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Indonesia/Malaysia: End wage exploitation of domestic workers

Human Rights Watch News Release - May 10, 2010

Ensure minimum pay in labor pact, monitor recruitment fees

Indonesian domestic workers earn shamefully low wages for their long hours of work and dedicated service to Malaysian families. It is also strikingly discriminatory when domestic workers from other countries automatically receive higher wages. – Nisha Varia, senior women's rights researche

New York – Indonesian and Malaysian ministers meeting in Kuala Lumpur today should ensure that pending revisions to a labor pact include a minimum wage and stronger oversight of recruitment fees, Human Rights Watch said. The two governments have indicated their agreement to revise a 2006 Memorandum of Understanding (MOU) to allow domestic workers to keep their passports and have a weekly day of rest, but negotiations have stalled on a minimum wage.

Today's session is to prepare for a meeting next week between President Susilo Bambang Yudhoyono of Indonesia and Prime Minister Najib Razak of Malaysia. During the one-day preparatory meeting, officials will try to resolve differences on contentious bilateral issues, including border enforcement and labor migration of domestic workers.

"Indonesian domestic workers earn shamefully low wages for their long hours of work and dedicated service to Malaysian families," said Nisha Varia, senior women's rights researcher at Human Rights Watch. "It is also strikingly discriminatory when domestic workers from other countries automatically receive higher wages."

Approximately 300,000 domestic workers, mostly from Indonesia, work in Malaysia. Many work up to 18 hours a day, seven days a week, for wages of 400 to 600 ringgit (US$118-177) a month. Domestic workers must typically turn over the first six to seven months of their salary to repay exorbitant recruitment fees charged by private labor brokers for placing them in their jobs.

When salary deductions to repay recruitment fees are taken into account, the Indonesian domestic workers only earn an average of 300 to 450 ringgit (US$89-133) a month over a two-year contract.

In the absence of government regulations, employment agencies and employers typically set domestic workers' salaries based on their country of origin instead of their education and experience. Filipina domestic workers in Malaysia earn the highest salary at US$400 a month because of requirements imposed by the Philippines government. Malaysia offers the lowest wages in comparison to other countries employing large numbers of Indonesian domestic workers. For example, Indonesian domestic workers in Saudi Arabia are entitled to a salary of 800 riyals (US$213) per month without any deductions.

Malaysia has no national minimum wage, but the Human Resources Ministry is conducting a study to consider introducing one for private sector workers. The Malaysian Trades Union Congress advocates a minimum wage of 900 ringgit (US$266), and the Malaysian government considers earnings less than 750 ringgit (US$222) to fall below the national poverty line.

"When people are desperate for work, they have little power to negotiate decent terms of employment," Varia said. "The current plight of Indonesian domestic workers is a clear example of when governments should step in to prevent unchecked market forces that lead to discriminatory and exploitative working conditions."

Large numbers of complaints from domestic workers of nonpayment of wages and a series of high-profile abuse cases led Indonesia to suspend migration of domestic workers to Malaysia in June 2009 until new protections were put in place. After several bilateral meetings and missed deadlines, Indonesia and Malaysia still disagree on Indonesia's demand for a minimum wage, and the current draft agreement will give employers the option of paying a worker to forego the weekly day of rest, a provision that can be abused easily. Recruitment fees are also a major problem, Human Rights Watch said.

"Protection of domestic workers' wages is not only about increasing the level of their monthly salary, but also ending the practice of deducting salaries to repay recruitment fees," Varia said. "This practice contributes to abuse and forced labor, and both Indonesia and Malaysia have failed miserably to oversee labor recruiters and their profiteering from migrant women."

Indonesian labor recruiters charge high placement fees to migrant domestic workers that often exceed reasonable costs. Since most migrant domestic workers are unable to pay these fees, the Indonesian agency typically offers them a "loan." The loan is passed on to Malaysian recruitment agencies or employers, who then take the first six to seven months of the domestic workers' salary as repayment.

Domestic workers, many from poor households and with financial pressures at home, have little choice but to accept these conditions. This system contributes to domestic workers being trapped in abusive situations as some employers may restrict their freedom of movement to prevent them from running away before the debt is repaid. In other cases, domestic workers may be pressured by employment agencies to stay with abusive employers until the debt is repaid, or they endure such conditions so that they can ultimately send money home.

Human Rights Watch released a statement on March 4 detailing gaps in the proposed revisions to the MOU and recommendations for reform. The recommendations include a commitment to extend equal protection under Malaysia's labor laws to domestic workers, under Section XII of the Employment Act of 1955; provision for a standard contract that ensures minimum labor protections, including a 24-hour rest period each week, a fair minimum wage, a limitation on weekly hours of work, and benefits; and stronger regulations governing recruitment agencies, including eliminating salary reductions to repay recruitment fees, and providing mechanisms to monitor and enforce these standards.