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Challenges in ensuring ethical recruitment

A closer look at the Bangladesh-Qatar corridor

On October 8, 2020

Opportunities to work abroad overshadow the austere realities on the ground, leaving potential migrants to weigh their options and often to choose to pay huge recruitment fees. Initiatives such as the ILO's Equal Recruitment Campaign, the IOM's International Recruitment Integrity Framework (IRIS) and the Responsible Recruitment Toolkit concentrate on encouraging ethical recruitment practices – in particular addressing the high costs that migrant workers pay. Reducing these costs is a crucial part of driving consistent, systemic ethical recruitment activity around the value chain. Yet, the situation in sending countries, such as Bangladesh, show these waves of global initiatives have not reached their shores. Gaps in regulations of recruitment practices in both sending and destination countries continue to pose many risks to migrant workers.

Additionally, a glaring omission in ethical recruitment discourses is the needs of women migrants, who comprise nearly half of all migrants worldwide. The lack of a gender perspective means regulations do not take into consideration the unique challenges women face both in origin and destination in terms of access, mobility, knowledge and financial independence.  This is particularly pertinent as ethical recruitment is often seen as only financial costs and not the socio-cultural burdens that may accompany migration, which disproportionately affect women.  

Which brings us to the key issue around ethical recruitment. Governments and civil society issue directives to agencies that no charges are to be imposed on prospective migrants.  Then, whose responsibility is the cost of recruitment? This needs to be clearly spelt out and is not something to be dealt with through recruiting firms alone. Further, the right of migrants to work should be upheld as sacrosanct. This leads us to several prominent issues that are only ever addressed in abstract terms:

A training and testing centre in Bangladesh

1) What are ethical recruiting standards?

2) How can we ensure that ethical standards are addressed as a process?

3) How do you identify a recruitment company as an ethical recruiter?

4) How to recruit ethically within the constraints of time and cost?

The last point in particular needs more deliberation in destination countries. Normally, recruitment in the GCC starts after a project is awarded. Thus the manpower mobilisation period will range from a few days to less than a month. Furthermore, 98% of the tender is awarded on the basis of cost – often to the lowest or second-lowest bidder. In both cases, the manpower costs will be a variable, and recruitment cost will not be accounted for.  

What is ethical recruitment?

There is no one definition of ethical recruitment or even one set of universally accepted standards that are applied.  Undoubtedly, the hallmark of ethical recruitment is to not charge workers a fee for jobs, but this will not be feasible unless one determines the costs involved in the recruitment process and what each actor must bear. It is unwise in every way to suggest that employers alone should pay all recruitment fees, rather they should be borne by the three actors of migration: the employer, the recruitment agency (RA) and the migrant (see figure 1). 

Despite increasing international commitments on decent recruitment and employment practices, substantial amounts of money are still paid by the most vulnerable and unprotected low-skilled migrant workers from developing countries. Their place and role in the close-knit societies they come from have a significant impact on migration. No agencies or civil societies can eradicate these close ties and the enablers of high migration rates – dalals or middlemen or fidus Achates. No zero-cost migration in any corridor exists. However, ensuring migration costs have a minimal impact on migrants would be the first step towards securing zero recruitment fees for workers. 

Let's take the example of Bangladesh. The government's cap on recruiting rates for employment firms alone would in no way reduce migration costs. One can argue that fair migration can be a win-win situation for migrants and employers – boosting productivity by hiring workers with the right skills and abilities, and helping migrants realise the full benefit of travelling across borders to better their lives. One of the primary benefactors of this migration process are governments of sending countries, where remittances help build informal socio-economic structures and fill gaps in governance.

