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Driving a hard bargain

Still on the subject of Hong Kong’s domestic helpers and their employers, Simon has noted a news story about a developing trend and Mr Tall has reminded us of an earlier piece he wrote on the same subject (that also referred to the article from the The Economist Christmas 2001 issue).

First the news story.  Yesterday’s SCMP story (subscription required) is about the the reduction in the number of Filipinas working as domestic helpers in Hong Kong, and the somewhat smaller increase in Indonesian helpers.  I have mentioned this before, but it seems that the trend is continuing.  There are now 35,000 fewer Filipinas and 23,000 more Indonesian helpers than four years ago.  I suppose are two possible explanations for this trend.  The first is that Indonesian helpers are given more training and usually learn Cantonese before coming to Hong Kong, whilst the second is that they are willing to work for less than the minimum wage:

A survey by the Association of Indonesian Migrant Workers showed about 90 per cent of Indonesian helpers were earning between $1,500 and $2,500 a month.   

That compares with a legal minimum wage of HK$3,270 but it seems that Indonesian recruitment agencies do not inform the helpers that there is a minimum wage in Hong Kong.  That may be so, but I doubt that it makes all that much difference – the point is that there is no shortage of people willing to come here and work for that money.

This is nothing new – I remember being somewhat shocked a few years when a colleague proudly told me that he was employing an Indonesian helper for around half the minimum wage in force at the time.  It’s not breaking the law so much as the fact that people can regard HK$2,000 per month as a fair reward for the job that helpers do.  Yes, I’m sorry, but I can’t help being a do-gooding liberal.

If the figures quoted by the SCMP are correct, it should be easy for the Labour department to take action – all they need to do is visit a few homes where Indonesian domestic helpers are employed.  However, what do they do if the helper plays along with the deception and does not wish to make a complaint?  The helper may well feel that their choice is between working for the wage they have been offered or going back to Indonesia (and they’d probably be right).   

Mr Tall puts another side of the story as a counter to the hysterical allegation that many helpers are “living in “virtual slavery”’, noting that many experienced helpers will pick and choose where they want to work, and for whom.  There’s nothing wrong with that, of course – in a healthy employment market both the employer and the employee have their own requirements, and the final arrangement is subject to negotiation.  Unfortunately the contract and visa arrangements for FDHs are rather inflexible.  Whereas it is very common for other employment contracts here to have a 3 month probation period, FDH contracts are for a fixed two-year term, and if the employer terminates the contract (or when it comes to an end) then the helper will only be allowed to stay in Hong Kong for a short time before having to return home.

Logically, experienced helpers should command higher salaries.  That may be how the informal market is developing, but mainly by reducing salaries at the entry level rather than increasing them at the top. However, if a helper is forced to leave Hong Kong shortly after completing a contract, it makes it difficult for them to find a new employer.  Really, that’s not good for anyone.  If the Hong Kong government really wanted to improve the lot of foreign domestic helpers, it should make it easier for them to change jobs and to work here without having to use an agency.  However, I suspect that the main objective of government policy is to reduce the number of FDHs working in Hong Kong, so I don’t suppose they’re about to do anything to improve their lot.


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Curious but I don't get a trackback from you when you link.

I suspect the HK Government isn't interested in doing much to improve the lot of FDHs.


Surely the right to employ foreigners should be auctioned off, or at least priced properly, as a resource (the right to work here) belonging to Hong Kong as a whole.

Under the current system, those less well off are less likely to be able to afford a helper, even though their need may be greater, while those better off get a resource worth several thousand dollars per month for only about $4k per month. Given that the resource belongs equally to everyone, this means that the poor are subsidising the rich.


Interesting idea, but I think it needs some more thought! I don't quite see how your idea would enable poorer people to pay less for their helpers.

That's because I was too lazy to send you a Trackback (I have to remember to do it, and I often forget).


It probably wouldn't directly enable them pay for a helper, but it might bring some closer to being able to do so, indirectly, by increasing government revenues and hence lowering their tax bill, if they have one, and hence putting more money in their pockets.

It would ensure that people pay full price for the resource, just as they should (I believe) do for road usage through ERP - despite Michael Suen's statements to the contrary.

All this nonsense from the government about how ERP wouldn't work - you just have to look at the proportion of private vehicles going into and out of Central at rush hour to see how many discretionary journeys there are. Any discretionary journey has the potential to be eliminated by ERP.


ERP seems to work in Singapore, and "Congestion Charging" has been a great success in London, so I've no doubt it would work here.

Charging in a similar way for employment visas is an interesting idea, though it implies that overseas workers are a luxury item, which is not universally true. In fact, in most countries there are two distinct groups of immigrant workers - one group with skills or experience that may be in short supply, and the other group who are willing to do jobs that locals don't want to do. In both cases, the economy benefits from having the immigrant workers (though governments frequently fail to get that message across).

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