Why do migrant workers pay thousands of dollars to work in Singapore?

SINGAPORE: Myanmar national Pyae Sone had only been working in Singapore for less than a month before he got fired from his job as a kitchen assistant.

The 21-year-old was a first-year botany student at university but decided to give up on his education to provide for his five siblings and parents, he told CNA through a Burmese translator. 

He found out about a recruitment agency in Yangon from a friend who was already working in Singapore.

The agency, which had ties with a Singapore counterpart, offered him a job at a Chinese restaurant, where he would be paid S$1,600 (US$1,200) a month. 

To secure the job, he had to pay the agency S$5,800. It was "very difficult" to fork out the amount, said Mr Sone, adding that he had to resort to taking loans. 

With high hopes, he arrived in Singapore in late June for his first-ever job. But things quickly went south when he found out that he had been laid off.

Mr Sone told CNA that he was only officially informed about this after a talk with the local agency on Jul 10. His work permit status online, however, indicated that it had been terminated much earlier on Jul 4. 

The agency told him that his employer at the restaurant had complained that Mr Sone refused to do the tasks he was given – claims which the migrant worker denied. 

It also cited a separate incident, where Mr Sone had accidentally disposed of a box containing a pair of shoes, as another reason for his dismissal. 

The migrant worker was then offered two options: To look for a new job but pay the agency another S$2,000 to do so; or get refunded a portion of the agency fees. 

While he would have preferred the first option, his family could not afford to cough up more money, Mr Sone told CNA. Left with no choice, he chose the latter and got back S$2,000.

Now, Mr Sone is back in his hometown, hoping for another chance to work in Singapore again.

Migrant workers like Mr Sone pay thousands of dollars to intermediaries to work in Singapore, for a chance at a better life.

Yet after being hired and entering the country, they find themselves in situations where jobs are unlike what they were led to believe, and there is limited recourse for compensation or to find another position.

CNA looks at the ecosystem of migrant worker recruitment, the role that employment agents are supposed to play, and how abuses of the system can happen.

LOCAL PLAYERS

Earlier this month, CNA reported that Bangladeshi worker Jaynal MD had paid an agent based in Singapore almost S$7,000 for a job, but found himself without one after coming over. 

CNA saw Mr Jaynal's in-principle approval (IPA) letter issued by the Ministry of Manpower (MOM), which identified Fresh Milk Suppliers – which trades as DairyFolks – as his employer.

His IPA letter also identified the local agent as IM Employment Agency. This is a licensed agency that had 130 work pass applications approved in the past year, according to MOM’s online directory of employment agencies.

IM Employment did not respond to CNA’s request for a response. DairyFolks had also declined to comment when contacted previously. 

Mr Jaynal said DairyFolks told him it had only asked its agent for three workers – and the agent had already sent them three.

MOM on Jul 15 said that investigations into DairyFolks and Mr Jaynal’s local employment agency are ongoing.

"Mr Jaynal has also found an employment agency and is undergoing interviews with potential employers," the ministry said.

Migrant workers need to have the IPA from MOM to enter Singapore and get a work permit.

It is not possible for a migrant worker to enter Singapore with the IPA if the employer is unaware he has been hired, said Ms K Jayaprema, president of the Association of Employment Agencies (Singapore) (AEAS).

The employer must buy the S$5,000 security bond for a migrant worker to enter Singapore, she said. This takes the form of a banker's or insurer's guarantee, and is required for all non-Malaysian workers.

There is always a local entity involved in the process of recruiting migrant workers, said Mr Luke Tan, senior casework manager at Humanitarian Organisation for Migration Economics (HOME).

This is because their application must be submitted by local agents or employers through MOM’s online portal.

Agents or intermediaries who find jobs for workers are often located both in their home countries as well as the countries of destination. 

Intermediaries need to have access to both the potential workers in the home country as well as contacts with employers in order to get jobs for the former, explained vice-president of Transient Workers Count Too (TWC2) Alex Au. 

Some work as paired intermediaries – one person in the home country and the second in Singapore – while others may work on their own but travel to and from the countries, he added.

HIGH RECRUITMENT FEES

In HOME’s experience, recruitment fees stated by agents can range from S$5,000 to S$16,000.

"Generally, Bangladeshi workers tend to be charged more than workers of other nationalities," said Mr Tan, adding that workers who are in Singapore for their first job typically pay between S$13,000 to S$16,000. 

For repeat workers who have previously been employed in Singapore, the fees are lower, TWC2’s Mr Au added. For instance, a worker could pay about S$5,000 for a second job, and S$2,000 to secure third or subsequent employment.

While Mr Au said intermediaries do not explain the high recruitment fees, NGOs such as HOME shared that the reasons provided are "mostly deceptive". 

"Recruitment agents will lure workers with the promise of a well-paying job, good employer and decent working conditions, in order to incentivise the workers to pay the high fees," said Mr Tan.

"Multiple parties also receive a cut from the recruitment fees: Besides the agents in the home countries and Singapore, we have seen cases where even the employers receive a cut of the recruitment fees paid." 

MWC’s Mr Lim also said that agents in the workers' home countries often justify the high fees on the grounds of needing to obtain multiple documents, such as passports and visas, as well as other administrative expenses.

