Carter Black
Foreign domestic helpers are an indispensable part of the workforce for many households in countries like Hong Kong, Singapore, and Taiwan. These migrant workers usually come from less developed countries, and their salaries make a significant contribution to their own home countries’ economies. However, the economic impact of foreign domestic helper salaries goes beyond remittances to their home countries. In this blog post, we will explore how foreign domestic helper (外傭) wages affect the economies of both the host and home countries.
One of the most obvious economic impacts of foreign domestic helper salaries is the remittances they send back home. According to the World Bank, global remittances reached an all-time high of $689 billion in 2018, and foreign domestic helpers make up a significant portion of these figures. For instance, in the Philippines, foreign domestic helper remittances accounted for more than 9% of the country’s GDP in 2019. These remittances can have a substantial impact on the home country’s economy by boosting domestic consumption, reducing poverty, and funding local development.
Moreover, foreign domestic helper salaries have significant impacts on the host countries’ economies, particularly in relation to the labor market. In countries like Hong Kong, foreign domestic helpers might make up more than 5% of the workforce, and their low-wage jobs offer significant benefits to the host economy. For instance, foreign domestic helpers enable dual-income households, allowing more women to enter the workforce, which could increase productivity and economic output. They also reduce demand for local unskilled labor, freeing up locals to pursue more valuable or specialized professions.
However, research has shown that foreign domestic helper wages could also have a negative economic impact on the host countries. Low-wage migrant workers could potentially undercut local labor markets by offering cheaper services that locals might not be able to compete with, thereby suppressing wages and earning potential for locals. This effect could be exacerbated by the fact that some employers might prefer foreign workers due to their overall lower wages, leading to an influx of migrants into the market.
Another potential economic impact of foreign domestic helper wages is their contribution to informal or gray economies. For instance, some employers might request their foreign domestic helpers work extra hours or perform other tasks outside their original job descriptions without pay. They might also pay below minimum wage or avoid paying taxes or other employer costs, such as social security. This type of informal economy not only deprives the host country of potential tax revenue, but it also lowers the overall labor standards for all workers in the country.
Conclusion:
In conclusion, foreign domestic helper wages undoubtedly have significant economic impacts on both home and host countries. On one hand, the remittances they send back home boost domestic consumption and improve living standards in the home country. On the other hand, they also provide low-wage jobs that free up locals for higher-value professions and contribute to the host country’s economy. However, there are also potential negative impacts, such as suppressing local wages and contributing to informal economies. In light of these impacts, policymakers need to strike a delicate balance between supporting the economies of both home and host countries while also considering the welfare of all workers involved.
