A missed opportunity to tackle debt-bondage faced by migrant domestic workers?

Many of the world’s largest financial companies have made bold promises to promote responsible investing and to combat human trafficking. Yet, behind these commitments lies exploitation much closer to home, literally. In the Asian financial hubs of Hong Kong and Singapore, where many of these firms have offices, migrant domestic workers (MDWs) are frequently trapped in debt bondage, a form of modern-day slavery. Many might be unwittingly hired by foreign finance executives from these firms, who could be blinded by the apparent strict rule-of-law in these global cities. 

Based on findings from various research reports, employment agencies have likely charged illegal recruitment fees to more than half of the 600,000 MDWs in both countries. All reports find the incidence of illegal or excessive fees (that is, those in excess of the legal amount allowed) to be very high and the resulting debt contributes to trafficking for labour exploitation. Despite these well-documented human rights abuses, the financial sector has largely turned a blind eye to the problem, leaving its non-local executives to use, often unwittingly, unscrupulous agencies that charge illegal or excess fees during the hiring process.

The Domestic Workers Justice Initiative (DWJI), an organisation that advocates for the rights of migrant domestic workers, and which I advise, believes that global investment firms can leverage their resources and profile to address this exploitation by establishing a system of best-practices that others could adopt. DWJI has a clear mission: employers of MDWs, particularly foreigners in high-paying roles, need to be made aware of how illegal hiring practices harm domestic workers and understand the role they can play in countering such practices. Moreover, the firms they work for must encourage the use of ethical employment agencies to break the cycle of exploitation. 

However, for many of the 301,600 MDWs—the majority of whom are women—the journey to Singapore can and frequently does come with a hefty price tag. EAs often charge them recruitment fees in excess of the legal limit that can amount to several months’ salary. It is worth noting that, due to the nature of migration for work, the illegal fees are charged in a number of locations. So, for example, the majority of those coming from the Philippines will pay excessive or illegal fees disguised as training costs despite local laws prohibiting this or limiting the amount. Even though these fees are not charged in Singapore, they may be collected via money lending or loan arrangements. This practice leaves workers in debt even before they start their jobs. The women who fall prey to these fees are often from Indonesia, Myanmar, the Philippines, and South Asia. Far from home and in debt, many feel they have no choice but to endure mistreatment and overwork for fear of losing their jobs. For them, abuse is not just physical but also financial—a silent and key indicator of trafficking driven by the very agencies that foreigners and locals use to hire MDWs who reside in their homes. 

One might expect that global financial institutions, which champion compliance and corporate responsibility, would want to do everything possible to counter these illegal and exploitative practices. After all, their employees often spend a great deal on domestic help. 

DWJI proposes that financial firms adopt the CARE (Contact, Anti-trafficking education, Resolve, Exit) programme, modelled after a successful US State Department initiative. CARE recommends that an independent expert interviews all domestic workers newly hired by the firm’s foreign employees to ensure that no illegal fees were charged. This expert would also act as a contact in case of abuse. Such a system will offer immediate relief and accountability, and provide data on agencies that are charging illegal fees, which would be useful to employers, workers, consulates of sending countries, and the Singaporean government. 

What’s more, this certification programme would cost each of the companies an estimated S$70,000 annually—pocket change for many large finance firms. This amount would go towards hiring the independent experts—most likely anti-trafficking experts from the non-profit or legal sector—who would administer the programme and the running costs. Where relevant, the programme could also assist MDWs to recoup illegal fees they have been charged or reimburse them if the amount could not be recouped from the agency. Yet, despite the obvious benefits and minimal costs, no major financial firm in Singapore, or elsewhere for that matter, has agreed to adopt this solution.

Rather than make direct appeals to these firms, DWJI’s anti-trafficking campaign targeted institutional investors—the pension funds, endowments, and asset managers that hold tremendous sway over private equity firms. The goal was to get these institutions to pressure their private equity suppliers to adopt remedial measures along the lines of the proposed CARE programme. These investors often sign on to global pledges like the United Nations Principles for Responsible Investment (UN PRI), which commits them to addressing human rights abuses, including trafficking. Our campaign’s core argument was that when a firm’s business operations require it to bring a foreign executive into an environment where trafficking-related felonies are likely, it was obligated to take preventive or remedial measures. At a minimum, the firm would inform the newly arrived executive of the risks and suggest using an ethical employment agency that does not charge illegal fees. Institutional investors have enormous leverage over private equity firms because they account for most of the industry’s revenue. They’re also among the world’s largest purchasers of legal, accounting and banking services, which gives them the leverage to get others in the private equity “ecosystem” to adopt reforms too. 

A key aspect of the campaign consisted of couriering 5,000 packages to board members and senior employees at the world’s top 100 public pension funds and university endowments that invest in global finance firms with Singapore offices. These were some of the largest clients of the private equity industry and in many cases bound by anti-trafficking laws. DWJI framed its letter to each recipient as reporting crimes linked to the institution’s supply chain, often using their own anti-trafficking statements to hold them to account. The intent was to raise awareness of the institutional investor link to these crimes and to explain that simple low-cost measures that had proven effective in similar situations were available. The hope was that if the issue was framed as one of compliance, not morality, investors would be more willing to take it seriously and investigate.