NGOs told CNA that cases like Mr Jaynal's – where the worker's employment does not even start or the IPA is not converted to a work permit after arrival in Singapore – are not common.

But the scenario falls along a spectrum of deceptive recruitment that can range from a job that never materialises, to a job that does exist, but does not honour the salary and employment terms in the worker’s IPA.

TWC2 sees about 10 to 20 cases a month where salary terms were not honoured, although Mr Au stressed there could be many more cases as not all workers know of the NGO.

HOME’s Mr Tan told CNA that the organisation's help desk sees an average of about 20 cases each month from non-domestic workers on deceptive recruitment.

Of these, an average of four workers have been left in a situation where they neither have employment nor the right to transfer, he said. 

The stakes get even higher when the recruitment process itself puts workers in debt. Workers may have to take out loans or sell existing means of livelihood to pay agency fees – like Mr Jaynal, who sold his rickshaw for a one-way ticket to Singapore.

WHAT AGENCIES ARE PAID FOR

The payment that licensed employment agents in Singapore can collect from a worker is limited to one month of his fixed salary for each year of employment, capped at two months of fixed salary.

Ms Jayaprema said the fees collected by local licensed agencies cover business overheads and services they provide. These include orientation and administrative procedures upon arrival, checking in on the worker and employer during the employment, resolving any grievances, and handling repatriation.

Local licensed agencies are essential to foreign recruitment as they provide accountability, she added.

"The licensed employment agency is responsible to the Ministry of Manpower in many areas to do this job correctly," she said. "There's accountability from the person or agency who processes the (work pass) application."

"On the other hand, the value to the candidate and the employer is to be able to be a proper matchmaker," she added. This includes filling in the "gap of information" between candidates in source countries and employers in Singapore.

Agents ensure that the terms of employment and scope of work are discussed and documented, she said. This includes communicating with the worker in his mother tongue. Agents also screen and interview candidates to ensure they have the required skills.

Dr Sam Yeo is the director of Eight Stones Recruitment, which mainly recruits workers from India, Bangladesh, Myanmar and China for the construction, marine shipyard and process sectors.

On average, the agency collects between S$300 and S$1,500 from each migrant worker. The lower sum is when the employer chooses to foot a higher share of the bill, said Dr Yeo.

Practices differ by industry. Migrant workers in the semiconductor industry do not pay any agent fees in "99 per cent" of cases, as their employers cover the costs, said Ms Shirley Shi, director of business development at Wanco Manpower.

She said this is because semiconductor manufacturers supply multinational corporations like Apple, which are part of a global industry coalition called the Responsible Business Alliance.

These suppliers follow a "code of conduct" for responsible behaviour in supply chains, which includes covering the costs of recruitment, said Ms Shi.

The local agencies told CNA that they usually work with recruiters in workers' source countries to find candidates, but are not privy to the fees that those foreign recruiters charge the candidates. It is also common to be approached by unlicensed recruiters.

Dr Yeo said that on five to 10 occasions in the past five years, Eight Stones Recruitment was approached by foreign recruiters that turned out to be holding fake licences when his agency did background checks. He believes other local agencies have similar experiences.

MOM said that agencies that have "compromised the interest of the migrant worker" or broken rules and regulations in Singapore during the job placement process face enforcement actions.

These range from receiving demerit points to being prosecuted in egregious cases. Agencies may also have their licence revoked.

CUTTING OUT THE MIDDLEMAN

Anecdotally, Ms Jayaprema has already observed a growing trend of employers hiring migrant workers directly, without going through licensed agents. Instead, they take up referrals from existing workers or find job-seekers on social media.

While this has happened for years, there was a "major shift" towards direct hiring after the COVID-19 pandemic, she said.

In the past five years, around 70 per cent of applications for work permit and S Pass holders were submitted by employers, according to MOM.

However, this figure may not be representative of direct hiring. Agencies may be involved in the job placement process even if the application was submitted by an employer. Similarly, agencies may assist employers to submit applications for workers sourced by the employer itself.

Ms Jayaprema's view is that direct hiring leaves both workers and employers more open to the risk of mismatched expectations, or worse, being cheated.

"We're not talking about buying products online ... we're talking about people who are hired to work in Singapore," she said.

Given the difficulty in regulating intermediaries, Mr Au said TWC2 has long advocated "cutting them out of the chain" through an "MOM-endorsed central jobs portal that matches workers to jobs without need for middlemen".

NGOs also highlighted that it is not easy to discern unscrupulous agents or intermediaries.

"Unfortunately, effectively spotting unscrupulous agents is a near-impossible task," said HOME’s Mr Tan.  

NGOs like his do not have information on recruiters based in workers’ home countries and that there are often multiple layers of intermediaries, he added. 

"Migrant workers are highly dependent on such migration intermediaries for a job overseas. 

"Dealing with deceptive recruitment practices requires substantive transnational cooperation and HOME urges policymakers to take decisive action to weed out such criminal activity," Mr Tan said. 

Similarly, Mr Au pointed out that Singapore-licensed agents do not operate in workers’ home countries. As such, the only intermediaries they meet are those who operate as unlicensed freelancers. 

"How to tell an unscrupulous agent apart from a scrupulous one?" he questioned.