Underpayment: Research on Indonesian Domestic Workers in HK PDF Print E-mail
Underpayment is the most serious problem among Indonesian migrants in Hong Kong. “UNDERPAYMENT”

Systematic Extortion of Indonesian Migrant
Workers in Hong Kong

For eight months, I never received any salary at all. After that, I began receiving only HKD 2,000 per month. At the training camp the Employment Agency asked me to state that my salary was properly paid according to the required government standard.
(An interview with Sumiyatun, a migrant worker from Adipala, Cilacap)

A.        About the Research

This research is the first comprehensive study of Indonesian labour migration focusing on their entire migration process: the pre-departure phase in Indonesia, the onsite phase in Hong Kong, and the reintegration phase in Indonesia.  The research was conducted in two parts.  The first part, the “Hong Kong Domestic Workers (HKDW) Baseline Survey” was conducted in Hong Kong through survey questionnaires administered to a total of 1017 respondents.  Random sampling was conducted based on areas with a high density of Indonesian migrant workers.  The second part of the research, the “Hong Kong-Indonesian (HK-I) Survey was conducted in both Indonesia and Hong Kong through interviews and FDGs with key informants.  

B.        Background

The number of Indonesian migrant workers in Hong Kong has been rapidly increasing in recent years, largely due to the higher salaries and levels of personal freedom for foreign domestic workers (FDWs) compared with other Asian countries.  There is also reasonable enforcement of laws protecting all workers, including migrants.  Despite these advantages, however, serious problems among Indonesian migrants persist as it is relatively easy for employment agencies and individual employers to thwart laws designed for workers’ protection.

C.        Main Findings

According to the research, the most frequently occurring problems found at the point of pre-departure in Indonesian include, the lack of information provided by brokers, improper shelter, the length of time spent at the training camps, and lack of pay for work done while at the training camps.  Meanwhile, the most common problems that Indonesian migrants encounter during their services in Hong Kong are underpayment, contract violations, verbal abuse, and early termination.  On returning to Indonesia, the existing problems that Indonesian migrant workers encounter are illegal agency charges, extortion, and bad treatment on arrival at the airport.

The above problems are caused by: 1) cross-cultural insensitivity and limited trainings for government officials on this issue; 2) lack of information concerning legal rights in Hong Kong; 3) flawed regulations of the Indonesian government on recruitment and placement; 4) the absence of a bilateral agreement between Hong Kong and Indonesia; 5) illegal practices among Indonesian recruitment agencies—PJTKI; 6) poor monitoring of officials’ conduct and inefficiency in law enforcement in both Indonesia and Hong Kong; and 7) lack of concern by NGOs and unions in Indonesia regarding migrants’ situation in Hong Kong.

The Indonesian culture of receptiveness, nrimo, submission and a tendency to believe that an event must have an element of good or bad luck causes migrants to be easily deceived.  Moreover, the lack of awareness on collective power weakens the bargaining position of Indonesian migrant workers.

1.         Underpayment 

Underpayment is the most serious problem among Indonesian migrants in Hong Kong.  The Hong Kong government stipulates a minimum wage of HKD 3,270 for domestic workers, regardless of nationality, and the wage is HKD50 higher for those contracts signed on or after May 19, 2005. 

The HKDW Survey found that around 42% of Indonesian migrants surveyed are underpaid, with 22.6% reporting that they received only HK$2,000 per month, and another 10% paid only HK$1,800.  Respondents reported receiving actual wages ranging from HK$1,000 to $4,000, with the largest group, or 32%, receiving the MAW of HK$3,270.  Only 23% were paid HK$3,670.   The HK-I Survey found that 46 out of 69 (67%) of respondents were paid only HKD 1,700 to HKD 2,200, while only 19 indicated being paid the full salary. 

According to the HKDW Survey, 82.8% of respondents reported that they signed a receipt each month indicating payment of wages.  Of these, 45% of respondents who answered the question reported that the receipt was false and 55% reported that the receipt did properly indicate the wage received

2.         Excessive Agency Fees

Current regulations in Hong Kong state that no more than 10% of a migrant worker’s monthly salary—HKD 327 for those earning the minimum wage— shall go towards paying a recruitment fee. The fees approved by the Indonesian government, however, are often deducted in monthly installments totaling 90% or even 100% of the monthly wage. The two policies contradict each other and may confuse a migrant worker in doubt of her rights.

The Indonesian policy regarding recruitment fees is often violated by employment agencies. These fees are paid by both the worker and employer through both salary deductions and lump sum fees, with the amount varying depending on the agreed upon wage. According to the HK-I Survey, underpaid workers—those earning less than the minimum wage with salaries ranging from HKD 1,500-2,500—were found to pay four to six months’ salary deduction, while their employers pay between HKD 9,000-13,000. Fully-paid workers earning the minimum wage or above pay recruitment fees totaling HKD 15,000-21,000, while their employer pay HKD 3,000-9,000. Typically, HKD 8,000-9,000 of the fee goes to the Hong Kong branch of the employment agency, while HKD 9,000-10,000 goes to the Association of Entrepreneurs for the Placement of Workers (APJATI) to pay for the costs of training camps, medical exams and travel documents.  A similar data found by HKDW Research was that 77% respondents were paid $21,000 for recruitment fees and 2% paid $6,000. 

