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Cost-Benefit Social Protection Domestic Workers

Cost-Benefit Analysis of Extending Social Protection for Domestic Workers in the Philippines
Axel Weber

The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use. The countries listed in this paper do not imply any view on ADB's part as to sovereignty or independent status or necessarily conform to ADB's terminology.

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Cost-Benefit Social Protection Domestic Workers

Outline
Background Scope Methodology Definitions Categories Quantitative Dimension Legal Situation Household Workers in Practice Wage situation Affordability Options for Improvement Recommendation

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Cost-Benefit Social Protection Domestic Workers

Background
ILO Prepared a Convention on Domestic Workers, which has been approved on June 16 Senate Bill on Household workers Vizayan Forum Magna Carta ILO study served as an input to the social partners' consultations in preparation for the International Labour Conference (ILC) discussion on the Convention and Recommendation on Domestic Workers. It was intended for policy makers, governments, employers, workers, civil society working together in promoting the rights and protection of domestic workers.

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Cost-Benefit Social Protection Domestic Workers

Background
The 100th session of the International Labour Conference, on 16 June, achieved the adoption of the Decent Work for Domestic Workers Convention No. 189, and its accompanying recommendation.

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Cost-Benefit Social Protection Domestic Workers

ILO Convention 189


The right to a written and understandable contract, A minimum age in line with the Minimum Age Convention and national laws, Ffree to negotiate to stay in or outside the house. Can spend their free time outside the house of the employer and can keep their documents like ID and passport. Working hours, overtime, leave and times of rest must be in line with what is generally accredited to workers. Domestic workers enjoy minimum wage coverage. Domestic workers enjoy protection in the area of occupational health and safety, social security and maternity. Domestic workers have access to the justice system at the same conditions as other workers. Freedom of association and collective bargaining.

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Cost-Benefit Social Protection Domestic Workers

Scope
Assessment of the costs and benefits of improving the level of social protection of domestic workers A differentiated analysis of affordability according to different types of employer and worker Formulation of alternative approaches and methods for improving the level and coverage of social protection of domestic workers

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Cost-Benefit Social Protection Domestic Workers

Methodology
quantitative data from the following sources: Census, Labor Force Surveys, FIES, other possible sources; administrative data from government sources such as the Philhealth, SSS, Department of Health, Occupational Safety and Health, Employees Compensation Commission, among others; review of existing literature on domestic workers in the Philippines; qualitative data from interviews from key informants, representatives from partner organizations and experts on social protection and domestic workers issues.

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Cost-Benefit Social Protection Domestic Workers

Definitions
domestic work means work performed in or for a household or households, and domestic worker means any person engaged in domestic work within an employment relationship. Domestic workers may cook, clean, take care of children, the elderly, or the disabled, even domestic animals. They may also work as gardeners or guardians in private homes or as family chauffeurs.

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Cost-Benefit Social Protection Domestic Workers

Categories
Full Time Live in Live - out Maid, Nanny Driver, Nanny, Maid Part Time In Practice not Existing Gardener, Laundry Woman

Apart from these categories, there is one more very frequent type of domestic workers: The extended family. Among many types of workers there are also minors (below 18), which are especially vulnerable

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Cost-Benefit Social Protection Domestic Workers

Quantitative Dimensions
Estimate 2010 LFS: 1,924,000 domestic workers Families with expenditures for Domestic Services: 925,500 (2006 FIES) Estimated 300,000 below 18 (Vizayan Forum) This would mean that less that 10% of households have domestic workers Probably many more (up to 30% of households) Already most OFWs have domestic workers at home (and there are 9 million OFWs) We estimate that there are up to 4 million including extended family but have no hard evidence for this

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Cost-Benefit Social Protection Domestic Workers

Legal Situation
Labor Code (Art. 141-152) Domestic workers exempt from many regulations (severance pay, 13th salary, period of notice, causes of retrenchment) Exempt from general minimum wage (800, 650, 500 PhP instead of 10,200 per month (404 per day). It is compulsory to insure domestic workers in SSS (if salary more than 1000 PhP, Art. 142 Labor Code). No compulsory membership in Philhealth. It is not compulsory to insure domestic workers in ECF It is not compulsory to contribute to Pag Ibig for domestic workers No entitlement to sick leave (except SSS) Holidays and working hours not regulated Employers are obliged to provide decent lodging, food and health care.

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Cost-Benefit Social Protection Domestic Workers

Household Workers in Practice


Most have no written contract Very few insured in SSS (officially 109,000) and Philhealth (officially 20,000) Irregular days off if any Long working hours Not respected as professionals No sick leave (retrenched if sick or pregnant) An estimated 5,000 are organized (SUMAPI) Exposed to domestic violence and sexual harrassment

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Cost-Benefit Social Protection Domestic Workers

Working Hours and Pay


According to LFS domestic workers in private households work longer hours than employees in private establishments. Average working hours per week 40,6 in private sector 52,9 hours for DW. Female workers work slightly more (53,10) than male (51,9) The reason for the higher working hours of domestic workers might be that many live in the household of the employers and thus are practically permanent on duty. Hourly cash wage for domestic workers is 14,28 PhP (21,57 for men and 12,94 for women), whereas in private sector it lies around 66 PhP (the minimum wage for regular workers is 50.5 PhP per hour).