Figure 1: ACTUAL RECRUITMENT COST OF LOW SKILLED WORKER AS OF 2019

ORIGIN COUNTRY US$ DESTINATION COUNTRY US$
Variable Costs Variable Costs
Internal Travel, Food, Accommodation  50-100 Airfare (one way) 300-350
Subagent Commission 50-100 Agency commission 250-450
        Total (average) $150.00          Total (average) $675.00
Fixed Costs Fixed Costs
Medical Test 67 Work Visa 82
Orientation 2 Visa attestations 150
Welfare Fund 10 Residency permit 320
Life Insurance 7 Medical Test 30
Finger and Manpower clearance 60 Health Card 30
Sub-Total $146.00 Sub-total $612.00
Combined total $296.00 Combined Total $1,287.00
Overall Total $1,583.00

*Source: Interview of a marketing manager of a recruitment agency

The above estimate of recruitment costs justifies the maximum recruitment fees set by the Government of Bangladesh (BDT84,000) if employers bear the expense of airfare and agency commission – which rarely is the case. 

The figure below provides a better understanding of the actual migration costs of the labour market in Bangladesh borne by migrants.

Figure 2: APPROXIMATE COST (IN BDT) OF MIGRATION THROUGH ILLEGAL CHANNELS 

DESTINATION COUNTRY

RANGE OF MIGRATION COST* 

(As of July 2019)

EXCESS COST TO GOVERNMENT RANGE
QATAR** 170 000 - 270 000 86 000 - 186 000
KSA*** 300 000 - 450 000 135 000 - 285 000
MALAYSIA 120 000 - 230 000 360 000 - 146 000
OMAN 120 000 - 200 000 36 000 - 116 000
KUWAIT 200 000 - 350 000 116 000 - 266 000
* Cost is subject to skill requirement, nature of the job, salary, and other benefits.
**Considering the maximum cost ceiling (BDT84,000) fixed by the Government.                                                                      ***Considering the maximum cost ceiling (BDT165,000) fixed by the Government.    
Source: Key informant interview with a recruitment agency Marketing Manager

On an average, 78% of recruitment and migration costs are borne by intermediaries and other participants (IOM, 2010); 98% of the workers interviewed said they paid intermediaries, but the money they paid never went fully to the recruitment firms that placed them in jobs in the GCC. About 89% of the recruiting companies interviewed reported that they never engage directly in the assessment of prospective migrants but use intermediaries. These costs turn out to be a burden for migrants, particularly given the way they are financed.

Approximately 67% of migrant workers have reported that they borrow money for training and relocation. A large proportion of migrant workers often fund the expense of migration by selling property (24%), mortgaging property (23%) and selling assets such as jewellery, cattle, trees, or homes (20%) (IOM, 2010). These intermediaries are the reason for higher recruitment and migration costs and result in the abuse of migrant workers who are caught in the rivalry between recruiters and individuals who engage in visa trade. Interviews with migrant workers and recruitment companies in both the GCC and Bangladesh have shown beyond a doubt that sub-agents handle recruitment costs.

In reality, recruitment agents, sub-agents and intermediaries often change their fees on the basis of their competitive advantages in entering a particular market. With so many factors at stake, it is difficult to generalise the specific costs borne by migrant workers while engaging with RAs, unofficial sub-agents and intermediaries.

The figure in the below chart is self-explanatory as to how much a migrant worker earns and saves.

Figure 3: MONTHLY EXPENSES SHEET OF A LOW SKILLED MIGRANT WORKER IF RECRUITED UN-ETHICALLY

INCOME EXPENSES
SALARY USD 350.00 FOOD USD 85.00
  TELEPHONE USD 25.00
PERSONAL EXPENSES USD 25.00
BANK INTEREST pm (3% OF USD.4000) USD 120.00
TOTAL USD 350.00 TOTAL USD 255.00
SAVINGS = USD.95 per month

*Source: Interviews.  60% migrant workers in Qatar, and rest in other GCC states

Approximately 27% of his income is what he is able to remit every month. His family members would still not be saving, but paying back the principal of the loan. Without any means of escape, migrant workers are compelled to remain silent about the worst forms of oppression.

The other type of kickback practised in the GCC is the security deposit scheme. The employer asks for a minimum deposit of USD14,000 from RAs, which is used as a guarantee bond. This will be used to cover costs if employees fail the mandatory medical test or probationary period or quit before the end of the contract.  In exchange, the employer has an arrangement with the RA to provide a job order for a  minimum of 50 low-skilled employees. Undoubtedly, the precautionary deposit would be added to the relocation expense of prospective migrants.

