Hong Kong helpers: low pay isn't racism

A reader brought up treatment of foreign domestic helpers are a great example of racism in Hong Kong.

However, it’s important not to confuse perceived low pay and racism. They’re separate issues. Let’s look at helper pay.

The “cheapness” of maids is because of the large supply. If there were no visa restrictions at all, maids (and labor in most categories) would be cheaper. People come to Hong Kong to be foreign domestic helpers because they make more money than they would staying in their own country.

I have a classmate in the Philippines and he tells me that many college educated people, often with masters degrees, only make US$300 to US$1000 a month. That’s before taxes, housing, food and transportation. In comparison, the minimum wage for maids in hong kong is about US$520 and your employer is required to provide housing, food and health insurance. At home, much of your wage goes to paying living expenses, as a maid in Hong Kong, your living expenses are paid by your employer and your wage is discretionary income.

The picture is even clearer if you look at total value of compensation (like the taxman does). Single people without the need for maids that have employer provided housing (often worth more than their salary!) like to rent out the empty rooms, including the maids quarters, for extra cash. In more upscaling housing, maids quarters are often nicer then the subdivided rooms (套房) many single white collar Hong Kong workers pay US$500 to US$1500/month to live in and can have market monthly rental values of US$1000 to US$2000 (or more!).

Even a bed in a closet in Hong Kong in a really bad location is hard to find for less than US$200-300 a month. Beds in shared rooms often go for this much.

By including the rental value of housing, (ignoring utilities, health care & food, return home plane ticket, etc also provided by employer) helper compensation is much higher than the headline minimum wage and explains why many would pick being a maid in Hong Kong versus staying at home. In Hong Kong, your living expenses are taken care of and you have discretionary cash each month; at home your (often lower) monthly wage gets consumed paying for living expenses.

Everything I’ve described here assumes Hong Kong employers of foreign domestic helpers are playing by the rules. The reality is many employers don’t play by the rules they agreed to and dehumanizing racism is a motivating factor.

Political rants

The foreign domestic worker policy is an economic policy that functions as a giveaway to the Hong Kong real estate industry. Both parents working to make the mortgage payments keep housing prices even higher than they would be simply because of government restrictions on the land supply, mandated inefficient use and developer collusion.

This is one of the many government policies that distort the Hong Kong economy with biases towards (and away from) certain industries. White collar industries in Hong Kong are protected by a visa policy that has (unwritten) salary price floors, education and experience requirements. You have to pay a foreign hire a certain amount or more or the employment visa won’t be granted. The salary price floor is much higher than the minimum wage for maids.

I am a fan of a liberal visa policy. However, all industries should be treated equally. Maids shouldn’t have different visa policies than bankers and computer programmers. Current helper visa policy punishes unskilled local Hong Kong workers relative to college educated white collar by forcing the former to compete on a global labor market while protecting the latter. While punishing unskilled local worker, it also manages to set up the employer-helper relationship in a way makes it very easy for employers to be abusive and almost impossible for helpers to escape such abuse.

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Larry Salibra

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I'm an entrepreneur and Engineering Partner at Blockstack where I'm building a new internet for decentralized apps. More about me.