Empowering Migrant Workers:

A Field Experiment among Filipino

Maids in Singapore

Slesh A Shrestha, NUS (with Dean Yang, University of Michigan)

Introduction

• International labor mobility

– 232 million international migrants, representing 3.1 percent of

the global population

– More than 90 percent of all international migrants are workers

and their families

– 48 percent of all international migrants are women, who are

increasingly migrating for work

– Remittance flow of US$400 billion in 2012

Introduction

• Transnational labor market

Source: International Migration Outlook 2011, Migration Policy Institute

Introduction

• Transnational job search

– Employees

• Incomplete information on wages, job vacancies, and

qualifications

– Employers

• Incomplete information on productivity and skills

– Suboptimal employment outcomes

– Suboptimal hiring

Introduction

• Migrants in foreign labor market

– Provide factual information on labor market conditions

• To migrants

• In their foreign country of employment

• Effect on job search and employment outcomes

Introduction

• Providing such information improves

– Employment outcomes

– Intentions/expectations/bargaining power

– Knowledge

– No effect on search behavior

– Effect realized through increase in knowledge

• Local labor laws

• Local labor market conditions (wages)

Introduction

• Migrants in foreign labor market

– Immigrants as a share of national labor force

• Australia : 27%

• Canada : 21%

• United States: 16%

• Singapore : 38% (21% excluding FDWs and construction)

Literature review

• International migration and labor market

– Destination country

• Effect on market wage

– Borjas (2003)

– Card (1990)

• Effect on female labor supply

– Cortes and Pan (2013)

• Effect on innovation and productivity

– Borjas and Doran (2012)

– Kerr and William (2010)

• International migration and labor market

– Migrants and job search

• Selection/quantity of immigrants

– Immigrants usually come with/tied to a job

– H1B category requires sponsor employer in the US

– Skill-selective immigration policies

• Search is imperfect and costly

– Suboptimal outcomes for both employer and employee

– Lack of information on wages and vacancies [Beam, 2014]

– High cost [Beam, McKenzie and Yang, 2014]

– Risk [Bryan, Chowdhury, and Mobarak, 2014]

Literature review

• Employer-foreign employee job match

– Employers and employees rely on middle men/labor agencies to perform the match

• 90% of employers of FDW use employment agency

– Based on a list of few characteristics provided by the employer and employee

• 74% use standard FDW bio-data

• But only half of them go on to interview maids

– In some cases, employment agencies’ incentive could be misaligned resulting on poor matching

• Hong Kong

Literature review

• Standard job search model

– Incomplete information about job vacancies, wages and other market conditions

– Employees use their search experience to gather information about labor market

• Learn from their past search experiences

• Update their beliefs about the “true” distribution of offers

– Ability to search for jobs important when information on labor market is unavailable or difficult to acquire

• Take rational choice in uncertain environment

– Acceptable terms and conditions of employment

Literature review

• Sequential “stopping” approach

– Worker receives wage/job offer one at a time

– Has to decide whether to take the offer or reject

the offer and keep searching

– What determines the workers decision of

whether the offer at hand is “fair” ?

– Based on the past offers obtained to date

Literature review: job search model

• Bad initial offer by random luck leads to – Different updating of worker’s beliefs

– Lowers “acceptable” or reservation wage

– Future search behavior

– Explains why individuals who happen to experience a longer unemployment spell (bad draws of offer) have lower reemployment rates and wages

• Burdett and Vishwanath (1988)

• Addison and Portugal (1989)

• Falk, Huffman, and Sunde (2006)

• Gonzalez and Shin (2010)

• Active labor market programs – Employment services that provide job-search assistance and labor

market information

Literature review: job search model

• Lack of knowledge about true job/wage distribution in the labor market

– Incomplete information/knowledge frictions

• Lack of social networks in foreign country

– Inability to search • Labor mobility restrictions for migrants

– In HK, when FDWs find new employer after their contract ended prematurely, they have to leave the country to apply for new permit

– Relaxing Kafila system improved wages in UAE

» Naidu, Nyarko, and Wang (2014)

• Lack of knowledge about mobility/transfer laws – De facto labor restriction

– In Singapore, we find that only 10% of our sample FDWs knew about transfer laws