According to the HKDW Survey, 46% of respondents signed a loan agreement where in they were obligated to borrow money, which would be paid back in Hong Kong. Respondents said that they signed the agreement as it was part of the regulation, or they faced threats against deployment if they did not sign the regulation.

3.         Contract Renewal

In 1999, the Indonesian government approved a contract renewal fee of HKD 5,500.  However, this was summarily violated by most PJTKIs, who would charge workers anywhere from HKD 3,000-13,000.  After a restructuring of the Indonesian Labor Ministry in October 2000, a new policy, fought for by migrant workers and meant to be consistent with the Hong Kong law, stated that contract renewal fees could not exceed 10% of the worker’s initial monthly salary.  Yet again, this directive was breached by PJTKIs, who continued to ask for fees between HKD 3,000-7,000.  The current policy was initiated after yet another leadership change at the Labour Ministry, and it forces agencies to only charge 10% of the initial salary and to enforce a mandatory minimum stay of 30 days upon migrants’ return to Indonesia following the termination of their contract.

Despite the new directive, employment agencies continue to overcharge workers for contract renewal.  Some respondents of the HK-I Research paid IDR 2 million (USD 214.12) in cash to their employment agency, while others paid through monthly salary deduction.  The HKDW Research found respondents paying varied renewal fees, ranging from HKD 135 to as much as HKD 21,000.  The average was around HKD 4,279, and 40% of respondents said they paid HKD 5,000 to HKD 21,000 by cash or through monthly salary deduction.  Aside of exorbitant fees, the agency also charged the employer fees ranging from HKD 2,000 to HKD 9,000.

Indonesian laws concerning migrant workers’ rights often contradict Hong Kong laws.  While Indonesian law appears to favor employment agencies, Hong Kong law tries to make it easier for migrants to renew their contracts independently.  As the two sets of laws appear to be inconsistent with each other, migrant workers are often confused as to what they need to accomplish in order to successfully and legally renew their contracts.

D.        Recommendations

In view of the above findings, we urge the governments of Indonesia and Hong Kong, intergovernmental organizations, NGOs and trade unions to take the following respective measures to eradicate abuse and violations experienced by the Indonesian migrant workers coming to Hong Kong.  

Indonesian Government

Regarding Employment Agencies 
1. Conduct a strategic review of the role of agencies in the recruitment process and their impact on migrant workers’ rights, prosecute abusive agencies and traffickers, and make the necessary regulatory and policy changes to ensure the full protection of migrant workers in the deployment process, ensuring that they are consistent with international human rights standards.

2. Strictly monitor the compliance of recruitment and placement agencies based on new standardized regulations mentioned above.  Take action against those agencies that violate these regulations, including revoking their business licenses and prohibiting them from being granted new licenses; this is crucial to prevent their future operation and continued exploitation of migrants.

3. Take serious steps to eradicate the fake issuance of travel documents by employment agencies, including monitoring and ensuring the proper implementation of regulations by immigration officials and look into coordination with other countries to further understand this issue.

Regarding the Indonesian Government Legislation, Policy and Practice
4. Cancel the existing national migration legislation, Bill No. 39/2004 on the Protection of Indonesian Overseas Migrant Workers.  In its place, create a new national legislation emphasizing the protection of migrant workers in line with appropriate international human rights standards.  This new migration legislation should ensure:

(a)                A review of the role of the recruitment agency in preparing migrant workers for their deployment overseas, placing migrant workers, reducing the amount of fee charged by the agent, provide effective redress mechanisms in cases of violation of migrants’ rights by the agents or the employers where the agents place the workers.

(b)                The repeal of the clause in the current legislation requiring migrant workers to return to Indonesia to renew their contracts.  

(c)                That the Indonesian government’s policies and practices are consistent with Hong Kong labor laws on agency fees and minimum allowable wage.  These policies should be enforced through sanctions against agency and consular officials charging illegal fees and rigorous audit of agencies.

(d)                Strict policies to guarantee that agencies place Indonesian domestic workers in contracts that comply with the minimum wage requirement—offending agencies should be fully prosecuted and their licenses revoked.

(e)                The funding and implementation of a national compulsory program of information and public education.

(f)                  The negotiation of bilateral agreements with all receiving governments, including Hong Kong, based on appropriate international human rights standards.

(g)                The establishment of labor attaches in destination countries, such as Hong Kong, to provide comprehensive paralegal services to Indonesian migrants seeking redress as well as to conduct education programs.