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Cost-Benefit Social Protection Domestic Workers

Wages of Domestic Workers


According to LFS 150 PhP average per day (3900 per month, LFS 2007 notes an average of 2,314 though) According to BLE minimum 2,000, maximum 5,000 in Region VI Live-in factor: value of lodging about 1,500 PhP (depending on quality), value of food about 1,500 PhP Cash and in-kind together: average around 6,250 PhP Live-out workers cash wages are not necessarily higher Wages for maids and nannys lower than wages for drivers and gardeners

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Cost-Benefit Social Protection Domestic Workers

Wage Differencial
Average Domestic Worker General Difference to General Difference Minimum Domestic Average to Domestic Wage Worker Wage Worker

Cash i-kind total Day (NCR) 125,00 100,00 225,00 404,00 Month 3.250,00 3.000,00 6.250,00 10.504,00 Year 39.000,00 36.000,00 75.000,00 136.552,00

44% 481,73 40% 12.525,00 45% 150.300,00

53,3% 50,1% 50,1%

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Cost-Benefit Social Protection Domestic Workers

Affordability - Incomes
National average family income 206,000 PhP (NCR 365,000) Source: NSO, 2009 Family Income and Expenditure Survey. Average wage (BLES 2008) P12,525 monthly or about 150,000 annually. Medical doctors: 240,000 annually. Average annual household income of families with domestic workers around 450,000 PhP (FIES 2006, maybe 500,000 in 2010) Two minumum wage earners household income 244,800 PhP anually

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Cost-Benefit Social Protection Domestic Workers

Income of Households with Domestic Workers

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Cost-Benefit Social Protection Domestic Workers

Affordability - Costs
Average full costs of live-in domestic worker 87,000 PhP (46,800 cash salary, 36,000 in-kind, 3,984 SSS and Philhealth). Not counting in-kind: average around 51,000. Minimum: 26,300. With minimum wage 140,000 (126,048 cash wage plus 11,480 SSS and Philhealth not counting live-in factor, 13th salary, severance pay).

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Cost-Benefit Social Protection Domestic Workers

Affordability Overview (annual)

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Cost-Benefit Social Protection Domestic Workers

Costs of Social Security


The costs of covering domestic workers with social security are as follows: 2.5% for Philhealth 10.4% for SSS 10 PhP for Employees Compensation Fund 100 PhP for Pag Ibig For example: For a salary pf 6,000 PhP the costs would be 499 PhP (employers share) 275 PhP (employees share) 10 PhP ECF for employer In Total 784 PhP or 13.06% of the salary, 8.48 for the employer In addition the administrative burden has to be taken into account.

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Cost-Benefit Social Protection Domestic Workers

Options (minimum)
Full membership in social security
SSS, Philhealth, ECF

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Cost-Benefit Social Protection Domestic Workers

Options (maximum)
Equal legal situation for all workers, including domestic workers (retrenchment causes, 13 salaries, severance pay, days off) Full membership in social security, including SSS, PHIC, ECF Increase of minimum wage from 800 PhP to regular minimum wage of 10,504 PhP Costs: Compared to an average salary of 3,900 PhP increase would be 3.4 - fold or average costs of 13,096.37 PhP per months (including Social Security). About 30% of the households that currently employ staff can afford this.

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Cost-Benefit Social Protection Domestic Workers

Options (maximum)
Calculation of full costs of maximum package

Minimum wage Social Security 13th salary Entitlement to severance pay Total

Monthly 10.504,00 841,70 875,33 875,33 13.096,37

Annually 126.048,00 10.100,40 10.504,00 10.504,00 157.156,40

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Cost-Benefit Social Protection Domestic Workers

Cost - Benefit
Benefit Maximum Option Equal treatment; Higher estimation; Cost 2.4 folding of cost; Loss of employment opportunities (up to 30% less full time employment but maybe more part time); Problems for working couples (especially women) with children. Some might not be able to shoulder a cost increase of more than 30%

Protection against risk, risk pooling. On the average 30% more income for the workers

Minimum Option

Improvement of protection for workers but at lower costs than the maximum option, especially for mothers working (cost increase about 10%);
Improvement of social security and risk coverage for workers and employers;

Cemented low income for domestic workers; No substantial improvement of situation for workers except social security.

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Cost-Benefit Social Protection Domestic Workers

Impact of Maximum Solution

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Cost-Benefit Social Protection Domestic Workers

The Senate Bill


The Senate bill (N 78, Fifteenth Congress of the Republic of the Philippines) Providing for Additional Benefits and Protection to the Househelpers.
Househelpers have a right to a written contract.. The minimum wage is increased to 3,000 Pesos. Withholding wages, forced disposal of wages, deposits for damages and boded labor are prohibited The employer has to keep medical emergency equipment. All workers have the right to be enrolled in SSS and Philhealth Workers have a right to an employment certification. The employer has to keep a record of his or her employed workers.

The bill has not been approved by the lower house yet and thus cannot enter into force. It is doubtful that the lower house will approve it in the form of the senate bill.

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Cost-Benefit Social Protection Domestic Workers

Enforcement Options
Tax deduction of household staff costs if compliant with rules (costs would be around 30 bn PhP for 1.9 million workers) Introduction of a grievance procedure on Barangay level Labor inspections Legal support for workers To threaten to charge the employer with costs in case of old age, accidents and sickness

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Cost-Benefit Social Protection Domestic Workers

Recommendation
To enforce membership in social security To amend the legal minimum wage in the LC to 3,000 PhP To recommend (not enforce) a minimum wage in line with the general minimum wage of 10,504 PhP (cash and in-kind), around 7,000 cash only To distribute material of information and awareness to households and run campaigns for domestic work To change labor code (13 salaries, severance pay, period of notice) to create equality of treatment of workers