The term ‘placement fees’ will, after May 1, 2012, only include the cost of medical check-ups, document processing and charges by Indonesian training centres, unlike currently where the term includes fees by recruitment agencies and other middlemen. This change will mean lowering placement fees from about $3,000 currently to about $1,600 for first-time maids and $800 for those who have worked before.

Higher agency fee but no need to give loan

CURRENT SYSTEM

Employer: Pays fee of $400 to $600 to the maid’s agency, which covers the cost of advice given to the employer. Lends maid about $3,000 to pay a ‘placement fee’, which covers the costs of her medical check-up, document processing and training.

Maid: Repays employer the $3,000 placement fee in instalments. This means she typically gets only a small proportion of her monthly salary – often $10 or $20 – for the first eight months or so.

NEW SYSTEM

Employer: Pays higher agency fee of about $1,200 to $1,600. No need to give loan to maid.

Maid: Takes a bank loan to pay placement fee of about $1,600 if she has no experience with this type of work, and about $800 if she does. Repays the bank loan in eight months.

Moreover, the domestic worker will take on a bank loan for this sum instead of a loan from the employer. This way, workers will get a meaningful salary from the start, unlike at present where nearly all Indonesian domestic workers get a merely $20 a month for eight or nine months.

This change was announced by the Indonesian embassy earlier in the week and reported by the Straits Times (Changes to Indonesian maid policies, by Amelia Tan, April 4, 2012).

However, employers will now have to pay upfront all the costs by recruitment agencies, and this is expected to rise from the present $400 to $600 to about $1,200 to $1,600.

The net effect is likely to mean that domestic workers from Indonesia will become slightly costlier.

—

A follow-up article (Straits Times, April 5, 2012, Agencies predict dip in Indonesian maid hires, by Amelia Tan) reported that recruitment firms were becoming cautious about bringing in Indonesian maids until there is a clearer picture of demand. “Some maid agents are activating plans to deal with any shortfall in the supply of Indonesian maids and a higher demand for maids from other countries,” the reporter wrote.

The article also quoted TWC2’s vice-president:

Dr Noorashikin Abdul Rahman, vice- president of welfare group Transient Workers Count Too, said the lower placement fees for Indonesian maids is ‘a step in the right direction’, but thinks they can be lowered further.

A reader’s comment on the Straits Times page was quite negative about the agencies’ reaction to this move by the Indonesian government. Going by the handle Annewongholloway, the reader wrote:

Maid agencies cry ‘wolf’ all the time. I could not access or download their ‘standard’ association contract between agency and employer  (AEAS) but it is hilarious – poorly drafted, in Singlish. Meant to obfuscate and does. But more important it’s a typical “CYA” agreement.

Many agencies and the overseas associates prey on the workers, extracting money the poor can ill afford – they then pass the debt onto to employer who is left with deducting from the worker’s salary. Sometimes they bypass the originating country’s rules (and save on exit levies) by sending them abroad on tourist tickets – more profit?

While there are indeed good agencies, the vast majority are quite unscrupulous.