Overcharging and Deceptive Practices in the Domestic Worker Recruitment Process

24 June 2021

As labor migration flows have increased over the past few decades, international bodies like the International Labour Organisation have drawn attention to widespread issues of overcharging, lack of transparency, and deceptive practices by recruitment agents. In Singapore, the indebtedness of migrant domestic workers (MDWs) is a significant factor in their acceptance of deteriorating working conditions.

Our latest study aims to preliminarily investigate issues of potential overcharging, lack of transparency, and deceptive recruitment practices amongst MDWs working in Singapore. We aim to quantify the average amount paid by MDWs to secure a job of Singapore, the share of profit between home country and Singapore-based agents, as well as ascertain the level of transparency in the recruitment process. Out of 272 respondents, 29 MDWs claimed to have only engaged a Singapore-based agent, paying an average of $1854, or 4 months of salary, which is higher than the legal limit of 2 months.

MDWs who had engaged both a home country and Singapore-based agent were asked if they knew the share of profit between the two agents. While 36 MDWs claimed to know the share of profit, 19 responses showed numerical inconsistencies and were excluded, leaving only 17 valid responses. The average reported share taken by Singapore-based agents was 3.5 months of salary, or $1396, which is also higher than the legal limit.

However, it must be noted that these figures are greatly limited by small sample size and inconsistency of responses. More research is also necessary to determine the exact prevalence of overcharging, as they were were not given documentation that could let them know for sure that the local agent hadn’t engaged a home country agent without their knowledge, or the split between the local and home country agents.

More notably, more than 70% of respondents did not know the share of profit between their agents, making it impossible for them to ascertain if they had been overcharged. Only 30% of respondents had signed a contract, and only 13% had seen an itemized breakdown of their loan. Of those respondents who had signed documents, even less were allowed to keep the documents that they had signed. Effectively, only 10% of the 272 respondents had signed a contract they were allowed to keep, and only 6% had actually received a copy of an itemized breakdown. Considering that Singapore-based agents are legally mandated to issue itemized breakdowns, the low rates of compliance is concerning.

In our sample, a small portion of respondents (19 respondents, or 7% of all respondents) had paid a different amount than what was originally agreed upon. 18 had paid more than the agreed amount. On average, they were charged SGD 972 more than they had agreed on back home. One respondent paid less than what she expected to pay.

Enforcement against overcharging and deceptive practices is heavily reliant on MDWs making complaints against their agencies. However, without adequate transparency, it becomes impossible for MDWs to ascertain if they have been overcharged. Documentary evidence is also essential to bringing a successful case against agents. To heighten transparency and ensure that MDWs have proper access to documents, we recommend increased enforcement of the mandatory provision of itemized breakdowns, increased specification on the components that should be included in the itemized breakdown, and establishment of guidelines against safekeeping documents by employers. In the long run, we also recommend a shift towards a model where recruitment fees are not borne by the MDW.

Read the full report here.