This report on OFWs debt burden is being republished with PCIJ’s permission. —Ed.
(Last of two parts)
Many Overseas Filipino workers (OFWs) in Hong Kong are hounded by their lenders from the Philippines, who even hire debt collectors to threaten and harass their employers.
The Philippine Center for Investigative Journalism (PCIJ) found that Hong Kong employers have received threatening calls and visits from the debt collectors demanding payment for the Filipinos’ mounting debts.
In extreme cases, the employers receive snakes or photos of their pets with eyes crossed out in their mailboxes, or find their door smeared with red paint.
“Marami pong kasong ganyan (There are many such cases),” Dolores Balladares Pelaez, chair of the United Filipinos in Hong Kong, an alliance of Filipino migrant groups, told PCIJ. “Of course, the employers get angry and are stressed out.”
Some Hong Kong employers have since required that applicants have no standing debt. For good measure, some confiscate the worker’s passport and contract on arrival, documents that can be used as loan collateral. Such confiscation is prohibited by Philippine and Hong Kong laws.
In the Philippines, applicants take out loans at interest rates higher than 8% per annum—from lenders specifically referred by recruiters—to pay for a raft of excessive fees, including placement fees that are lumped with training and medical examination fees.
As their debts pile up, the overseas Filipino workers (OFWs) are forced to take out new loans to pay for old ones, in an endless cycle of indebtedness.
“The worker’s pay is small. A month’s salary isn’t enough to pay off a loan,” Pelaez said, noting that a migrant worker had to allot the monthly pay for loan payments, family expenses back home, and personal expenses. “It’s not really enough.’’
In China’s special administrative region, migrant domestic workers are paid a minimum monthly salary of HK$4,730, or P33,000.
The problems are clear, but the solutions are not:
1. OFWs need more guidance during the recruitment process so they do not fall victim to unscrupulous recruiters.
2. Not all violators are punished, promoting a culture of impunity among recruitment agencies and third-party services.
3. Some lenders impose high interest rates.
4. Some lenders shirk responsibility when the debts are sold to partners that harass OFWs to collect payment.
11 convictions in HK
The Hong Kong government, which has allowed the employment of foreign domestic helpers (FDHs) since the 1970s to meet the shortage of live-in helpers, acknowledged the risk of debt bondage among migrant workers. But it has no data on the matter.
In the past five years, it has prosecuted and convicted 11 employment agencies for overcharging commissions pegged at 10% of a worker’s monthly wage. It has also ensured that employers shoulder the workers’ medical examination and visa fees, among others.
But the Hong Kong authorities said governments should also do their part in addressing the issue of excessive placement or training fees.
In a joint response to PCIJ, the Hong Kong Labour Department, Immigration Department, and Police said the problem lies with “the indebtedness of the FDHs in their home countries before coming to Hong Kong.’’
The Hong Kong government cannot tackle this alone, they said, adding:
“We have repeatedly appealed to the governments of FDH-sending countries to address the problem of excessive placement or training fees charged by intermediaries in the FDHs’ home countries so as to tackle the problem of debt bondage at source.”
Migrante International, a global network of Filipino migrant organizations, cited the mandate and responsibility of the Philippines’ Department of Migrant Workers (DMW) “to coordinate with the other government agencies that can also put a stop to these cases.”
“But still, [there’s no] strong enforcement and regulation on these lending agencies, and further investigation,” said Migrante International chair Joanna Concepcion.
DMW Undersecretary Bernard Olalia admitted that there were regulatory “gaps” concerning agencies that collect illegal fees. He said even some compliant agencies bend the rules “just to find a way to charge the OFWs” even if the law clearly prohibits it.
Olalia, however, said the DMW wasn’t treating these agencies with kid gloves. He said erring agencies with valid licenses are charged with administrative cases and violations of recruitment laws, and other agencies with expired or invalid licenses face criminal cases.
From 2018 to 2022, a total of 35 recruiters operating without a license were convicted and 5,099 agencies were charged with recruitment violations, according to DMW data.
