May 27, 2024 Last Updated 6:09 AM, May 21, 2024

Costly inducements

Costly inducements

Wayne Palmer

   Agents advertise their services
   Wayne Palmer

Gathered in the front room of a well-known Hong Kong shelter for Indonesian migrant workers, 30 residents swapped stories about how they found out about working overseas. While their experiences in Hong Kong varied greatly, their accounts of how they began the migration process were very similar. Almost all had stories to tell about the intermediaries who had helped them on their way. It is illegal for these intermediaries - known as calo - to recruit migrant workers. But in practice they are an integral part of Indonesia's labour export program in which they play a vital role in sourcing enough recruits to meet overseas demand.

State policy makes it difficult for agents to recruit enough women without the help of calo. This is because the Ministry of Manpower discourages them from migrating for domestic work - a policy introduced in response to diplomatic rifts in Indonesia's bilateral relationships with host countries like Malaysia and Saudi Arabia as a result of the high rates of suicide, rape and severe physical abuse. As part of this campaign, Jakarta pushes local Manpower Offices to exclude potential domestic workers from their outreach activities to recruit migrant labour in areas with high unemployment. Although most continue to process domestic workers' documents, in some districts there are total bans on recruitment for domestic work.

The challenge for registered agents everywhere is the fact that it is illegal for them to use a 'direct approach' when recruiting. Agents can advertise in newspapers and hold job fairs, but they must wait to be approached by intending migrant workers. This restriction is one of the reasons that calo play such a significant role in the industry. Calo spread the news of overseas work to villages and bring recruits to agencies. And because there is more work than people willing to take it up, they sometimes offer cash incentives to help potential recruits change their minds.

The hidden price of help

Recruitment agents are permitted to assign staff to village areas in order to recruit people for work overseas. Known as fieldworkers (petugas lapangan), these intermediaries are fully licensed by the government. But illegal calo - many of them sub-contractors for licensed fieldworkers - operate in precisely the same way. And as potential migrant workers are generally suspicious of outsiders who offer highly paid work overseas, more often than not, calo tend to be people who already have their trust, such as a neighbour or even family.

Migrant workers almost always prefer to use a calo to going directly to a recruitment agent. By going through a calo, potential migrants feel more confident that they will be able to obtain all the documents they need - and without having to pay a cent. To participate in Indonesia's labour migration program, women must get signed permission from their husband or parents as well as from the head of their village, which isn't always easy. Women I spoke to talked about how village heads refused to provide signatures in the lead-up to elections and during the holy fasting month. They were also often asked to pay illegal fees when organising these and other necessary documents such as copies of their school certificates. What's more, though, it's not unusual for calo to pay migrant worker recruits up to Rp 2.5 million (A$320) in 'pocket money' for starting the migration process.

The practice of paying pocket money started a couple of years ago, when the Indonesian government began to crack down on agents that changed migrants' dates of birth and other personal data. So agents began paying calo a premium to make sure recruits met Indonesia's requirements for migrant domestic workers, such as proof of being at least 21 years old. As a result, most of the falsification of migrants' documents now happens before they get to the agents.

What started as a modest fee of a couple of hundred thousand rupiah has turned into millions of rupiah, as Hong Kong agents put pressure on their Indonesian partners to find more domestic workers. For each recruit, agents give fieldworkers Rp. 5 million who then give calo a cut for bringing recruits in, while up to half goes to the recruit herself. As the women in the Hong Kong shelter explained, this pocket money is there for the taking - and the amount you receive depends on how clever you are at negotiating. As a result, not everyone strikes it rich. Having contacted a calo directly after seeing an advertisement in the local newspaper about jobs in Hong Kong, Malaysia, Singapore and Taiwan, Sring received no pocket money at all. In hindsight, she believes that her calo did not feel the need to offer her an incentive because she was too honest about how much she wanted to work overseas.

But many succeed. Susi knew exactly what she was doing. She had heard about pocket money before she was approached by a calo in her village, who also happened to be her uncle. Susi had only returned two weeks before from working in Saudi Arabia when her uncle dropped in to offer her a job in Hong Kong. She was immediately interested because Hong Kong is well-known among migrant workers as having the best working conditions and some of the highest wages on offer but she pretended that she was not interested, knowing that she needed to play hard to get. Eventually, her uncle offered her a sum of money to start the migration process. After some bargaining, Susi agreed to sign up for Rp 2.5 million.

