How do workers raise money to pay agents?

Sharks prowl around the question of agent money

By TWC2 volunteer Stefan, based on interviews in May 2019

As different as the backgrounds of the migrant workers coming to Singapore are, they all have one thing in common: everybody needs to pay agent fees for their job in the city state. On a Friday night at TWC2’s food programme, the Cuff Road Project, meal tokens were handed out to workers with injury or salary claims, as usual. I mingled with the workers in the queue and asked at random how much they paid for their agents – “$4,000,” “$7,000,” “$5,000.” [all dollar figures in Singapore currency].

The numbers varied, but nobody had paid less than $3,000. How did these workers raise the money for their agent fees?

I sat down with three men to explore the answer to this question. As it turned out, while the fee itself is a common thread and most workers do not just have the money in their bank accounts, their ways of raising the amount needed differ.

1. Borrow money from “friends”

Bangladeshi national Yeakub came to Singapore two years ago. His agent fee was $3,000, a sum that seemed quite reasonable to him given that his in-principle approval (IPA) letter stated he would earn $1,600 per month. Of course, this was not what his employer ended up paying him, which is why he his now with TWC2 while waiting for the outcome of his salary claim. However, the reason for the interview was not to find out more about his claim, it was to find out more about his agent fee and how he managed to pay for it.

Out of the $3,000, Yeakub was able to pay S$1,000 out of his own pocket and had to borrow the remaining $2,000 from “friends”.

I was curious as to how long it took him to pay these “friends” back and whether he had already done so. “One year. Now finish ‘ready,” he said. Interestingly though, he had paid them back S$3,000. After double checking the sum for the agent fee, I asked him why he needed to pay back $1,000 more than he borrowed. He simply said: “Interest.” One might wonder what kind of friends charge a 50% interest rate, but to Yeakub, this seemed to be quite normal. I, for one, wanted to dig up some more information about his financial backers. He borrowed the S$2,000 from two men whom he has known for roughly five years. The entire agreement was based on trust; there was nothing in writing, but Yeakub knew the friends’ families and they knew his. They were able to give him the money because of their flourishing business. “[Their] shop inside everything have.”

2. Pawn the family’s land and/or gold

Then I sat down with Kalaiselvam, a 27-year-old delivery driver from India. He had to pay his agent $6,000—double the amount Yeakub’s agent charged. However, Kalaiselvam also thought his respective fee seemed reasonable, as his IPA stated a monthly salary of $2,600 and he was hired on an S-Pass. Of course, he too never got the salary he was promised and was regularly shortchanged by up to $1,800. That is, he was paid only about $800 a month. In total, his ongoing salary claim is for over $50,000. He meticulously documented everything on a sheet of paper: how much he was paid and how much he is missing for every month—even whether he got the money via bank transfer or not.

He even had the receipt for a bank transfer to the agent with him. The transfer was arranged by his father from India to enable Kalaiselvam to get the driver job.  “You want to see receipt?” Kalaiselvam asked. He produced a paper from his backpack showing a proof of transfer of $2,686 via Yes Bank to a man named William Benson Joshua. Interestingly, there is a William Joshua listed on LinkedIn as a Director of the same company that employed Kalaiselvam. However tempting it was to investigate this, the goal was to find out more about his agent fees rather than the business practices of his employer. So we left it at that.

Bank confirmation for the $2,686 sent to “William Benson Joshua”

We delved deeper into how the whole $6,000 was raised for the “agent fee”. The proof of transfer only accounted for roughly 45% of the total sum, so I enquired about the remaining $3,314. According to Kalaiselvam, his father borrowed money from different people, friends and family, and sent it all in different transfers depending on the source. In total, there were six lenders involved: one of them provided the $2,686, the other five provided the balance.

Unlike in Yeakub’s case, there was no 50% interest rate. Kalaiselvam’s father got the money in exchange for the family’s land, about four hectares of rice paddies, in a river valley that is six hours by bus ride outside of Chennai. However, the land alone was not enough to raise S$6,000 and his father also had to give away the family’s gold—ten “things,” as Kalaiselvam put it when I asked for the amount. Throughout our conversation, he kept asking me whether I could help him get back the S$6,000. The nature of the deal was that upon returning his friends and extended family their money, Kalaiselvam’s father would get the gold and land back. Unfortunately, now it all depends on the outcome of Kalaiselvam’s salary claim and I could only assure him that TWC2’s office team would do their best to assist him with that.

3. Get a bank loan

Finally, I interviewed Riyadh, a 31-year-old Bangladeshi construction worker. Riyadh had to pay $5,000 in agent fees: $3,000 went to an agent in Bangladesh and $2,000 to another agent in Singapore. After a couple of misunderstandings as to my questions, he explained that he got all of it as a loan from BRAC Bank. The loan of about 300,000 Bangladeshi Taka was to be paid back in twelve monthly installments of 30,000 (roughly SGD 500)—a 20% interest rate. While this figure seems high, it is still less than the 50% interest Yeakub was charged by his friends.

Riyadh’s IPA stated a basic salary of $600 but he was told by his agents before taking up the job he could make up to $1,000 a month by working overtime. He found the pay to be rather meagre in relation to the $5,000 fee, but hoped he could just scrimp and save for a year to pay off the loan and work with his company for another year to save money for himself. Unfortunately, he had an accident in March, falling 4‒5 m on site, after just one month of working in Singapore. Now, his father has to help him pay the installments to the bank while he awaits the resolution of his injury compensation claim. I thanked him for the interview; however, Riyadh just pessimistically replied: “Interview also don’t pay for makan (food).”

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As varied as these three examples are in the way recruitment costs are sourced, another common thread surfaces: no matter the source, whether it is from acquaintances, banks, or the sale of land, repaying the loan is a central challenge. Out of the three men I interviewed, only Yeakub had managed to repay the loan. The other two with their higher fees and cases of salary deductions and injury, have not been so lucky. Even for Yeakub, however, having to pay off his $3,000 debt with a monthly income of $700‒800 within one year was no easy task.