Recruitment cost in some cases about 20 times monthly salary

Posted by on November 22, 2018 in Articles, Facts, research, analysis, Stories

In this article “$” represents the Singapore Dollar unless we specifically say otherwise, e.g.”US$”.

It’s been some time since we last wrote about recruitment costs. It’s not a topic we should lose sight of. No progress is being made on this front, and high costs remain the chief reason why migrant workers cannot exert their right to proper payment of salary and decent work conditions.

Singapore allows employers to terminate a worker’s employment at any time without need to provide justification. Any worker who protests about unpaid salary, excessive hours or lack of safety provisions, or who falls ill for more than a few days, or any other matter, knows that his dissent will likely be followed by the loss of the job. Being sent home may mean having to face irate moneylenders who loaned the cash to pay recruitment costs. With such asymmetry of power between employer and employee, it should hardly be any surprise that employer malpractice continues to flourish.

The Ministry of Manpower (MOM) has recently tweaked policy a little to allow a worker with a valid salary complaint to look for a transfer job without first  having to go home. In TWC2’s experience with cases, the success rate is poor. Our sense is that many employers prefer to hire meek workers who have never before asserted their rights. Fresh arrivals from the home country are seen as more submissive — but of course they are, since they’re shackled with large recruitment costs. Until Singapore does something to control the entry of fresh new workers, it’s hard to see how the transfer rate can much improve.

Al Jazeera recently had a story about recruitment costs — also known as ‘agent fees’ or ‘agent money’ — faced by workers going to the Middle East: Up to $10,000 What migrant workers pay for a job in GCC. (Note that the currency used in the headline is the United States Dollar, not the Singapore Dollar. US$10,000 is equivalent to about S$13,700.) Al Jazeera’s story is a good overview of the issue across the Persian Gulf countries.

Similarly high recruitment costs are experienced by migrant workers coming to Singapore too, though, as in the Gulf, US$10,000 (S$13,700) would be at the higher end of the spectrum. Nonetheless, compared to the meagre salaries they earn, what workers have to pay even at more typical, lower, scales is still an absurd multiple of monthly wages, as the case studies below will show. And this is beside the fact that as a matter of ethical principle, no worker should have to pay anything to get hired in the first place.

Conventions of and reports by International Labour Organisation (ILO)

The ILO’s Private Employment Agencies Convention 1997 (C-181) has Article 7, Clause 1 saying:

Private employment agencies shall not charge directly or indirectly, in whole or in part, any fees or costs to workers.

Unfortunately, as at September 2018, only 33 countries have ratified Convention 181, about half of them being European countries. Neither Singapore nor any of our major countries of origin has done so. Not Philippines, not Indonesia, not India, Bangladesh or Myanmar. Nevertheless, the convention sets a reference goal.

The International Labour Organsation is increasingly concerned with this issue. Here, for example, is a 2017 presentation about its regulatory recommendations.  Specifically for Bangladesh, the ILO also produced a (2015?) paper titled Causes of and potential redress for high recruitment and migration costs in Bangladesh.

A  very interesting chart from page 31 of this publication, and its accompanying paragraph, is reproduced here showing how costs for workers leaving for Singapore compare with other major destinations. The vertical axis is in Bangladesh Taka (BDT).

The most striking thing is that the peak for Singapore is the highest. It appears to show that the average recruitment cost for someone headed to Singapore is about 410,000 taka (in 2014, 2015?) or about $6,800.

There’s a shorter version of this publication, called a primer, from which I reproduce its “Key challenges” which encapsulate the reasons why recruitment costs have gone through the roof. Basically, it is a near-total dereliction of duty by the Bangladeshi government, thus allowing shady operators room for exploitation.

  • In practice, illegal sub-agents or intermediaries, run a parallel recruitment system.
  • Recruiting agents utilize dalals in order to make contact with potential migrant workers, since agents’ offices are generally not located in areas where potential migrants live, and migrants are often distrustful of people from outside the community.
  • The involvement of illegal sub-agents who operate in destination countries or from transit countries and who hike-up the price of job offers and visas.
  • Lack of a labour market information management system that could inform and empower the workers.
  • Recruiting agents and dalals circumvent the obligation of showing the job contract to recruited workers and get away with this deliberate non-compliance.
  • Where job contracts are available, these are in languages not known to the recruited workers and written in a legal language not understood
    by the workers.
  • Migrant workers rarely receive receipts for payments made to agents and dalals.

