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Indonesia postpones placement fee policy that could raise cost of hiring domestic workers

Indonesia postpones placement fee policy that could raise cost of hiring domestic workers

A domestic worker with an elderly person in Singapore. (File photo: TODAY/Illi Nadhirah Mansor)

SINGAPORE: Indonesia has postponed the implementation of a new policy that could make it more expensive for employers here to hire its citizens as foreign domestic workers.  

Under the exemption of placement fee policy, Indonesian migrant workers in 10 job sectors, including domestic helpers, cleaners and farm workers, will no longer be required to pay their own placement and training fees.

The new requirement was to have kicked in on Jan 15. 

It has now been postponed to the middle of July due to "several factors", Mr Tatang Razak, Indonesia’s chief secretary of the government agency for the protection of migrant workers (BP2MI), told CNA. 

READ: Indonesian migrant workers, civil society welcome new placement fee plan; employers to bear costs from Jan 15 

One of the reasons for the delay is that the Indonesian provincial government should bear the training costs, but “they do not seem to be ready”, Mr Razak said.

The infrastructure for training Indonesians to become domestic workers, to be provided by provincial governments, is not ready in some of the country’s regions.

Traditionally, training centres in Indonesia are set up by recruitment agencies, and the training is paid for by them as well. The agencies then deduct the cost of such training from the workers' salaries. However, the new plan aims for provincial governments to take over both the training and the costs.

“After observing and seeing the objective conditions on the ground, especially the infrastructure for training (of migrant workers) in regions (within Indonesia), it seems that many are not ready,” Mr Razak said.

“If there are still some regions that are not yet ready, we will need to think of a mechanism. Even if there is a placement fee, for example for training, we could perhaps create a people's business loan at a low interest rate."

Mr Razak added that Indonesia and the receiving countries need to review existing Memoranda of Understanding that were agreed upon because they are based on a cost structure.

“Of course, with zero cost, there is also a need for us to sit back, review. But in principle, it is left to the market. The government has nothing to do with it. So if employers object if they want to take a migrant worker from another country, that's their right,” he said.

“Our principle is that we actually have a new law and we need to review every issue that exists, including agreements with the receiving countries including work contracts with migrant workers and the users."

President of the Singapore Accredited Employment Agencies Association Brian Tan said that agencies got to know of the postponement in January through the Indonesian embassy.

When the policy was first announced, it was “sudden”, he said.

“Now at least with this delay, there’s basically more time for us to adjust to the new arrangement,” he said.

“There’s a cost in the placement of foreign domestic workers (FDWs), be it for training, food and lodging and all that. Currently, with the placement loan, the FDW bears some of the cost, but if the Indonesian government wants to proceed with this policy, then the cost has to be parked somewhere."

READ: Demand for new maids high despite extra costs amid COVID-19 restrictions, risk of imported cases

The upfront fee, which is borne by employers then deducted from the workers’ salary, is usually above S$2,000.

“Ultimately, if the zero placement fee (policy) goes ahead, what would likely happen is that employers may bear the brunt of the burden. If that happens, Indonesian FDWs may become a little bit more costly to hire,” Mr Tan said.

“That is a concern to them, especially in the context of COVID-19,” he added, referring to extra costs amid the pandemic such as the need to pay for stay-home notice and coronavirus testing.

Hiring Indonesians would become “less desirable” than hiring workers from other countries, Mr Tan said.

Mr Matthew Lee, manager at Raymond Maids Employment Agency which specialises in Indonesian and Filipino helpers, said that potential employers are concerned about forking out more.

“I said to them - let’s see and wait because regulations tend to change quite fast in Indonesia, it seems," Mr Lee said.

He noted that with the delay, the demand for Indonesian workers, which had momentarily dipped, has returned.

Mr Tan added: “We can’t control what the government in Indonesia wants or plans to do. What we hope is that they will reconsider this policy and hopefully find a win-win, viable solution moving forward.”

Source: CNA/ja(gs)

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