyed 4,189 women from Indonesia and the Philippines who planned to, were currently working, or had previously been employed as a domestic migrant worker in either Singapore or Hong Kong.

More than 40 per cent of the world’s 52 million domestic workers are in the Asia Pacific region and 80 per cent of them are women.

The goal of the study was to compile quantitative data that showed the extent to which some of these women were experiencing treatment and working conditions that were akin to modern slavery.

Farsight CEO Jacob Townsend says the term modern slavery is used to describe contemporary practices used by employers and recruiters that exploit vulnerable workers.

The practices can include deception by recruiters, harsh working conditions, forced labour, abuse and employees having to work for little or no pay.

He says while this type of conduct is typically associated with the “dark corners” of industries such as the sex industry, it actually spans a diverse spectrum of professions and circumstances.

Many households in richer east Asian countries employ a domestic worker and Townsend says there is a “large minority” among these workers who have been exploited at some stage of their employment.

"The goal of the study was to compile quantitative data that showed the extent to which some of these women were experiencing treatment and working conditions that were akin to “modern slavery”."

“It seems to be quite a large minority of domestic workers who have been deceived during recruitment to some extent” he says.

The study found migrant domestic workers suffered labour exploitation and violation of their rights at all stages of the employment cycle from their first contact with recruiters, through the migration process and later, under their employers.

Their experiences included poor working conditions; emotional, physical or sexual abuse by their recruiters or employers, and employment practices that trap them in debt.

Although most women expected to migrate and work for a period of two years, the average time overseas for both Indonesian and Filipina workers was four to five years because they felt pressure to stay abroad and send money home to their families, or they had debts to pay off.

“The myth is you go for a couple of years, you save lots of money and then return,” says Townsend.

“But very few people return after a couple of years and not with large additional income.”

Debt bondage– where employees get caught in a cycle of spending their wages to pay off loans – was a problem regularly encountered and Farsight says this is a form of modern slavery.

Most women went into debt in order to migrate and then paid back the recruitment agency through months of salary deductions.

Paying back these fees would take three to six months of a two-year recruitment contract, with the average being four months.

“Three to six months and then you might have a contract that lasts for two years. We’re talking 25 per cent, up to 50 per cent of their time there, they’re paying back debt,” says Townsend.

Employers might also deduct their share of any recruitment fees from an employee’s salary, with some also charging workers for groceries or any “mistakes” workers made in their duties.

Townsend says the practices are exploitative because many women were not told in advance how much their debt would be, nor were they given clear information to understand what that debt will mean for their circumstances.

“What we’re asking these women to try to do is calculate living costs and salary in a foreign currency,” he says.

He says countries need to review the financial literature available for domestic workers and establish an ongoing, useful resource that assists them with financial planning.

Townsend says higher ethical standards by recruitment agencies could have a dual benefit; where employers would begin demanding more highly-skilled workers, which would then “raise the income and livelihood for some women”.

Macquarie Group Foundation will continue funding advocacy and rehabilitation for victims of modern slavery in each of the countries where the research was based, says Way.

“We’ve had hundreds of people from Macquarie who have been involved,” he says.

“We’ve got a cross-regional steering committee but, importantly, we’ve got staff involved so we can hopefully raise awareness. “This project is important because we can have an impact in our communities,” he says.

“These issues happen all the time and you can’t turn a blind eye to it.”

Photographer: Dino Geromella