Getting to root cause of migrant domestic workers' money woes

This letter was submitted to The Straits Times and was published on 25 July 2019.

To complement recent measures put in place to curb moneylending to foreigners, we note that the Ministry of Manpower has released a video and brochure educating migrant domestic workers (MDWs) on money management.

We welcome measures that go towards solving the problem of overborrowing and which advocate financial prudence among MDWs.

At the same time, we must also be aware of other issues that drive MDWs to borrow from licensed or even unlicensed moneylenders.

They sometimes face pressure to send money home to assist with their families' finances, or with sudden emergencies relating to education, health or reconstruction of their houses in times of natural disasters.

Some of these MDWs may still be repaying loans brought about by recruitment fees.

On occasion, we have also encountered MDWs who have stated that they turned to moneylenders due to untimely payment of salaries by their employers.

There are ways to alleviate the above-mentioned problems faced by MDWs. The Humanitarian Organisation for Migration Economics supports an eventual move towards zero recruitment fees, based on the International Labour Organisation's Fair Recruitment Initiative.

This allows MDWs to start earning and saving money as soon as their employment starts.

Timely payment of salaries will also ensure that MDWs have a steady flow of income that may curb the need to turn to moneylenders.

Employers should also be willing to listen if their MDWs approach them with requests for loans or advance salary payments, if such requests are reasonable.

MDWs typically earn low wages and may have, from time to time, pressing financial needs.

Such arrangements between employers and MDWs, together with an agreed-upon repayment plan, will insulate MDWs from interest rates that licensed moneylenders are allowed to charge, which may perpetuate the cycle of borrowing for some MDWs.

Jaya Anil Kumar
Case Manager
Humanitarian Organisation for Migration Economics