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New Zealand – Filipino workers drowning in debt

03 October 2013

Filipino workers on the Christchurch rebuild are being forced to pay thousands of dollars to overseas loan sharks for the right to work in New Zealand, as part of a larger recruitment industry that some are labelling ethically dubious, reports tvnz.co.nz.

Most recruitment agencies in the Philippines charge workers a ‘placement fee’ for finding work for a candidate. As a result many Filipinos take out high-interest loans in their home country to pay the fee, which can range from a few thousand dollars up to about NZD 10,000 (USD 8,248).

Inquiries have found that many Filipino workers working in Christchurch to fill gaps in the city's labour shortage are drowning in debt as they struggle to service the loans.

Phil Nevell, from recruitment company One World Resourcing, said: "It's not an economic issue. It's an ethical and a social issue."

Some companies either pay the placement fee or pay the loan and then reoffer it to the workers at a lower interest rate. Before Filipinos can leave their country to work abroad, they must obtain an Overseas Employment Certificate from the Philippines Overseas Employment Agency (POEA). Recruitment agents aid this process.

Under Filipino law, agents can charge up to one month's salary in placement fees. Most Filipino workers earn about NZD 22 an hour (USD 18.15) or about NZD 42,000 (USD 34,641) a year. It is understood, reports tvnz.co.nz, that the placement fees are sometimes inflated with extra costs.

Mr Nevell said: "[The workers] are entering a financial contract they are never going to be able to pay off. As responsible employers within a developed country, we should be paying it. Ignorance is not an excuse - if employers are getting staff for free then the employee has paid for and most likely financed the job."

Other countries such as the United Kingdom, Australia and some parts of Canada prohibit collection of placement fees. It is against New Zealand law for an employee to be required to make a payment to an employer or an employer's agent as part of gaining or keeping employment.

However, this law did not carry across borders, a Ministry of Business, Innovation and Employment spokesperson said.

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