What does Indonesia's new placement fee policy for domestic helpers mean for you?

There are nearly 260,000 domestic workers in Singapore, with approximately 50 per cent of them coming from Indonesia. To ensure fair treatment their domestic workers face abroad, the Indonesian government has put into place several protection measures like the $6,000 performance bond .

However, starting in January 2021, the Indonesian government will charge a new one placement fee of $3,000 to help cover the cost of bringing people into Singapore. In this article, we explain some of the reasons for the implementation of this law, and what this will mean for you as an FDW employer.

Reason for implementation

The Indonesian government has primarily implemented this law to help pay for the transportation, accommodation and medical fees incurred by new FDWs.

Previously, an estimated $6,582.02 was borrowed by the worker to cover those costs, which disproportionately affects their stream of income and potential remittances for the duration of their debt.

For example, one Indonesian FDW claimed her salary was significantly reduced for the first year while she was paying off her debt.

A secondary reason is the activism for FDW rights. Earlier this year, the Indonesian government came under some pressure for refusing to pass a bill to aid in the protection of their domestic workers abroad.

Moreover, a high-profile court case between a wealthy Singaporean family and an Indonesian domestic helper rose to international attention.

What employers should expect

The new law puts the onus on employers to pay the one-time fee of $3,000 per worker brought into Singapore. Currently, the agencies can pass off many fees to FDWs. This means that the workers who come into Singapore will usually borrow money to cover their examination, early accommodation and assimilation courses by themselves.

As of now, this adds to recent expenses of the Covid-19 pandemic, where employment agencies for FDW are required to pay for swab tests and quarantine accommodations (up to $1,700 per person). The additional costs will likely trickle down to the Singaporean households, which make many worried of the overall costs to hire an FDW.

Current cost of a FDW in Singapore

Hiring an FDW as is can be expensive . When you hire an FDW, you have to pay one-time fees such as agency, work permit, orientation, medical examination and other fees. Additionally, you have to pay annual fees such as wages, insurance, food, toiletries, and transportation (averaging $12,496.29 a year). It's important to know that maid insurance is mandatory in Singapore.

For a basic plan, the average cost for a 26-month plan is $284 per month, whereas a higher-end plan could set you back 20per cent more.

One-time fees to hire an FDW in Singapore

What can you expect moving forward?

The increase of $3,000 is not meant to discourage Singaporeans from hiring Indonesian workers. Instead, it's meant to prevent the foreign workers from incurring debt prior to, and in the early stages, of their arrival into Singapore.

This may reflect an opening in the market for other nationals, though for now Indonesian workers in Singapore remain the majority.

However, the overall market for foreign domestic help will not cease, since FDWs are a valuable economic resource in Singapore.

This article was first published in ValueChampion.