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INPUTS TO THE REVIEW BY THE THE HKSAR GOVERNMENT OF ITS POLICY ON FOREIGN DOMESTIC HELPERS 

 

 

"The proposed levy is discriminatory. If a tax is to be applied to imported workers, it should be across the board on all domestic workers and all those who are admitted under the scheme for professionals and skilled workers from all sources."

The Philippine Consulate General in Hong Kong SAR expresses deep concern over pending proposals to impose a levy on foreign domestic helpers (FDHs) or on employers of FDHs and/or to reduce the minimum allowable wage (MAW) of Foreign Domestic Helpers.

 The HKSAR Government has always acknowledged the significant economic and social contributions of the Filipino domestic helpers to the Hong Kong society over the years. These Filipino workers also serve as a major link in bringing about greater understanding between our peoples.

 The Philippine Government is equally appreciative of the mutual benefits arising from Hong Kong’s hosting of our FDHs.

Close cooperative relations between the Philippines and Hong Kong span many centuries. Political and economic ties remain excellent. We shall continue to further strengthen our bilateral relations through the coming years.

       

These proposals would adversely affect FDHs who are already receiving the lowest wages and working the longest hours in Hong Kong. It is our view that the proposed levy or any measure that would reduce the existing remuneration of FDHs at this time would be inequitable and clearly discriminatory. 

As Hong Kong faces great economic challenges, the Philippine Consulate General hopes that the HKSAR Government will find more creative ways in addressing its budget deficit, its rising unemployment problems and the plight of its local domestic helpers other than targeting FDHs.

 The Consulate has faith and confidence that the HKSAR Government, in the review of its over-all policy on foreign domestic helpers, will exercise its prerogative judiciously and fairly in the best interests of all parties concerned.

The Philippine Consulate General is greatly appreciative of the openness and reasonableness of the HKSAR Government in welcoming our inputs to the review of policies impacting on FDHs.

In this spirit, the Philippine Consulate General wishes to submit, for the consideration of the HKSAR Government, the following views and comments which were put together in the course of its consultation with the Filipino domestic helpers, the Filipino expatriate community, the business community, concerned colleagues in the consular corps and other concerned groups in Hong Kong:

The Philippine Consulate General hopes for the HKSAR sympathetic understanding of its inputs.

 1.  FDHs favorably contribute to the Hong Kong economy.  

The HKSAR Government and the Hong Kong people have always acknowledged the significant contributions of FDHs to the Hong Kong economy.

a)     With reliable Filipino domestic helpers at home, Hong Kong women have been given the opportunity to look for lucrative jobs, thus, increasing productivity and household incomes in Hong Kong.

b)     Despite the sluggish economy, demand for FDHs has increased. This is because more housewives have been forced to re-enter the job market to make both ends meet. These women can do so only by delegating their household duties to the helpers.

c)      A substantial part of the income of Filipino domestic helpers is spent in Hong Kong. A survey conducted by Hong Kong News reveals that only 45% of a Filipino workers’ salary is remitted to the Philippines. The remaining 55% is spent for personal and other services. This means that a bigger portion of the helper’s income is plowed back to the economy through their consumption of goods and services in Hong Kong.

d)     As Filipino domestic helpers are subjected to the same economic difficulties as other Hong Kong residents (such as increased cost of food, clothing and other basic necessities), any measure that will reduce directly or indirectly their income would adversely affect their spending capacity to buy Hong Kong goods and services.

 2.         The proposed levy on FDHs or their employers or any reduction in the minimum allowable wage (MAW) of FDHs is inequitable and discriminatory.

a)     The poor and the weak in society need the most protection. FDHs are vulnerable to exploitation considering their existing wage level and the nature of their employment and therefore in most need of     government protection. Imposing the levy or further lowering their meager income could open the floodgates to more exploitation. The rationale of having a minimum wage is to provide protection and a safety net to the weakest and poorest in society, specially in times of an economic downturn.

b)     The proposed levy is unjust and inequitable. Proponents conveniently call it levy on employers but it is coupled with a corresponding wage cut on FDHs in the same amount. It is actually  an indirect tax on FDHs. In Hong Kong, in order to be liable to salaries tax, a HK resident must have an annual income of HK$108,000 (or HK$ 9,000.00 a month) if one is single, or, HK$ 216,000 a year (or HK$18,000 a month) if married, or, HK$246,000 a year (or HK$20,5000 a month) if married with one child, and so on.  If the proposal is approved, FDHs will be directly or indirectly be paying HK$6,000 a year. FDHs already receive the lowest wages and work the longest hours and yet theFDHs’ earnings are being proposed to be taxed by around 14% to 20%. Taking into consideration Hong Kong’s salary tax structure, the proponent of this levy is saying that the FDHs who earn HK$3,670 a month, is of the same taxable bracket as a Hong Kong junior executive who earns more than 7 times her salary. If the HKSAR Government approves a new law taxing FDHs by HK$ 500 to HK$750 a month, in whatever form and scheme, it will in effect be carving out a new class of taxpayers from the Hong Kong population, separate and distinct from the present taxpayers, and tax them higher than most low to middle-income members of the population.

c)     The proposed levy is discriminatory. If a tax is to be applied to imported workers, it should be across the board on all domestic workers and all those who are admitted under the scheme for professionals and skilled workers from all sources.

d)     It is unjust for FDHs to share Hong Kong’s pain but not its gain. Monthly household income and GDP since 1982 shows that an FDH’s salary has lagged behind the growth in Hong Kong’s GDP and median monthly income. In the meantime, wage levels for cleaners in sanitary services working for eight hours a day rose from HK$5,062 in 1999 to HK$5,430 in 2001 while workers in Chinese restaurants working 9 hours a day received HK$6,782 in 1999 and HK$6,873 in 2001. In contrast there was no increase in wages of FDHs working 16 hours a day, six days a week, from 1999 to 2001. When the Hong Kong economy grew by .3% in 1999 and by 10.5% in 2000, there was no increase in the wage level of FDHs. Now that there is a downturn in the economy, FDHsare being targeted as one of the first to share the pain of having reduced wages.

 3.     Reducing the meager wages of FDHs or imposing additional burden on employers of FDHs at this time will adversely affect Hong Kong’s economic growth.

a)     Any increase in the rate of salaries tax on employers of FDHs, many of whom are middle-income families or any measure that would reduce FDHs wages would impact negatively on their consumption of local goods and services amounting to estimated HK$ 3.6 billion a year and harm Hong Kong’s economic growth.