Covid-19, a clear impact on migrant domestic workers financial situation
The Covid-19 pandemic has had a global impact since 2020, and has impacted Hong Kong’s migrant domestic workers in particular. With employers losing their jobs, facing financial struggles or sometimes relocating overseas, domestic workers’ have been directly affected as a consequence.
When asked “How did Covid affect your financial situation?” 69% of the 814 respondents have been financially affected by the Covid-19 pandemic, facing one or several difficulties.
Of that, 43% domestic workers declared having greater expenses, and / or have been sending higher remittances to their families back home.
In addition to financial challenges, the Covid-19 pandemic also brought extra stress and anxiety to migrant domestic workers, who are in majority breadwinners, and the main source of income to their families back home.
When asked “Do you feel more stressed as a result of your financial situation during Covid?”, a striking 61% of respondents answered yes.
Financial difficulties: a pre-pandemic issue for migrant domestic workers
Although the Covid-19 pandemic increased migrant domestic workers’ financial difficulties, for many of them, the financial struggle is, unfortunately, part of their daily lives.
Many migrant workers come to Hong Kong for opportunities with the hope of earning a higher salary than what they would in their home country. However, unlike other migrants in Hong Kong, domestic workers sometimes face extra costs to find a job due to high recruitment fees from employment agencies in Hong Kong or in their home country.
When asked: “Did you ever have to pay an employment agency to find a job in Hong Kong?” 74% of the respondents replied “yes”, and 17% “No, but my friends and relatives had to”, showing just how much this issue has been and is still existing.
As a reminder, in Hong Kong, employment agencies are legally allowed to charge 10% of the domestic workers’ first month salary as a placement fee.
To understand these costs better, HelperChoice and Enrich HK asked the respondents how much they had to pay for their current job in the city and discovered that an astonishing 48% of migrant domestic workers have been overcharged during the recruitment process, in some cases (6%), up to 6 months salary or more than HK$28,000.
However, HelperChoice and Enrich HK also highlight an encouraging trend, by comparing the amount the respondents had to pay for their first job to the one they had to pay for their current one.
There is a clear decrease in the number of migrant workers who have been overcharged during the recruitment process, which dropped by 26.5%, and an increase in employers paying for the workers’ fees, by 180%.
Yet, a large majority of migrant workers who had to face these additional fees don’t question these, as 85% of the workers who have been charged higher fees declare not planning to pursue any action. When asked the reason why, many answered that they didn’t want to cause trouble, that they didn’t know they could do anything or that the agency was retaining their passports until the end of the payment.
An anonymous domestic worker declared: “Because when I found out that I can take legal actions they say it’s too late as there’s a certain year/s to file.”, while another said: “Well I don’t have a support system or organization who could help at the time. I also thought it was useless as I had no money and the agency was holding my passport. There was nothing I could do.”
These answers and testimonies emphasize the need for ethical agencies and platforms which have been increasing in the past 10 years. HelperChoice was created in 2012 as a response to the high recruitment costs charged by traditional employment agencies.
Mahee Leclerc, General Manager of HelperChoice explains: “Through technology, we wanted to provide a fair and transparent alternative to disrupt the existing system in place. Our goal is for all migrant domestic workers to know their rights and that they can find jobs for free, therefore avoiding debt bondage. We also advise all employers to ask the workers if they had to pay the employment agency during the recruitment process”
High Levels of Debt
While it is clear that high employment costs increase financial pressures for domestic workers, this is often further complicated by other stressors, resulting in domestic workers needing to borrow money.
Of the 814 domestic worker respondents, 58% declared having taken a loan in the past, with the most common reasons for borrowing money being for emergencies (31%) and construction/housing projects (32%).
The findings also reveal the enormous pressure on domestic workers to meet monthly loan repayments.
Out of the 58% who reported having taken a loan, 34% of respondents reported paying between HK$2000 – HK$4000 in monthly installments for their debt repayments, while a staggering 21% pay over HK$4000 per month. Given that the minimum legal wage for migrant domestic workers in Hong Kong is HK$4,630 per month, this is a cause for grave concern.
73% of respondents claimed to have taken loans from loan agencies. Unfortunately, the results show a trend of charging the domestic worker community extremely high interest rates. While 20% of those who had taken loans did not actually know what monthly interest rates they were being charged, 25% said they were charged interest of between 2%-4% per month (effectively 44.3% to 88.6% per annum). A shocking 11% believe they were charged over 4% per month (over 88.6% per annum). For reference, the maximum legal annual interest rate in Hong Kong is currently up to 48% per annum, though money lenders can legally charge up to 60% per annum under certain circumstances.
Additionally, when asked ‘Have you ever signed as a guarantor for someone else’s loan’, 30% of respondents replied ‘yes’, 40% of whom reported eventually paying for the loan on behalf of the principal borrower.
Zamira Monteiro, Communications Manager at Enrich HK, believes that this highlights the wider need for education, “These financial challenges have existed long before but have been severely exacerbated by the Covid-19 pandemic, especially for this community who have been disproportionately impacted and have no safety nets. While it is shocking that 21.4% of domestic workers who reported taking a loan are paying over HK$4000 in monthly repayments, it also emphasizes the need for greater education on financial management. This can empower domestic workers to make informed decisions, withstand pressures and protect themselves.”
Despite the challenges, an encouraging 54% of domestic workers reported that they are able to save some money each month, with business, investment and emergencies representing the main savings goals.
With 61% of domestic workers reporting feeling more stressed by finances, as a result of the Covid-19 pandemic, HelperChoice and Enrich HK believe that it is important for employers to work together with their domestic workers to ensure that they receive access to education and support. This can enable them to plan, save and prepare for their future, creating a mutually beneficial employment relationship.
Monteiro said, “Financial and empowerment education is a life-changing solution – 96% of domestic workers who complete Enrich’s workshops begin tracking their expenses and 85% save more money. A domestic worker who is financially secure is happier, more confident and able to focus on caring for our loved ones, especially our children and elderly.”
About this survey
The survey was jointly delivered online by HelperChoice and Enrich HK from May 16 – June 10, 2021. The survey was circulated via social media, using snowball sampling, in English (13% of respondents), Tagalog (58% of respondents) and Bahasa Indonesia (19% of respondents).
ABOUT HELPERCHOICE
HelperChoice is the first social impact startup dedicated to eradicating placement fees and human trafficking for the purpose of forced labour. The impact has been recognised by many organisations, including the International Labour Organisation. HelperChoice contributor to fair employment, and is a grantee of the DBS Bank foundation for social enterprises. HelperChoice has facilitated more than 50,000 recruitments and estimates that more than 60 million euros of illegal placement fees were saved. Learn more: https://www.helperchoice.com/
ABOUT ENRICH
Enrich is an award-winning Hong Kong charity promoting the economic empowerment of migrant domestic workers, through financial and empowerment education. Enrich is a contributor to the Hong Kong Strategy for Financial Literacy, and is a recipient of the Financial Education Champion award (2019, 2020, 2021). Since its establishment in 2007, Enrich has reached over 60,000 migrant domestic workers. Learn more: www.enrichhk.org
For more information please contact:
Mahee Leclerc, General Manager at HelperChoice
Tel: +852 9132 3115
Email: mahee@helperchoice.com
Zamira Monteiro, Communications Manager at Enrich HK
Tel: +852 5616 1694
Email: zamira@enrichhk.org