Literature review: job search model

• Low reservation offer abuse/exploitation

– Deaths of construction workers in Qatar • 237 Indian nationals in 2012

• 241 Indian nationals in 2013

• 185 Nepalese nationals in 2013

– Average work hours of FDWs in Middle East • 108 hours per week in Bahrain

• 101 hours per week in Kuwait

– Reported abuse cases of FDWs in Singapore • 157 abuse cases in 1997

• 53 cases in 2007

Literature review

• Response: regulating/restricting recruitment in source country

– Nepal banned women under the age of 30 from travelling to Gulf

countries for work in 2012 • Shift towards illegal channel (via India)

– Philippines introduced minimum wage requirement in 2006 • In our data, more than 30 percent of Filipina FDWs in Singapore report

earning less than that

• Response: regulating domestic sector in destination country

– Hong Kong and Saudi Arabia introduced minimum wage and

required off-days

– Informal and unstructured nature of household work makes it impractical to set explicit standards and monitor them

• FDWs are not covered by the Employment Act

• “Prefers the free market to determine the wages and other conditions of employment” (Yeoh et al, 1999)

Literature review: FDWs

• Where do they come from? – Philippines : 150,000 (35% of its overseas workforce)

– Sri Lanka : 120,000 (45% of its overseas workforce)

– Indonesia : 66% of those migrating

• Who are they? – Mostly females

– Not necessarily uneducated • 60 percent of our sample FDWs had college degree

– Two year fixed term contract (with renewal)

• FDWs in Singapore – 215,000 FDWs currently working in Singapore

• 1 in every 5 households

– First granted FDW work permits in 1978

– More than 1,000 licensed maid agencies

– Recruitment and employment of FDWs governed by the Employment of Foreign Manpower Act

Background: FDWs

• Employment of Foreign Manpower Act

– FDWs must be female

– Have completed at least 8 years of education

– Originate from approved list of countries

– Employers must have income and needs to hire FDW

– One time security bond of $5000

– Monthly levy of $265

– Personal accident and medical insurance for FDW

– Provide acceptable accommodation, safe working environment

– No minimum wage, working hours and other benefit requirements

Background: FDWs in Singapore

• Employment of Foreign Manpower Act – Allowed to transfer in the middle or end of their contract

• With an approval from their current employer

• New employer will file for a new work permit

• Keeps working for the current employer till the new work permit is

approved by the MoM

• Not required to leave the country before starting the new contract

• Do not have to pay any transfer fee to the government

• Current employer can hire new FDW once transfer is complete

– Statistics on transfer rate not available

• Mean share of FDWs with more than two transfers is 3%

• Mean retention rate (% of its FDWs that have remained employed with

the same employer for one year or more) is 42%

Background: FDWs in Singapore

• Sample – Filipina migrants who are working in Singapore as domestic

workers and are eligible for transfer

– 303 FDWs

• Study area – Around Lucky Plaza every Sunday from early June 2013 to

late September 2013

• Attrition

– 153 FDWs successfully contacted via phone after 6 months

– Retention rate of 60 percent

• Not different across treatment and control

Experiment

• Treatment – Verbal and written information

• Singapore laws about FDW transfers

• Instructions and forms to apply for transfer

• Information on actual job vacancies

– Job posting website called DWJobs.com

– 10 most recent postings in a flyer

– Each posting comes with offered wage and benefits,

brief job description and requirements, and contact

information of the employer

Experiment

Experiment JOB POSTING 1: Domestic Helper on Transfer Wanted Immediately

Contact Number: 98160530

Salary: S$ 550 Property Type: Landed

Area: Seletar Skills Required: Cooking, Housekeeping Description: Good & total housekeeping and some cooking for family of 4 adults. Prefer English speaking, honest, committed, clean and hardworking. off-day

every week, own room plus bathroom.

