Upfront incentives, a carrot for migrants
This article was written to mark International
Migrants Day - December 18:
by Bilesha Weeraratne
Incentive payments to attract low-skilled migrants are rare. But in
the case of Sri Lankan female domestic workers, employers of several
Middle Eastern (ME) countries such as Saudi Arabia, Qatar and Bahrain
are willing to bear an exorbitant incentive payment.
With regard to Saudi Arabia, it is estimated that the employer makes
a payment of around Rs. 875,000 (or SAR 23,000), to source a housemaid
from Sri Lanka. Out of this amount, Rs. 275,000-375,000 is retained by
the foreign employment agent in SA to cover costs and commissions, while
the balance is sent to Sri Lanka. Apart from about Rs.100,000 of the
amount sent, the remaining Rs. 500,000- 600,000 is shared by migration
stakeholders as incentives. This article discusses the adverse
implications of such upfront incentive payments to migrants by focusing
on the case of female domestic workers from Sri Lanka (SL) to Saudi
Arabia (SA).
Incentive payment
Latha is a recent migrant from Diddeniya, Kurunegala who found a job
as a housemaid in SA through a licensed foreign employment agency in
Kurunegala town. Since Latha did not know about migration or the agency
in Kurunegala, it was Gunapala - a sub-agent who also lives in Diddeniya,
who introduced Latha to the agency. Gunapala is an informal
representative of the agency in Kurunegala, who mediates between the
agency and migrants like Latha. As such, the total incentive amount of
Rs. 500,000-600,000 is shared by Latha's family, Gunapala and the agent
in Kurunegala.
The incentive payment to Latha's family totalled to about Rs.
250,000, while it was disbursed in a rather intriguing manner. Initially
Latha was given an advance payment Rs. 25,000 to cover her miscellaneous
costs involved in the run up to migration, while the balance (about Rs.
225,000) was presented to her husband, Gamini, only after Latha boarded
the plane to SA.
The timing of this large incentive payment is aimed to curtail the
possibility of potential migrants changing their mind after obtaining
the incentive payment. However, this bizarre timing of the incentive
payment leads to many adverse implications. One of the main issues is
the upfront payment to the husband while the migrant-wife is en route to
ME. This gives her little control over how it is used. The increase in
disposable income to the household even before the migrant takes up her
duties leads to the possible decrease in labour force participation of
the husband left behind, and promotes an increase in unnecessary
expenses such as alcohol consumption and gambling.
All the while, the female migrant is accountable to serve for the
agreed two years since the upfront payment was received by her party.
This increases her vulnerability at destination.
Meanwhile, it is common for husbands to convince the otherwise
unconvinced wives to migrate for employment just to obtain the incentive
payment. In such cases the lack of motivation by the woman to pursue a
job in the ME often leads to problems at destination that necessitates
her premature return, inconveniencing the employer, agents in both
countries and the Sri Lanka Bureau of Foreign Employment (SLBFE).
Yet another group of husbands and wives work in unison to exploit the
incentive payments by going through the process and migrating only with
the intention of collecting the incentive payment. Once at destination,
these female domestic workers create some issue and return to repeat the
entire process with another agent and collect yet another incentive
payment.
Upfront
Given that the recruitment fee is paid upfront by the employer, in
the above cases, the agent in SL is responsible to replace a maid for
the employer or refund recruitment cost paid (including the incentives).
In such situations, agents in Lanka work to recover the incentive
payment, failing which; the migrant would be black-listed.
Finally, since the agents and sub agents also keep a share of the
incentive payment, they pressurize the workers to remain with the
employer for at least three months to avoid having to return the
incentive payment or to provide a replacement worker. Such pressure also
contributes to female domestic workers being compelled to endure abuse
or bad working conditions at destination.
Solution
The best solution to address the adverse implications of this upfront
incentive payment is to include the same into their monthly salary.
Currently, Sri Lankan domestic workers are paid about SAR 900, whereas a
Filipino female domestic worker earns about SAR 1,500. As such,
including the incentive payment into the wages would benefit workers in
many ways such as greater control for female domestic workers over their
earnings, and greater flexibility and fewer obligations towards the
employer and the agent as the incentives would now be related to the
duration of service.
In the absence of efforts to address these large upfront incentive
payments, Sri Lankan workers would become less competitive in the SA
market in price terms. For instance, in 2013 the wage for a Filipino
female domestic worker was SAR 1,500 and the wait time for the maid to
arrive in SA was 20-90 days, while for a maid from Morocco the wait
period was four months with a recruitment cost of SAR 12,000.
The recruitment cost for a maid from Lanka was around SAR 25,000 with
a monthly salary of SAR 900 and a wait period of four to eight months.
In the Philippines it is SAR 19,000.
This shows how Sri Lanka is becoming less competitive in terms of
wages, recruitment costs and wait times.
In this connection, the latest budget proposal to increase minimum
wages for Sri Lankan domestic workers to USD 300 (SAR 1,125) is a step
in the right direction. The proposal would be better if it focused on
the total remuneration package which includes incentive payments instead
of wages only, so that Sri Lankan workers would still remain competitive
in Saudi Arabia despite a higher minimum wage rate.
Note: Rs. 1 = SAR 37-38 (estimated); The names of the interviewed
migrants have been changed for anonymity.
The writer is a Research Fellow at the Institute of Policy Studies of
Sri Lanka (IPS). To view this article online and to share comments,
visit the IPS Blog 'Talking Economics' - ips.lk/talkingeconomics |