Philippine workers' law needs prompt revision

Overseas workers are the lifeblood of the Philippine economy, so it makes sense that a law has gone into force ensuring that a comprehensive insurance policy accompanies each new employment contract. Recruitment agencies had long been pushing the idea to protect against liability, but it became a political issue during the last election campaign and was quickly turned into legislation. The measure is obviously welcome, but it is a pity that in the haste to draw up and approve it, lawmakers overlooked the fact that Hong Kong and some other jurisdictions already provide such protection. President Benigno Aquino has to put an end to the confusion by ordering a freeze and taking the necessary corrective steps.

Doing so promptly is in everyone's interest. Foremost is Hong Kong employers of domestic helpers, who under local law already have to pay HK$1,350 in insurance cover for each two-year contract. The new Philippine legislation stipulates that recruiters have to pay the US$144 fee for the new policy, but there is concern that they will surreptitiously try to pass the cost on. Hong Kong's insurance protection is already comprehensive; there is no need for it to be supplemented and even less for employers to double-pay.

If employers are not made to shoulder the cost, there is a chance that workers will. Recruitment agencies in the Philippines already charge a three-month fee to domestic helpers who want to work in Hong Kong, an amount equivalent to one-third of annual per capita income. The firms have a reputation for using market forces to demand even more, so it would be simple for the unscrupulous to palm off the new fee. Corruption is rampant, after all.

The law means big business for the three insurance companies chosen to provide policies - with nine million or more Filipinos working overseas, they have got much to gain. So, too, have the agencies, which have often had to deal with costs that insurance would otherwise have provided for. Lastly, there are the domestic helpers trying to get to Hong Kong. Employers here are not willing to take them on until the confusion has been straightened out.

That is a simple matter. Just as with a Philippine law on double taxation, a line needs to be inserted in the new legislation making it clear that employers in places where insurance is already mandated need not pay again. Aquino should immediately stop the provision and have Congress review it and make the necessary additions. By doing so, he will ease minds and show a commitment to sensibly administering what, at face value, would seem to be a worthy law.