Gaps between expectations and skills

One of the recurrent problems is the wide gap between the employer’s expectations and needs, and the skills and abilities of the workers. Without skills development centres that meet the needs of international employers, these gaps will persist, and migrant workers will struggle with contract substitution.

Furthermore, in Bangladesh, though there’s a recognition that migrants produce more foreign exchange than clothing exports, the recruitment industry does not receive government subsidies like the clothing industry does. Many recruiters also provide skills training to potential migrants. Of course, before we recommend any such incentives, an ethical recruitment framework should be clearly designed and adopted in origin countries, and incentives should be extended to only those who adhere to the regulations of this framework.

Recently, the GCC governments have demanded that recruitment be routed through local recruitment agencies registered in their own countries. This resulted in an increase of 5 % to 10% in recruitment fees, in contrast to the anticipated decrease in recruitment costs, as agencies in destination countries began charging agencies in sending countries on a per visa basis.  

Conducting ethical due diligence during the recruiting process will help to ensure that individuals chosen are more likely to improve and uphold the standards of the company and provide an example to those within the company. Such people are less likely to conduct business or make decisions in a manner that may damage the ethical principles or credibility of the company.

In order to provide effective protection for their citizens, origin countries must appoint labour attachés or consular officials, at least in major destination countries. The labour attaché deals with all employment-related questions, whereas consular officials deal with consular services and police cases involving migrant workers. A 'one-country-team approach' is adopted in certain instances, such as with the Philippines' embassies. In this approach, all embassy officers act as a one-country team within the mission to protect and promote the welfare of Filipino migrants. With other embassies, full-fledged support from the labour department in overseas missions does not exist.

More needs to be done to develop a system of ethical recruitment practices, including:

  1. A study on the essence of recruiting practices across industries and regions. While millions of funding dollars have been spent on various studies and pilots, not one goes into the details of a specific labour market and analyses the risk and opportunities of both existing and ethical recruitment practices.
  2. Enforcement and tracking of operational resources consistent with government legislation with effective monitoring systems in origin and destination.
  3. Development of a new business model for recruitment on a corridor basis or agreed bilaterally.

Areas that require urgent attention include policy asymmetry and compliance in the regularisation of intermediaries, the concept of ethical recruitment, and the benchmarking of recruitment costs for all migration actors. Instead of universal migration law, bilateral agreements in different sectors should be made more successful.  The current situation is exacerbated by the inability of governments to control and track the activities of private recruitment agencies. The mere harmonisation of legislation in origin and destination countries in compliance with established international standards will not guarantee a fair recruitment process unless the main issues are defined, addressed, and monitored.

Pandemic and beyond

Hundreds of thousands of migrant workers are bearing the brunt of the coronavirus pandemic in the region, stuck in labour camps, standing down from their jobs, facing high rates of infection and with no way to return home. In addition to the pandemic, migrants' vulnerabilities are reinforced by two other factors: the fall in oil prices and the nationalisation policies of the Gulf states. With the onset of the pandemic followed by fear and lockdowns, many companies either terminated low-paid migrant contracts or sent them back to their home countries on long vacations. These companies have now ended up with a shortage of labour as the projects restart, and borders remain closed.  

A comprehensive study by various governments is needed to analyse the difference between the pre-pandemic and post-pandemic environments and address the new challenges faced by migrant workers and employers. International labour standards contain guidance even in the unique context of the COVID-19 crisis, which ensures decent work, although many businesses have struggled due to lack of funds. Long-term structural changes have now become inevitable unless the deep-rooted inequalities exposed to the crisis escalate. In addition to addressing the immediate effects of the pandemic, policymakers should seize this opportunity to frame policies aimed at achieving a forward-looking workforce.

(Views expressed in this article are their own, and reflect the work he has done in the field of recruitment.)