(‘Dalal’ is a local Bangladeshi term signifying a sub-agent, usually the one in direct contact with the prospective migrant worker.)

However, as we shall see in the second case study of Hossen Saddam below, the Singapore government too is permitting, through neglect, similar abuses in our own country.

Case studies

Below are three cases studies that illustrate the issue. Two of the three men were saddled with recruitment cost for their initial job that was about twenty times their basic monthly salary.

Islam Jahidul first came to Singapore for work in 2013. Before qualifying for a work permit as a construction worker, he had to undergo a basic skills training course in Bangladesh to obtain a basic skills certificate. He chose a course in steel reinforcement bars. He paid about $6,000 for the three-month course, plus a further $4,000 “agent money” to get a job. Total $10,000.

The job had nothing to do with steel. It was with a company that  installed stone facing onto walls. It paid a basic salary of $520 a month, which meant that what Jahidul sank in ($10,000) was a multiple of 19.2 months of his starting salary.

Fortunately, Jahidul managed to hold the job for four and a half years, during which he also earned some overtime and had an annual salary increase of about 4%. Fortunately too, his salary was always paid on time.

Then he got injured in a worksite accident and was unable to work.

Unlike Jahidul, Hossen Saddam has held three different construction jobs. He first came to Singapore in 2012 after doing his basic skills (in thermal insulation) course in Dhaka for which he paid 250,000 Bangladeshi taka (approx $4,200). Then he had to pay 350,000 taka to his agent in Bangladesh (approx $5,800). His total of 600,000 taka was equivalent to $10,000, similar to Jahidul’s cost.

Hossen’s first job had a basic salary of $468 per month, which meant that the multiple of recruitment cost to salary was 21.4 months, i.e. nearly two years. However, the job lasted only one year and he went home in 2013.

A year later, Hossen managed to land a second job. Since he had a basic skills certificate in hand already, he didn’t need to undergo another course. He “only” needed to pay the agent’s fee. In this instance, the “agent” wasn’t in Bangladesh, but was a Bangladeshi national working as a site supervisor in Singapore. The supervisor said the company had vacancies and used his position in the company to act as a job broker. Hossen had to remit $3,000 to the supervisor to get this job. It is not known if the supervisor then shared some of that money with other managers or the boss himself.

For this job, the basic salary was $572 per month. Thus, the cost-salary multiple was 5.2 months, though he still needed to recover the loss from the first job. The second job didn’t last more than 12 months either. He then went home and remained jobless for more than a year.

Hossen’s third job came in November 2016. As with his second, the job came through a Bangladeshi working in Singapore who had connections to profit from. Hossen remitted $3,700 to this man as his “agent fee”. The basic salary was $520 a month; the cost-salary multiple was thus 7.1 months. This job lasted about 21 months.

He’s out of work again. And by the way, in none of the three jobs did he do any work remotely related to thermal insulation, which was what he trained for.

The third case study is not of a construction worker, but someone who worked in the shipyard sector. Some shipyard workers undergo training before coming to Singapore, some do not. It is not mandatory unlike the case for construction workers. For his first job in Singapore, Islam Hafizul went for a welding course in Bangladesh in 2011, and paid around 50,000 taka — actually 30,000 for the course and 20,000 in related expenses. (50,000 taka = $830).

Then, to get a job, he paid an agent in Bangladesh about $2,000. The basic salary was $546 a month. The multiple would then be 5.2 months.

Hafizul’s second job began in early 2017. The agent fee involved, paid in Bangladesh, was 270,000 taka (=$4,500), and it was for a job with a basic salary of $624 a month. The multiple was thus 7.2 months. He was injured in an accident in the tenth month and lost the job.

The table below summarises the figures for the three case studies.

As mentioned earlier, the chart further above (from ILO’s publication) shows an average recruitment cost of 410,000 taka, or about $6,800, for a Bangladeshi worker headed to Singapore. Our case studies are consistent with this finding; the various data points from our three cases are in the same ballpark when averaged.

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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