How much do you have to earn to hire a foreign domestic worker in Singapore?

According to the Ministry of Manpower, there were 246,800 foreign domestic workers working in Singapore as of 31st December 2017, comprising 18 per cent of the foreign workforce in the country.

Not only that, as the demand for foreign domestic workers grew, their bargaining power also has been growing as well, translating into higher salaries and better protection through comprehensive insurance packages.

While this is a good news for the helpers, it could conversely result in higher costs for households in Singapore. Then, just how much does one have to earn to afford a FDW in Singapore today?

HOW MUCH DOES IT COST TO HIRE A FOREIGN DOMESTIC WORKER?

According to our research, it costs about S$1,400 in one-time fees just to hire a maid foreign domestic worker. Most households hiring a helper for the first time usually go through maid agencies as they take care of all the paperwork and can also help out with mediation if things do not work out between you and your new FDW. Hiring a helper on your own is definitely cheaper, but you have to be prepared to handle the application process and might have no recourse in case you need to change the hired help.

ONE-TIME FEES WHEN HIRING A FDW IN SINGAPORE CAN BE AROUND S$1,400

Typically, you can expect to spend another S$1,200 per month on various things like salary, insurance and living expenses. Usually, a FDW's salary is pegged to her nationality with certain countries stipulating a minimum monthly salary for hiring FDWs from them.

In fact, the median salary for new workers is actually quite close to the minimum requirement. However, a FDW's salary can also vary depending on their experience, and can increase to up to S$1,000 per month in some cases. Also, hiring new helpers often requires a up-front payment in the form of placement fee, which is usually equivalent to 2 to 5 months of FDW's salary.

However, this fee is subsequently deducted from the maid's salary in monthly instalments for the agreed time period. Also, Singaporeans who live with an elderly person, a child or a person with special needs can apply for a concessional rate of FDW levy at $60 per month in case, which will reduce your cost to $1,000 per month and $12,000 per annum.

HOW MUCH SHOULD YOU EARN TO AFFORD A FOREIGN DOMESTIC WORKER IN SINGAPORE?

Given the relatively high cost, how much money do you actually have to earn to afford hiring a foreign domestic worker? According to our analysis, your net income after CPF contribution should be about S$6,000-S$7,000 per month to sufficiently afford a full-time domestic helper.

This amount would be able to cover most of the costs associated with hiring a maid on top of the $4,839 an average household spends on food, transportation, education, clothes and entertainment. Given that the median gross income in Singapore excluding CPF contribution is about S$3,500, this would imply that households with only one member earning an average or below average salary cannot afford to hire a full-time helper. However, families with 2 working adults earning an average salary should be able to afford hiring a domestic help with some financial buffer to spare.

SO WHO CAN AFFORD TO HIRE A FULL-TIME FDW IN SINGAPORE?

In fact, most households in Singapore are earning more than the above amount, with the median household income of S$9,023 per month.

Nevertheless, certain jobs definitely pay better than others, making it easier for some to afford the extra help at home than others.

For example, the median wage excluding CPF contribution was the highest for financial & insurance services at about S$5,500, while it was the lowest for accommodation and food services at less than S$2,000.

This article was first published in ValuePenguin.