This start-up wants to disrupt the corrupt global “maid trade”—by charging the rich more

A job fair in Manila.
A job fair in Manila.
Image: Reuters/Romeo Ranoco
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HONG KONG—Seneng Mujiasih arrived in Hong Kong in December 2010, on a two-year domestic helper visa. When she was fired 13 months later, she “still owed money she had borrowed for arranging her employment and couldn’t afford to return home,” a friend in Indonesia told Bloomberg. She then stayed in Hong Kong picking up jobs that included working in Wan Chai bars, encouraging men to buy drinks. Three weeks ago, she was killed in a banker’s apartment in the neighborhood.

Mujiasih’s story is a tragic chapter in the tale played out around the world, as millions of women leave their homes every year and travel to urban centers, or even other countries, to become domestic helpers. While they leave because of the promise of higher wages, these women are often saddled with huge amounts of debt by a global network of fixers, placement agencies, and money lenders—much of it illegal, and all of it against global labor codes.

Now, a lawyer and ethics professor, an accountant, and a newly minted MBA grad hope to disrupt this system. Their start-up, Fair Employment Agency (FEA), is a Hong Kong-based company that places domestic workers without forcing them to pay placement fees. FEA is registered as a charity, but the founders’ goal is to turn the company’s placement operations into a sustainable business, allowing it to expand through Southeast Asia, then perhaps the Middle East and beyond.

“We see this as the largest women’s right issue in the world,” David Bishop, an attorney, social entrepreneur, and lecturer at Hong Kong University tells Quartz. On one hand, being able to hire domestic help at home allows many wealthier women to enter the workforce or get higher education, but on the other, it can trap poorer women from developing countries in crippling debt, making them vulnerable to abuse from their employers.

How the maid trade works

There are about 53 million domestic workers officially employed around the world, and the unofficial figures may be twice that, the International Labor Organization reports. Most are women:

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Helpers can wind up with debts like Mujiasih’s through a process that starts in their home town, where recruiters find young women and offer them or their families signing bonuses for agreeing to work overseas. But then the recruiters and related agencies charge high fees for everything from training to photos to visa applications, and these are often capped with a massive “placement” fee—which the newly-recruited domestic helper sometimes doesn’t learn about until she arrives overseas.  (Amnesty International has a comprehensive report called “Exploited for profit, failed by governments” on how this process works in Indonesia.)

It is, at its most basic, a “take from the poor, give to the rich” scenario—employment agencies offer cheap services to customers to get their business, and then charge the often-impoverished women looking to do the jobs a fee equivalent to several months wages for placing them in a wealthy home.

Making matters worse, activists and advocates say, employment agencies sometimes purposefully place domestic helpers in homes where they won’t work out, just so they can collect another placement fee when they are moved somewhere else. Or, when a domestic helper has finally paid off her huge debt, but before her contract is over, the agency will call her employer promising an even better helper—and then charge both helpers placement fees when they change jobs.

How FEA and other agencies could help

Bishop and FEA co-founder Tammy Baltz worked with Helpers for Domestic Helpers, a local charity in Hong Kong for employees who find themselves struggling with overwhelming debt, facing unemployment, or dealing with a host of other problems. It was during this time that they decided they could do more to change the system by starting a business that prevented these women from accumulating debt in the first place. Scott Stiles, the company’s general manager, studied the issue during an internship in Hong Kong.

Their “disruptive” idea is simple: form an accredited employment agency that doesn’t charge domestic helpers fees for placing them in jobs. Instead, the agency carefully matches employees with employers, and makes sure employers to pay all the costs, from medical tests to visa renewal fees, for a flat upfront fee of HK$7,500 (US$967) for a standard two-year contract. This ensures that a helper is a good match for their home and not saddled with debt, allowing her to send her full salary home.

Convincing Hong Kong’s heads-of-household to cough up fees that their domestic helpers are sometimes paying now isn’t going to be easy. The cut-throat industry includes hundreds of employment agencies licensed in Hong Kong alone, who compete on offering employers great deals—like “25% off of service charge” for a second maid, or varying costs for things like contract negotiation and visa processing. The entrenched industry of agents and money-lenders also isn’t likely to welcome a newcomer that’s trying to put them out of business.

The company plans to pursue Hong Kong’s biggest employers, multinational companies with constantly rotating pools of expat employees, and appeal to their Corporate Social Responsibility requirements.

FEA opened its doors in September, and has has since handled about 20 contracts. “We don’t aim to show it is a great business to be in, and I don’t think it is” Baltz, a former accountant and consultant, tells Quartz. The only reason the business is attracting so many players are the profit margins they make from the illegal fees, she said.

FEA has raised about $120,000 in charitable donations and low-interest loans, and is seeking additional funds. Because the business is a registered charity, any profit that it makes will be invested back into expansion, including potentially setting up training facilities and moving into other countries.

How widespread is the problem?

Numbers on the global maid trade are hard to come by, because of the geographic breadth and private nature of most of the companies involved. The Hong Kong government, for example, doesn’t track maid “churn” or monitor how often domestic helpers make it through a two-year contract. Most of the companies involved are privately run and the profits they make from domestic helpers often come through a far-flung networks of anonymous payment agencies, like 7-11.

In Hong Kong alone, FEA conservatively estimates that Indonesian and Filipino domestic helpers pay HK$712 million (US$91 Million) a year in placement fees. These fees often come in the form of high-interest loans that can grow to many times that amount.

“In 2013, 70% of our clients complained of being charged excessive placement fees,” according to Holly Allan, the founder of Helpers for Domestic Helpers. If these women can’t make a payment, their loans are sold off to aggressive debt collectors, who charge “penalty” fees that act like a balloon interest rate, she tells Quartz, even though such interest rates are illegal.

“If they can find a job without the fees it is partly a solution,” Allan says. “At least the FEA offers an alternative.”