Dewi also did well - but by cutting out fieldworkers and calo altogether. Having heard that recruitment agents paid migration calo Rp 5 million for each recruit they bring in, she approached an agent in Jakarta with her cousin, who pretended to be a calo. The agent then paid Dewi's cousin Rp 5 million which they then split, Dewi pocketing Rp 3.5 million and her cousin, the rest. However agencies only pay money to recruits who come with a full set of documents. It saves them the costs associated with using the services of a fieldworkers and calo. They claim to offer up to Rp5 million, although migrant workers say that 'money for coming yourself' is rarely more than Rp3.5 million.

In addition to giving potential migrant workers pocket money and other incentives, agents offer recruits the choice to pay for the cost of recruitment up front or on credit. No agents I spoke to could remember anyone who paid before she went. When I asked migrant workers why they chose credit, they explained that it was simply too risky to pay up front because there was no guarantee that they'd like their employer or that they'd even get to keep their job.

When this system works well, it suits everyone. Migrant workers obtain employment overseas without having to pay up-front fees and recruitment agencies can meet overseas demand for labour. But a lack of checks and balances means that things can easily go wrong. For example, agents are supposed to recruit migrant workers only after receiving a job order from their overseas partners. However, uncertainty about when and how many job orders will come in means that they often recruit in anticipation of getting contracts. As a result, the time migrant workers spend in agency training facilities sometimes exceeds the three-month maximum allowed under Indonesian law.

Because agents make a risky and substantial investment in recruits' future employment prospects, they are reluctant to let recruits come and go

Migrant workers in the Hong Kong shelter had mostly spent six weeks in training centres - the precise amount of time it takes to organise a work visa. But in some cases, they had spent up to seven months. And because agents make a risky and substantial investment in recruits' future employment prospects, they are reluctant to let recruits come and go while waiting to be deployed. If intending migrants want to return home for a visit, they are required to leave a deposit with the agency as a guarantee that they will return. This practice is illegal and is a violation of recruits' human rights. But it is difficult to eradicate because of the financial risks that agents take.

Upon arrival in Hong Kong, migrant workers are saddled with a total debt of HK$21,000 (A$3500). They are required to make seven monthly instalments of HK$3000, (equivalent to 84 per cent of their wage) to Hong Kong creditors in order to pay it off. Of the debt, HK$3000 is interest owed to public finance companies that provide the loans. HK$7000 is paid to Hong Kong agents for organising things like work visas and a further HK$11,000 is earmarked for Indonesian agents to cover the cost of training and recruitment, which includes the expense of incentives such as pocket money. Agents go guarantor for these loans and are liable for the first three months of repayments. So if migrant workers stop making payments, agents often contact their families asking them to pay. If families refuse, agents are known to resort to bullying tactics like incessant telephone calls and sending thugs to force families to pay up.

A risky business

Financial incentives paid by calo have attracted attention from NGOs, who claim that agents are effectively bribing women to migrate. Government officials have also expressed concern about the practice, citing cases of migrant workers in Hong Kong and other destination countries such as Singapore who say they were persuaded to migrate against their will, usually by husbands or fathers who were keen to use the pocket money to pay off debts. In some of these cases, when women told agents they didn't want to go, their objections were ignored. It is these sorts of incidents that staff in Indonesian embassies say smack of trafficking. At the very least, the fact that the program allows recruiters to offer financial incentives to prospective migrants adds an extra level of complexity to the decision-making process, tempting people who may have preferred to make do at home with their friends and family.

It is important to remember that not all migrant workers are coerced into migration. Nor are they bribed to go. Women like those I spoke to in the Hong Kong shelter were well aware of the benefits and risks of migrating before they left Indonesia. These considerations underpinned their decision to take up offers of work abroad. They, like many migrants, appreciated the help of calo who guided them through the administrative demands of the state migration program, and saw their pocket money as a kind of bonus that could be used to settle debts before leaving the village and buy the things they needed during their stay in agents' training facilities.

It's impossible to tell if they would have had a better or worse experience if agents hadn't given them an incentive to go. But what's clear is that it does make migrating a riskier venture than it is already. Just to pay the incentives back means going an extra month without wages while losing one's job before the agent's guarantee is up could result in serious consequences for their families. The question is, then, is it a risk worth taking?

Wayne Palmer ( is a PhD candidate in the Department of Indonesian Studies at the University of Sydney. His research looks at illegal practices in Indonesia's labour export program.

Inside Indonesia 100: Apr-Jun 2010

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