Exposed: Hong Kong’s domestic helpers trapped by loan sharks and employment agencies in debt bondage hell
Almost from the minute they arrive to take up employment, many overseas maids find themselves hounded by lenders as they struggle to repay fee loans at exorbitant interest rates
Jane was not new to the experience of being harassed by debt collectors pursuing her domestic helper when she started receiving rape threats from a caller who contacted her day and night.
It was the second time a helper in her employment had fallen into debt and the clutches of a loan shark. In the first instance, she ended up paying off her helper’s debts.
The second time, Jane attempted to hold her ground and not give in to the bullying tactics – but the loan sharks persisted for five months. “It feels like they’re violating your entire life,” she said.
Jane is one of the many employers of domestic helpers interviewed by the Post who described the toll of the scare tactics used by unscrupulous loan agencies.
“You sit there, waiting for them to threaten you. You could be in a meeting and just start getting sent all these threats,” she said.
Eventually, with police support, the harassers gave up – but for Jane the experience was harrowing. And unfortunately, it is a scenario which is common for many of the domestic helpers who come to Hong Kong to work for families in the city.
The minimum wage for a foreign domestic worker is $4210, following a pay rise of HK$100 in October. But the 2.2 per cent rise – with inflation running at 4.4 per cent – has done little to alleviate the debt problems facing many workers, according to advocates.
Hong Kong hosts about 335,000 maids on two-year visas who, according to legal experts and NGOs specialising in this field, are very often the target of unscrupulous loan agencies charging sky-high interest rates.
These credit agencies collude with many of Hong Kong’s thousands of employment agencies which recruit mainly from the Philippines and Indonesia . They charge training fees which workers pay by taking out complicated loan schemes at interest rates of up to 60 per cent. This is money which they sign for but never see.
Hong Kong law prohibits agencies from charging more than 10 per cent of a worker’s first month’s wages. In spite of this, many charge placement fees of more than HK$10,000, colluding with the loan sharks to whom these women are forced to turn in order to work in Hong Kong.
Many helpers, often lacking in financial literacy and with the pressure of dependents to support at home, turn to short-term money lenders for loans.
Loan sharks operate with impunity, charging rates that defy money lender laws and are often found soliciting loans and gifts to domestic helpers in public spaces on weekends.
They promise easy cash, but often resort to frightening tactics to retrieve their money when a payment is missed and the amount they owe doubles over a two or three-week period.
As debts spiral out of control, loan sharks start to bully helpers and their employers until they relent and pay off the debt. It is a tactic they have used for years, according experts on Hong Kong’s migrant labour force.
The strong bonds that can form between employer and maid – owing to their living at home and often taking on parenting roles – are exploited by sharks.
Horror stories circulate of funeral wreaths being left at family homes and red paint splashed on doors, according to David Bishop, a lecturer at the University of Hong Kong specialising in local labour laws and the domestic worker industry.
Bishop is co-founder of social enterprise Fair Employment Agency, which serves to offset the system that facilitates migrant women spiralling into debt by cutting out middleman creditors.
Bishop said that harassment by loan sharks – most often in the form of relentless verbal abuse and veiled threat – wears down employers until they pay off the illegal loans.
Though branded “vampires” and “parasites” in a Legislative Council meeting on manpower last June, the government needs to do more to clamp down on employment agency and loan shark collusion, according to Bishop.
He said the HK$100 pay rise granted to helpers last year had not translated into any decrease in helpers falling into debt traps.
“While raising the salary rise is a move in the right direction, it’s not going to do anything about the wider issue of domestic helpers in debt, especially if there are no additional efforts made on the enforcement side,” he said.
Bishop met with the Commissioner for Labour Donald Tong Chi-keung last week about this issue. “There is genuine interest by the government to regulate more on this, but implementation so far has eluded them. But after talking to him, they do seem to have a sincere interest in improving the situation,” he said.
A code of practice for employment agencies is believed to be in the pipeline, though it will not be legally binding.
A United States report on people trafficking, published last year, highlighted the problem of debt bondage and employment agencies in Hong Kong. It described how workers can accumulate debt of up to 80 per cent in their first seven months alone as a result of excessive and illegal job placement fees.
The US State Department’s Trafficking in Persons Report 2015 urged the SAR government to increase its protection of maids, noting that despite conducting investigations into 1,300 agencies, the Labour department only revoked four licences in the last year, despite numerous reports of collusion between employment agencies and creditors.
A source who handles legal cases involving migrants workers held in debt bondage described how efforts to prosecute unlawful agencies and money lenders are waylaid, responsibility shunted from department to department until, years later, complainants inevitably give up.
Domestic workers are easy targets, because of the uniquely fragile nature of their residency in Hong Kong. Their visas need to be renewed every two years. If flaws are found in the terms of their contract, they can easily be revoked.
This is a strong deterrent to filing complaints about unlawful loan agreements, according to Cynthia Tellez, director of charity Mission For Migrant Workers.
Domestic helpers regularly come to the centre requesting help in responding to the at times very aggressive demands by loan sharks to keep up with their payments.
Their most recent figures showed 196 domestic workers approached the charity in the first three months of 2015 with concerns about their debt situation. In 2014, 1971 women came to them with debt issues – a number which doubled from the previous year.
About 90 per cent of domestic helpers struggle with debt, according to a survey conducted by NGO Enrich, which helps domestic helpers manage their financial woes in a city where thousands of cases of debt collection related crimes are reported to the police each year.
But despite loan-shark intimation being a very common concern for the centre visited by around 3000 women a year, Tellez said that since she began working at the charity in the 1980s, police had not prosecuted one case.
Names of all debt victims featured have been changed to protect their real identities.