High interest rates
Another factor in migrant workers’ debt bondage is the high interest rates in Hong Kong.
Based on Migrasia’s research, a third of surveyed OFWs took on debt “larger than their annual household income, in order to finance costs associated with migrating overseas.”
“And then you’re talking about interest rates that in Hong Kong often exceed 100%,” Migrasia said. “We’ve seen them over 300%, which means that if you made the minimum payment, you would never get out from underneath that debt. So what do you do? You borrow more money, right? And then you have a debt cycle that you can’t get out of.”
Lending agencies based in the Philippines have also grown wiser. Instead of going after their Filipino clients, they outsource debt collectors to do the job for them. In cases of “bad debts,” they sell loans to their counterparts in Hong Kong.
Advocacy groups said this was one way to collect excessive fees.
Nolivienne Ermitaño, assistant director of the Financing and Lending Companies Division of the Securities and Exchange Commission (SEC), said Philippine lenders and their third-party service providers “should be jointly liable, solidarily liable for that.”
“That won’t work,” he said. “You (the lender) are still part of it because you were the one who talked to the borrower in the first place. You can’t say you’re not responsible for that anymore.’’
On average, OFWs would take more than nine months and spend a fifth of their monthly salary for debt repayment. But some reported a repayment period of as long as three years, a year longer than the contract of household service workers, according to Migrasia data.
Officials said migrant workers need to do due diligence before processing pre-employment papers, and verify the legitimacy of licenses of recruiters and lenders with the regulatory authorities.
The DMW website lists licensed recruitment agencies for both land-based and sea-based overseas jobs. The list includes closed or permanently banned agencies, and those with canceled or suspended licenses.
The SEC website also lists lending companies and financing companies that were issued certificates of authority.
Ermitaño acknowledged that OFWs’ circumstances may “induce [them] to suspend their financial prudential thinking.” He said migrant workers have to be “discerning” and “skeptical” in order to preempt predatory practices and debt bondage.
The Philippine Overseas Employment Administration (POEA), now absorbed by the DMW, has identified fees to be shouldered by household service workers and by employers, to serve as a guide to Filipino applicants.
The DMW’s Olalia stressed that expenses that may be charged to the employer are neither reimbursable nor deductible from a worker’s pay.
Advocacy groups have cited mechanisms for migrant workers to seek redress for their grievances.
The DMW offers legal assistance and conciliation services, the SEC accepts complaints on unfair lending practices, the Department of Labor and Employment processes money claims, and courts hear illegal-recruitment complaints.
Workers living in far-flung areas can request assistance from the Public Employment Service Office, a multi-employment service facility maintained by local governments, community-based organizations, and state universities and colleges.
But here lies the problem: Not all migrant workers are aware of their options.
“They are not informed, they are not aware, and if you’re not aware of your rights, you cannot invoke your rights,” Olalia told PCIJ.
According to Olalia, a migrant worker can file a complaint, and the DMW can provide legal aid from the preparation of the affidavit to the prosecution of the case. Otherwise, the DMW may investigate the complaint on its own, requiring the worker to serve only as a witness.
But based on the SEC’s experience, many workers do not push through with their complaint once the issue is reported in the media and the harassment from lenders or recruiters stops.
“Mabilis ba? (Is the action fast?) What will it take from my (the OFW’s) end? Gaano ba katagal ‘yan? (How long will it take?)” Ellene Sana, executive director of the nonprofit Center for Migrant Advocacy, said, citing the OFWs’ concerns.
She pointed out that the bureaucratic process requires the time, energy, and money of complainants, and that a host of issues “make the worker think twice or thrice whether to pursue [a case] or not.”
Sana also agreed that many workers are aware of recruitment violations but sometimes go along with these out of “desperation to get the job.”
This story was produced as part of the Trafficking Inc. investigation by journalists from the International Consortium of Investigative Journalists, The Washington Post, NBC, WGBH Boston, Arab Reporters for Investigative Journalism, the Philippine Center for Investigative Journalism, and the Investigative Reporting Program at the University of California, Berkeley.