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A third of foreign domestic workers in Singapore in debt, half have no bank account: Report

SINGAPORE — Foreign domestic workers have contributed significantly to Singapore’s economy, but they are often financially excluded, and some return home worse off, a new study has found.

A third of foreign domestic workers in Singapore in debt, half have no bank account: Report

The report found that foreign domestic workers make a substantial contribution to the Singapore economy, but some face significant financial difficulties.

SINGAPORE — Foreign domestic workers have contributed significantly to Singapore’s economy, but they are often financially excluded, and some return home worse off, a new study has found.

The study — commissioned by information services company Experian and Hong Kong charity Enrich — revealed that the 250,000 foreign domestic workers here contributed some US$8.2 billion (S$11.2 billion) to the Singapore economy last year.

In doing so, they contributed 2.4 per cent of the gross domestic product — the main measure of economic output.

However, almost half of them do not have access to a bank account and a third are in debt.

The main reason for debt was loans taken before arriving in the country of work, and loans raised to deal with family emergencies.

Many workers also did not see the benefit of opening a bank account or the need to do so.

However, the study found that in Malaysia, with less strict regulations, a much higher 86 per cent of foreign domestic workers have bank accounts.

The total economic contribution of foreign domestic workers in Singapore was calculated by combining the workers’ personal expenditure, the real value of paid domestic work and the value of freeing up mothers to participate in the labour force.

Allowing mothers to re-enter the labour force added US$2.6 billion (S$3.5 billion) to the Singapore economy, the report stated. This includes savings of US$500 (S$675) in monthly childcare costs per household in Singapore.

At the same time, the foreign domestic workers also contributed back to their home countries. Singapore-based foreign domestic workers remitted a total of US$931.5 million (S$1.3 billion) last year.

The study was based on interviews and surveys with 300 foreign domestic workers from Hong Kong, Malaysia and Singapore conducted late last year.

It also drew on regional data, such as the Census and Statistics Department Hong Kong and Ministry of Manpower Singapore.


Domestic work, whether paid or unpaid, is traditionally performed by women and has been “historically undervalued”, the report said.

Ms Lucinda Pike, Enrich’s executive director, highlighted that the “sobering reality” is that domestic workers move away from home to work for financial reasons, to provide a better future for their families, but “many return home worse off”.

More foreign domestic helpers are also taking out loans here. In Singapore, the number of foreign domestic helpers who took loans from licensed lenders rose from about 1,500 in 2016 to 12,000 in 2017. In the first half of last year, that figure soared to 28,000.

The Government set a loan limit for low-income foreigners last November, which led to many domestic helpers turning to voluntary groups for help to negotiate repayment plans with moneylenders, TODAY reported.

The influx of foreign domestic workers is expected to continue, as more households become increasingly reliant on them for child and elder care, the report said.

Thus, the researchers aimed to show that domestic work is a key contributor to economic growth, and should be valued accordingly. Domestic workers can also be given greater access to financial education and services that better meet their needs.

The report also called for better regulation over existing financial organisations, given findings that many domestic workers turn to illegal moneylenders such as loan sharks to borrow money instead of formal institutions, placing themselves and their employers at higher risk.


One-third (34 per cent) of foreign domestic workers in Singapore are in debt, which is comparatively less than in Hong Kong (83 per cent) and Malaysia (65 per cent).

The average size of debt among foreign domestic workers interviewed in the Asia-Pacific is 4.5 times their monthly salaries.

Overall, the high indebtedness among foreign workers surveyed in all countries is mainly due to their existing debt — 73 per cent of respondents were in debt before arriving in the country of work — and loans raised to deal with family emergencies (77 per cent).

They are further burdened with extra agency charges both in their home country and the country in which they work.

The report stated that at the current repayment rate of 25 per cent in Singapore, workers here are likely to take an average of 28 months to clear their debts.


Most foreign domestic helpers borrow from their families, friends or employers, instead of relying on formal financial services.

Across the Asia-Pacific, 82 per cent of foreign domestic workers borrowed from families and friends, 39 per cent borrowed from employers, and 34 per cent borrowed from the unstructured sector, which includes loan sharks.

Close to 40 per cent took loans from commercial banks.

The report said that foreign domestic workers who borrowed from formal financial institutions have bank accounts, while those with no bank accounts relied on other sources, indicating that bank account ownership has an effect on increased reliance on formal financial institutions.


Only 51 per cent of domestic helpers working in Singapore have a bank account.

The main reason was that they did not see a need to have a bank account or the benefits of having one.

Some also lacked the required documents. Previously in Singapore, domestic helpers required employment documents and minimum amounts, among other criteria, to open a bank account. As such, some kept their salaries in cash while others entrusted their earnings to their employers.

However, this is changing as Singapore’s Ministry of Manpower has recently prohibited employers from safekeeping their domestic helpers’ money from the start of this year.

Applying for a bank account for foreign domestic workers via the Centre for Domestic Employees would also waive the minimum deposit requirements.

Close to one-third of foreign domestic helpers surveyed reported a lack of money as a reason for not opening a bank account, and others said that it was the lack of digital literacy.

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