Worse off for working? Kickbacks, intermediary fees and migrant construction workers in Singapore

Posted by on August 12, 2012 in Articles, Facts, research, analysis, Uncategorized

By John Gee

A majority of Bangladeshi workers in the construction industry may be made to pay their employers for the renewal of their contracts. Typically, they need to be employed in Singapore for at least 17 ½ months if they are to earn enough to pay off their placement costs. For most of the last decade, their basic pay has been stuck at $18 a day.

These are among the most striking findings of a TWC2 report based mainly on research conducted at the end of 2011, when workers returning home were interviewed.

The report notes:

Kickbacks are most readily discernible when employers make employment arrangements directly with their employees. This typically occurs when staff are retained after the elapse of a contract period. (Foreign construction workers are usually employed on one-year contracts). Of the 100 construction workers we surveyed who renewed their initial contract with their first Singaporean employer, 65% had to pay their employers for this opportunity.  Our results indicate that employers who charge for contract renewal collect between $300 and $2400 from each worker.  Our respondents paid an average of $1081 for contract renewal.

Intermediary and contract renewal fees present grave challenges for migrants seeking to improve their financial circumstances by working in Singapore.  The fees siphon off large portions of workers’ potential earnings.  Our respondents paid average intermediary fees of $7256 when inexperienced.  This is the equivalent of nearly 15 months of these workers’ “basic” (i.e. before overtime) salary. While intermediary fees are highest upon entry to the industry, migrants typically must overcome obstacles to earnings in the form of intermediary and contract renewal fees throughout the course of their careers.  The average intermediary fee for experienced migrants in our sample is $3332, or the likely equivalent of more than four months of these workers’ basic salaries. The average contract renewal fee of our respondents is the equivalent of as much as one-sixth of their basic annual salaries.

Intermediary fees can bring about the financial ruin of the small percentage of workers (perhaps about 5%) who have their initial employment contracts prematurely terminated. Intermediary fees are also devastating for the thousands of workers who return to their home countries after working for a year in Singapore. Intermediary fees cannot typically be recovered in one year, yet migrants often find themselves unemployed after completing their initial one year contract.  Finally, because stable, long-term employment opportunities in Singapore’s construction industry are rare, experienced workers typically must change jobs (and pay additional intermediary fees) multiple times.

This is an initial version of the report; the final version will include further examination of some issues and recommendations for action. The initial report has already been submitted to the Ministry of Manpower. You may download the PDF file by clicking:

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TWC2 is an organization that is dedicated to assisting low-wage migrant workers when they are in difficulty. We are motivated by a sense of fairness and humanity, though our caseload often exceeds our
means.

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