(h)                The facilitation of the remittance of money in order to assist in sustainable familial, local and national economic development.

(i)                  The creation of a National Commission on Migrant Workers’ Rights with representation from migrant workers’ organizations and unions and NGOs, and with specific responsibility for protecting migrants during the entire migration process, including recruitment, monitoring rights violations and abuses, and facilitating migrants’ redress actions and reintegration

(j)                  The participation of migrant workers and their advocates in the process of formulating the new national legislation in line with the recommendations of the ILO Committee of Experts on the Application of Labour Standards.

5.  Ratify the United Nations Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families (1990), ILO Convention No.97 Concerning Migration for Employment (Revised 1949), and Convention No. 181 Concerning Private Employment Agencies (1997).

Regarding Education and Information Dissemination
6. Create and implement a comprehensive education program in conjunction with migrant workers’ organizations and unions, national trade unions and NGOs in both sending and receiving countries, for prospective and returning migrant workers and their families that disseminates information on the realities of labor migration, migration processes and procedures, migrant workers rights, policies and laws in Indonesia and host countries, including Hong Kong, how to obtain assistance abroad and how to access economic alternatives to migration upon return.  This is crucial so that migrants can make informed pre-departure and reintegration decisions.

7. Provide routine training and dissemination of information to migrant workers in the destination countries, including Hong Kong.

8. Monitor the implementation of education and training for migrant workers and to ensure the effective conduct of the Competency Test Body.

Hong Kong Government

9. Take more serious action to stop the rampant practice of underpayment of Indonesian migrants in Hong Kong.  In particular, expand the operations of the Hong Kong government task force on underpayment so that it takes harsher action against violating agencies and employers, including conducting routine spot inspections of employers’ homes, stepping up inspections of agencies, blacklisting abusive employers, and revoking the licenses of violating agencies.
10. Step up the filing of criminal prosecution against violating employers to show the Hong Kong government’s serious commitment in upholding Hong Kong law and stamping out underpayment.
11. Create and implement practicable means for migrant workers to remain in Hong Kong for the duration of their civil and criminal proceedings, including providing migrants with the appropriate immigration visa and basic living allowance and/or the right to work so that they have a means to survive.
12. Pressure the Indonesian government to take stronger measures towards the eradication of underpayment and agency malpractice.
13. Recognize FDWs’ unions as legal representatives who can file complaints on behalf of their union members.
14. Consult registered FDW trade unions when amending terms and conditions in the standard FDW employment contract.
15. Include FDWs in the coverage of universal social security, such as the Mandatory Provident Fund (MPF).
16. Abolish the New Conditions of Stay, “2-week rule”, and other discriminatory policies against FDWs.

Intergovernmental Organizations

17. The relevant bodies within the International Labour Organization (ILO) and United Nations should:

(a)    Establish and implement programs that promote awareness among sending and receiving governments, such as Hong Kong and Indonesia, on the phenomenon of labor migration and its consequences, the positive economic, social and cultural roles and contributions of migrants and their families in host and home countries, and the role of international human rights standards in upholding their dignity.                                    

(b)   Work together with the Indonesian government and encourage it to take the necessary steps to ratify the United Nations Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families (1990), ILO Convention No.97 Concerning Migration for Employment (Revised 1949), and Convention No. 181 Concerning Private Employment Agencies (1997).
(c)    Adopt the findings and recommendations of this research and other relevant research of human rights NGOs when making reports on the Indonesian and Hong Kong governments’ compliance with the core UN human rights conventions and ILO conventions ratified by them.

18. International donor organizations need to provide additional support to NGOs, labor unions, migrant workers’ organizations, and migrant community groups in Hong Kong and in Indonesia.  In particular, they should continue to provide technical and financial support to build the capacity of these groups and individuals.

NGOs and Unions

19. NGOs and trade unions in Indonesia need to develop programs for migrant workers in Indonesia and in Hong Kong in order to address the needs of Indonesian migrant workers.  In particular, they should:

(a)    Engage in productive partnerships with migrant workers, NGOs and advocates in combating abusive practices, racism and discrimination and protecting the rights of migrants and their families;

(b)   Encourage and support the organization and unionization of migrant workers themselves, including the implementation of measures to ensure their full and active participation and empowerment as workers and as social partners.  These measures should take into account the restrictions migrant face in organizing, particularly migrant domestic workers.

(c)    Join existing campaigns for the Indonesian government to ratify United Nations Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families (1990), ILO Convention No.97 Concerning Migration for Employment (Revised 1949), and Convention No. 181 Concerning Private Employment Agencies (1997).

(d)   Provide financial training for migrants and their families at the family, community, regional and national level concerning how to plan for their return and reintegration as well as manage their remittances and savings.

(e)    Continue to provide and expand activities targeting migrant workers, including awareness raising initiatives, training and capacity building, and the provision of basic services for Indonesian migrant workers in both Indonesia and receiving countries.

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