JOB POSTING 2: Filipino Helper Needed

Contact Number: 96673607

Salary: S$ 520 Property Type: Landed

Area: Steven Rd Skills Required: Marketing, Cooking, Housekeeping

Description:

Able to communicate in English, Independent, and Honest. JOB POSTING 3: Looking for a Transfer Helper

Contact Number: 96633139 Salary: S$ 500 ++

Property Type: Landed Area: Yio Chu Kang

Skills Required: Elder Care, Marketing, Cooking

Description: A local family of six adults staying in 3 storey landed house around Lentor/Yio Chu Kang area looking for a transfer helper. She is required to do

mainly the household chores and preferably able to cook well. Ability to speak a little mandarin will be an added advantage. Willing to pay to a good, honest and hardworking helper! Interested please call Raymond Hp 96633139.

JOB POSTING 4: Looking for a Helper Who Has Got Good Cooking Skills

Contact Number: 97664422

Salary: Negotiable Property Type: Condo

Area: Singapore

Skills Required: Cooking Description:

I’m looking for a helper which is good in cooking and baking. call me if you are. 97664422 thank you

JOB POSTING 5: Australian Expat Family Looking for Help

Contact Number: 96539147 Salary: S$ 550 - 650

Property Type: Landed

Area: Eastwood Village Skills Required: Child Care, Pet Care, Housekeeping, Infant Care

Description: We are an Australian family new to Singapore with a pet dog, an 18 month old boy and a baby due in August. We have recently moved into a 5

bedroom landed property on the Upper East Coast and are seeking assistance in the following duties: Infant Care of our new baby; Child care of our 18 month old son; Housekeeping (including ironing); Marketing and cooking. We are looking for a helper who: Has at least two years experience with

infant and child care (a must); Is good with dogs; Has a happy nature and loves children; Speaks english well; Has at least 4 years experience (some

with Expat families); Is in her 30′s or early 40′s and has the energy to look after a 18 month old boy; Is genuinely interested in being a part of our family for the foreseeable future. All Sunday’s and public holidays are off. Previous employer references are required. If you are interested please contact me via the following with your name and transfer date and we will contact you soon regarding an interview: email: ggillin@hotmail.com or Phone: 96539147 or Text: 96539147. Regards, Greg.

• Treatment

– Improves knowledge of transfer laws

– Improves knowledge of market conditions

• True job/wage distribution in Singapore

– Decreases search cost

• Make it easier by providing job posting flyers

• Salience

Experiment

Findings

• Baseline characteristics – 60% have college degree

– 30% report being paid less than minimum wage set by the Philippine government

– 80% talk to their friends on phone

– 15% have worked on off-days

– 30% report being unsatisfied with employer

– 18% have switched employer in the last year

– 12% report looking for new employer

– 80% report that they would not look for new employer in the next 6 months

– 10% could correctly answer all transfer laws

Findings

Findings

• Improvement on employment outcomes

• Share of FDWs who experienced an improvement in work

hours increased by 9.29 percentage points

• 10% increase over the average improvement among control

FDWs

• No effect on actual job switching

• Improvement on intention/bargain outcomes

• Share of FDWs who report that they would ask for better

working hours increased by 13.6 percentage points

• Treated FDWs are 3 times more likely to negotiate for

better working hours in the next 6 months

Findings

Findings

• Improvement on employment outcomes

• Improvement on intention/bargain outcomes

• No effect on search outcomes/propensity

– Consistent with no effect on job switching

– Maybe decreasing search costs is not the channel

• Improvement on knowledge of transfer laws

– Knowing that one has other outside options improves their

reservation offer

– Increase bargaining with their current employer

• Does treatment affect FDWs who are most vulnerable?

• Any additional evidence on knowledge channel?

Findings

Experiment

• Improvement on employment outcomes

• Improvement on intention/bargain outcomes

• No effect on search outcomes/propensity

• Improvement on knowledge of transfer laws

• Treatment improves employment outcomes of FDWs who

might have been matched with a suboptimal employer

– Also increases job switching among these FDWs

• Treatment has no impact on employment outcomes of

FDWs with already complete knowledge about Singapore

laws in baseline

Findings

• Frictions on labor mobility/information worsen employment outcomes

• Government interventions could help labor markets work more efficiently

• Relying on market-friendly government actions could be more effective in curbing labor abuse/exploitation

• Ministry of Manpower Settling-In-Program for FDWs – Shares information on Singapore laws

– Limited to new arrivals

– One time

• But more active and engaged information dissemination initiatives could prove helpful

Extensions

Thank you