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

8/6/2019 Cost-Benefit Analysis of Extending Social Protection for Domestic Workers in the Philippines

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Cost-Benefit Analysis ofExtending Social Protectionfor Domestic Workers in thePhilippines

Axel Weber

1Cost-Benefit Social ProtectionDomestic Workers

The views expressed in this paper are the views of the author and do not necessarily reflect the views orpolicies 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 anyconsequence of their use. The countries listed in this paper do not imply any view on ADB's part as tosovereignty or independent status or necessarily conform to ADB's terminology.


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OutlineBackground

ScopeMethodologyDefinitionsCategoriesQuantitative DimensionLegal SituationHousehold Workers in PracticeWage situationAffordabilityOptions for ImprovementRecommendation

Cost-Benefit Social ProtectionDomestic Workers

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BackgroundThe 100th session of the International Labour Conference,on 16 June, achieved the adoption of the Decent Work forDomestic Workers Convention No. 189, and itsaccompanying recommendation.


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ILO Convention 189The right to a written and understandable contract,

A minimum age in line with the Minimum Age Convention and nationallaws,Ffree to negotiate to stay in or outside the house. Can spend their freetime outside the house of the employer and can keep their documentslike ID and passport.Working hours, overtime, leave and times of rest must be in line withwhat is generally accredited to workers.

Domestic workers enjoy minimum wage coverage.Domestic workers enjoy protection in the area of occupational healthand safety, social security and maternity.Domestic workers have access to the justice system at the sameconditions as other workers.Freedom of association and collective bargaining.


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ScopeAssessment of the costs and benefits of improving the levelof social protection of domestic workersA differentiated analysis of affordability according todifferent types of employer and workerFormulation of alternative approaches and methods forimproving the level and coverage of social protection ofdomestic workers


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Definitionsdomestic work means work performed in or for a householdor households, and domestic worker means any personengaged in domestic work within an employmentrelationship. Domestic workers may cook, clean, take care ofchildren, 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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CategoriesFull Time Part Time

Live in Maid, Nanny In Practice notExisting

Live - out Driver, Nanny, Maid Gardener, LaundryWoman


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


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Quantitative DimensionsEstimate 2010 LFS: 1,924,000 domestic workersFamilies 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 havedomestic workers

Probably many more (up to 30% of households)Already most OFWs have domestic workers at home (andthere are 9 million OFWs)We estimate that there are up to 4 million including extendedfamily but have no hard evidence for this


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Legal SituationLabor Code (Art. 141-152)

Domestic workers exempt from many regulations (severance pay, 13thsalary, period of notice, causes of retrenchment)Exempt from general minimum wage (800, 650, 500 PhP instead of10,200 per month (404 per day).It is compulsory to insure domestic workers in SSS (if salary more than1000 PhP, Art. 142 Labor Code). No compulsory membership in

Philhealth.It is not compulsory to insure domestic workers in ECFIt is not compulsory to contribute to Pag Ibig for domestic workersNo entitlement to sick leave (except SSS)Holidays and working hours not regulatedEmployers are obliged to provide decent lodging, food and health care.


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Household Workers in PracticeMost have no written contractVery few insured in SSS (officially 109,000) and Philhealth(officially 20,000)Irregular days off if anyLong working hours

Not respected as professionalsNo 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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Working Hours and PayAccording to LFS domestic workers in private households work

longer hours than employees in private establishments.Average working hours per week 40,6 in private sector52,9 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 andthus are practically permanent on duty.Hourly cash wage for domestic workers is 14,28 PhP (21,57 formen and 12,94 for women), whereas in private sector it liesaround 66 PhP (the minimum wage for regular workers is 50.5PhP per hour).


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Wages of Domestic WorkersAccording 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 RegionVILive-in factor: value of lodging about 1,500 PhP (dependingon quality), value of food about 1,500 PhPCash and in-kind together: average around 6,250 PhPLive-out workers cash wages are not necessarily higherWages for maids and nannys lower than wages for driversand gardeners


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Wage Differencial


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GeneralMinimum

Wage

Difference toDomesticWorker

GeneralAverageWage

Differenceto Domestic

Worker

Cash i-kind total

Day (NCR) 125,00 100,00 225,00 404,00 44% 481,73 Month 3.250,00 3.000,00 6.250,00 10.504,00 40% 12.525,00 Year 39.000,00 36.000,00 75.000,00 136.552,00 45% 150.300,00

Average Domestic Worker


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Income of Households withDomestic Workers


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Affordability - CostsAverage full costs of live-in domestic worker 87,000 PhP(46,800 cash salary, 36,000 in-kind, 3,984 SSS andPhilhealth).Not counting in-kind: average around 51,000. Minimum:26,300.With minimum wage 140,000 (126,048 cash wage plus11,480 SSS and Philhealth not counting live-in factor, 13thsalary, severance pay).


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Affordability Overview (annual)


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Costs of Social SecurityThe costs of covering domestic workers with social security are as

follows:2.5% for Philhealth10.4% for SSS10 PhP for Employees Compensation Fund100 PhP for Pag IbigFor example: For a salary pf 6,000 PhP the costs would be

499 PhP (employers share)275 PhP (employees share)10 PhP ECF for employerIn Total 784 PhP or 13.06% of the salary, 8.48 for the employerIn addition the administrative burden has to be taken into account.


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Options (minimum)Full membership in social security

SSS,Philhealth,ECF


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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, ECFIncrease of minimum wage from 800 PhP to regular minimumwage of 10,504 PhPCosts: Compared to an average salary of 3,900 PhP increasewould be 3.4 - fold or average costs of 13,096.37 PhP permonths (including Social Security).About 30% of the households that currently employ staff canafford this.


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Options (maximum)


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Monthly AnnuallyMinimum wage 10.504,00 126.048,00Social Security 841,70 10.100,4013th salary 875,33 10.504,00Entitlement to severance pay 875,33 10.504,00Total 13.096,37 157.156,40

Calculation of full costs of maximum package


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Cost - Benefit


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Benefit Cost

Maximum Option Equal treatment;

Higher estimation;

Protection against risk, risk pooling.

On the average 30% more income forthe workers

2.4 folding of cost;

Loss of employment opportunities (up to30% less full time employment butmaybe more part time);

Problems for working couples(especially women) with children. Somemight not be able to shoulder a cost

increase of more than 30%

Minimum Option Improvement of protection for workersbut at lower costs than the maximumoption, especially for mothers working(cost increase about 10%);

Improvement of social security and riskcoverage for workers and employers ;

Cemented low income for domesticworkers;

No substantial improvement of situationfor workers except social security.


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Impact of Maximum Solution


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The Senate BillThe Senate bill (N 78, Fifteenth Congress of the Republic of the

Philippines) Providing for Additional Benefits and Protection to theHousehelpers .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 andboded labor are prohibitedThe employer has to keep medical emergency equipment.

All workers have the right to be enrolled in SSS and PhilhealthWorkers 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 cannotenter into force. It is doubtful that the lower house will approve it in theform of the senate bill.


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RecommendationTo enforce membership in social securityTo amend the legal minimum wage in the LC to 3,000 PhPTo recommend (not enforce) a minimum wage in line with thegeneral minimum wage of 10,504 PhP (cash and in-kind),around 7,000 cash onlyTo distribute material of information and awareness tohouseholds and run campaigns for domestic workTo change labor code (13 salaries, severance pay, period ofnotice) to create equality of treatment of workers


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