DWJI’s campaign results thus far have been disappointing. Despite presenting clear and actionable solutions, our efforts were met largely with silence, deflection or boilerplate responses. Of the over 100 institutions contacted, only a handful engaged on this issue. For instance, one public pension fund immediately appointed an environmental, social and governance professional for this matter, and DWJI had a lengthy and substantive conversation with the institution’s representative. A development capital fund said that they had sent a letter to the private equity firms they work with inquiring about this issue. Similar engagements were had with several other institutions, but from what we could tell, none led to any substantive engagement with their private equity suppliers (refusing to even raise the issue) or demands for any remedial measures or an investigation. The overall apathy reveals perhaps a rampant hypocrisy among institutional investors, the vast majority of whom have made public pledges stating that they will actively consider issues like this and take appropriate action. 

While the exact language varies, the commitments can generally be summed up as an expectation that investors will use their leverage to address human trafficking risks in their business relationships (eg, Goal 3 from the UN PRI’s Blueprint for Mobilizing Finance Against Slavery and Trafficking). Nothing requires an institutional investor to join the UN PRI or to make these far-reaching pledges of ethical conduct. But in DWJI’s view, when they do, then they must live up to the commitments they have made. The contradiction is stark: institutions that publicly claim to prioritise ethical investing are unwilling to hold companies accountable for trafficking-related crimes tied to their own employees. The fact that the employees enter into this transaction unwittingly is immaterial. This isn’t just a failure of responsibility; it’s outright hypocrisy.

Various firms have, however, shared a key objection: that hiring a domestic worker is a personal matter and therefore not actionable. We disagree on several fronts. For one, by educating their employees about trafficking risks and promoting the use of ethical agencies that charge no placement fees to migrant domestic workers, firms can ensure that they are not complicit in these crimes. Secondly, firms already provide many perks that are largely personal in nature, including massage therapy, gym memberships, apartment search and school advisors. No one objects to provision of these services on the basis that they are too personal. So why would a service that assists with the lawful hiring of a domestic worker be deemed too personal? Some have further argued that forcing an ethical hiring programme on executives would be an intrusion. On the contrary, any ethical executive would view a programme as a valuable perk, not a burden or intrusion. 

These same executives are the very people institutional investors rely on to prevent trafficking hidden deep in portfolio company supply chains. If such executives condone well-documented trafficking-related offences in their personal lives, how can they be trusted in a business context when the financial rewards of looking the other way are so much greater? But, if forcing a programme on executives is deemed going too far, a voluntary one would be a big step in the right direction. Finally, imagine if somehow the majority of newly arrived executives were victims of a credit card scam or some other fraud perpetrated by employment agencies when they hired a domestic worker. Certainly, if that were happening, firms would warn newly arrived expats and provide a list of reputable agencies. No one would object to such assistance on the basis that it was an intrusion into the executive’s personal life. 

The US State Department’s Trafficking in Persons (TIP) Report serves as a reminder that while Singapore meets the Report’s minimum standards for the elimination of trafficking, more can be done. For instance, the report noted that the government has failed to take steps to eradicate recruitment fees charged to workers by Singaporean labour recruiters or ensure any recruitment fees were paid by employers. While international standards, like the International Labour Organization’s Fair Recruitment Initiative, advocate for zero recruitment fees, in Singapore, EAs are permitted by law to collect minimal fees. The TIP Report recommends that Singapore eliminates all recruitment or placement fees charged to workers by labour recruiters and to ensure that any fees are paid by employers. 

Despite the government’s continued efforts to improve its support for MDWs by strengthening existing policies to detect signs of abuse—such as increasing random house checks, enhancing the six-monthly medical exam, and conducting two interviews, an increase from one in 2021, during the first year of employment—Singapore continues to face significant challenges in the exploitation of domestic workers. Issues like excessive working hours, restricted freedom of movement, and the coercive practices tied to recruitment agencies are all highlighted in the report. The message is clear: Singapore’s reputation as a modern, progressive city-state is at risk of being tainted by these ongoing abuses.

For real change, both government enforcement and employer accountability must improve. This requires a shift in attitudes and behaviours that will only come about when social norms are challenged and examples of best practice are shown to be effective. Not only can financial firms operating in Singapore play a huge role in changing attitudes, they also have a moral obligation to ensure employees are not contributing to this exploitation by hiring through unethical agencies. By doing so, they would also set an example that could have a ripple effect.

DWJI’s efforts may not have achieved immediate reforms, but they’ve revealed a much deeper issue: the disconnect between what institutions say and what they actually do. Institutional investors and financial firms cannot continue to ignore the exploitation happening under their watch. By doing so, they help to perpetuate a system that exploits vulnerable women workers from the global south and places employees in the unenviable position of being part of the exploitation. It’s time to close the gap between words and actions. If we’re serious about ending modern-day slavery, then the next time a company touts its commitment to corporate responsibility, we must ask them—what are you doing to stop the exploitation of migrant domestic workers?

Robert Godden is an advisor to the Domestic Workers Justice Initiative, an organisation committed to ending trafficking and exploitation within expatriate communities. He is the founder of Rights Exposure, an award-winning non-profit consultancy that has worked extensively with migrant worker organisations, trade unions and the International Labour Organisation. Prior to this he worked on migrants rights for Amnesty International across Asia, including in Hong Kong, Nepal and South Korea.