Helpers from Indonesia: the burden of placement fees

Coming to Singapore to work as a FDW (Foreign Domestic Worker as per MOM’s vocabulary) has a tremendous cost for all those originating from Indonesia…with no foreseeable change…

The so called “placement fee” is the amount of money that candidates to a  FDW’s position have to pay to an employment agency. For all newcomers, meaning those who have yet never worked in Singapore, they have to go through 3 chanels before they reach an employer: 1/ A recruiter: a person who goes to remote villages and places to find potential candidates and sends them to 2/ a local employment agency based in the biggest city, international port of entry still in their country of origin (Jakarta or Batam in Indonesia, Cebu or Manila in the Philippines), who sends them to 3/ a Singapore based employment agency. The whole process requires many expenses both locally and in Singapore: transportation, accommodation, trainings, medical check-ups, paper work,  the air/ ferry ticket to enter Singapore, on top of which are the various intermediary fees. after you sum up these costs, you get the placement fee. But forget about a receipt with the details of the cost incured: the candidates never see one!

Nowadays, the placement fee asked to Indonesian candidates to come to Singapore is at least 2200 SGD. No candidate has such a huge amount of money to pay upfront – and if they had, they would not come to Singapore as FDWs! They would use the money to set up a small business in their country!-

So they have no other choice than taking loans. But who can be the lender?

Up to now, the employer is the lender: he is asked by the employment agency based in Singapore to pay the total amount and then to deduct it from the helper’s salary until the debt is cleared. Maybe you’ve heard of agents recommanding to give only 20 to 30 SGD monthly salary so that the loan can be repaid shortly. You note here that by doing so, the agent takes no risk and is sure that he gets his money back. He is not concerned whatsoever with the case of an employer who has paid upfront the 2200 SGD and then for whatever reason has to change FDW after 1 month…And the helper is trapped in hefty debts notwithstanding that she may have to repay a new placement fee to be transfered to a new employer…

Because many employers in Singapore have complained about their upfront payment, the Indonesian government has decided to implement a new procedure: an Indonesian bank has to be the lender. It means that all Indonesian candidates have to take a loan from a bank in Indonesia. The repayment is made through monthly installments of 280 SGD deducted from their salary in Singapore. You note here that the agent still takes no risk: he is fully paid upfront by the candidate and not by the employer as it was before. But the candidate is still trapped in hefty debts. And she still may have to face an additionnal placement fee in case her employer has decided to transfer her.

I can’t discuss here the amount asked for the placement fee even if my deep feeling is that it is far beyond the actual cost: but it’s just a feeling and I clearly have no idea of the costs incured with recruiting and sending a candidate to an employer in Singapore.

However, I’d like to dare one comparison: when a company hires an executive through a head hunter, the fee is about 3 months of salary + bonuses; this doesn’t include the additionnal costs (transportation, relocation services, cost of visa, etc). Applying this rule to hiring a helper, the agency fee for an employer is about 3x 400 SGD = 1200 SGD on top of which come all other costs (air transfer to Singapore, accommodation, trainings, medical check-ups, paper works, etc): must not be far from the 2200 SGD…

I personally have heard of employers who have decided to pay upfront the placement fee without making any deduction from the helper’s salary: great initiative indeed that relieves her from the burden of her placement fee…and fair decision isn’t it?

Let me know your thoughts…



About helpagency

French expatriate in Singapore since 2005, dealing with FDWs issues since 2008, offering training for FDWs (Children Health Urgent Care course)
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