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Research of NGOs reveals most of FDW wage spent on expenses in HK

19 August 2018

Agency and loan payments rise, remittance takes a dive

(For this issue, we will reprint a statement issued by the Mission for Migrant Workers (MFMW) and the Asia Pacific Mission for Migrants (APMM) on their joint research on where the salaries of foreign domestic workers go – Ed)

By Cynthia Tellez

A research study by the two Hong Kong-based NGOs released today (Aug 6) on how foreign domestic workers typically spend their monthly wage showed that expenses paid to HK businesses and services take three-fifths (3/5) of their salary, leaving only about HK$1700 for family remittance and savings.

The “Where Do Your Wages Go?” Research on the Expenditures of Migrant Domestic Workers in Hong Kong was conducted by MFMW and APMM in 2017 and surveyed more than 1000 FDWs on how their monthly wage is typically allocated. The survey was a follow-up to a similar study done by the two organizations in 2013.

On the general expenditures of FDWs
Results of the research revealed that most of the wage of FDWs are spent paying for agency fees and loans related to paying charges by recruitment agencies. At 36 percent, it is higher than remittance to family, which makes up 32 percent of their total expenses.

Meanwhile, cumulative expenses for food, communications, clothing and accessories, transportation, toiletries and donations accounted for 23 percent, while savings (if there are) is at 9 percent.

There was a marked difference in the expense pattern as compared to the 2013 study where half was spent on remittance. The almost 22 percent rise in expenses on payment to recruitment and loan agencies has eaten up on the remittance that is supposed to support their families back in their home country.

Most of FDW wage go back to HK businesses and economy
Taken together, around HK$2600 of the wage of FDWs of HK$4310 (current Minimum Allowable Wage) is spent in Hong Kong.

Agency fee and loan repayment constitute the chunk of this expense, showing still the prevalence of overcharging among agencies. Since more than 50 percent of FDWs are newly-arrived – as reflected by a study of the MFMW in 2015 – it can be inferred that many FDWs are still paying the fees charged to them upon deployment to HK.

Even loans can be attributed to agency problem as, either they are forcibly made in order to get more from FDWs while circumventing the legal policy in place for agency fee, or they are made precisely because agency fee eats up most of their salary, leaving very little for their own needs in Hong Kong and remittance to family.

It should be noted that these payments are made to HK-based recruitment and financing agencies.

Meanwhile, about HK$1600 per month is spent by each FDW for services or goods in Hong Kong. This makes them major consumers and patrons of Hong Kong goods and services, as their total consumption totals HK$562 million per month, or HK$6.75 billion per year.

When the wage is not enough
The dip in the remittance from the 2013 survey showed the impact of grossly high agency fees eating up on the capacity of FDWs to support their families. Instead of enabling FDWs to increase their remittance to their families due to the surging inflation in their home countries, forced obligation to agency and loan repayment make them either barely able to maintain their support, or even cut on their remittance.

Due to HK’s stringent policy towards FDWs, there is no way for them to increase their capacity to remit to their family even as they struggle to meet their expenses in Hong Kong.

While expenses for goods and services are already high, FDWs are also forced to spend on other necessities such communication, transportation, and donations. However, the most basic items such as food, clothing and accessories have increased. It can be inferred that FDWs tend to scrimp on expenses that are more flexible (e.g. using internet communication instead of phone cards, or reducing their mobility to reduce transport expense) in order to spend on the most basic items, as their monthly wage does not allow them to spend for all these.

Conclusion and Recommendation
Contrary to some beliefs that FDWs eat up HK resources, the research revealed that they are significant consumers and patrons of the Hong Kong economy.

While they come to Hong Kong to support their families back home, their condition dictates that most of their earnings are spent in HK, and thus contribute to the economic life of the city.

There is also a need to continue looking at agency malpractices and debt bondage as the findings showed. Such result is also consistent with the nature of cases handled by the MFMW reflected in its Service Report 2017.

From this study, MFMW and the APMM recommends that:
* The Minimum Allowable Wage should be increased to HK$5,500 as called for by FDW organizations
* Make the minimum allowable wage decision process more transparent
* Include migrant domestic workers in the Statutory Minimum Wage
* Actively address illegal recruitment and agency fees and related loans
* Create and implement an anti-human trafficking law in Hong Kong based on the UN Palermo Protocol standards.

About the Mission for Migrant Workers: 
The Mission for Migrant Workers (MFMW Limited) of the St. John’s Cathedral is a leading
and trusted service provider and partner of Asian migrants and a committed advocate in
building a caring and inclusive Hong Kong society.

Established in 1981, the MFMW believes that migrant workers as integral to but marginalized in Hong Kong, deserve care, respect and protection of their rights. MFMW
provides crisis assistance services to FDWs in distress, empowers their communities, promotes harmony in households and works for a more multicultural and inclusive Hong Kong.

About the Asia Pacific Mission for Migrants
The APMM is a pioneer in migrant empowerment programs in countries in Asia, Pacific and the Middle East. Established in 1984 with the help of the MFMW, APMM is instrumental in building migrant organisations across the region.

The APMM believes that empowered migrants are central in upholding migrants’ rights, instituting policies favorable to migrants and their families, and contributing to development that serves the people’s interests. For more than three decades, we have been with grassroots migrants in APME in championing and realizing grassroots migrant movement building through organizing, advocacy and research, solidarity and networking, women empowerment, policy engagement, and welfare services.

This is the monthly column from the Mission for Migrant Workers, an institution that has been serving the needs of migrant workers in Hong Kong for over 31 years. The Mission, headed by its general manager, Cynthia Tellez, assists migrant workers who are in distress, and  focuses its efforts on crisis intervention and prevention through migrant empowerment. Mission has its offices at St John’s Cathedral on Garden Road, Central, and may be reached through tel. no. 2522 8264.

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