LEVY FOR EMPLOYMENT OF HOUSEHOLD MAIDS

Mr Zainul Abidin Rasheed asked the Minister for Labour whether the proposed increase in the levy for the employment of household maids will discourage housewives to return to work.

Mr Gerard Ee asked the Minister for Labour whether he will consider a waiver or concession on the foreign maid levy where a maid with suitable qualification is employed to care for an elderly family member requiring nursing aid.

Mr Zulkifli bin Baharudin asked the Minister for Labour whether there are long-term plans on the imposition of the levy on foreign maids and how these are consistent with efforts to encourage more women to work.

Dr Lee Boon Yang: I would like to reply to the questions raised by Mr Zainul Abidin Rasheed, Mr Gerard Ee and Mr Zulkifli bin Baharudin together as they are on the same subject.

My Ministry recently announced the increase in the levy for foreign domestic workers from $330 to $345 per month. The increase will take effect from 1st April 1998. We also announced the intention to review the levy annually to ensure that it remains effective in dampening the demand for foreign domestic workers. Future levy increases will take into account the increase in the number of foreign domestic workers as well as the income levels of Singaporeans.

The levy on foreign domestic worker is meant to dampen demand so that Singaporeans will not become over-dependent on them. We understand that some families require the service of a foreign domestic worker and our policy is not to deny Singaporeans of such service. However, there is still a need to ensure that the number of foreign domestic workers remains manageable.

Households employ foreign domestic workers for a variety of reasons. Some employ a foreign domestic worker to look after young children, others to look after the aged and handicapped or the sick, and yet others to attend to household chores or to do all these tasks. We should not favour any particular household or type of work by exempting the levy or granting a concession. The levy should remain a transparent pricing mechanism applicable to all employers. Granting exemption or concession on the levy will undermine Government's efforts to manage the demand for foreign domestic workers.

The imposition of the foreign domestic worker levy is not inconsistent with efforts to get more women to join the workforce. By adopting levy as a regulating instrument, we are leaving it to women to decide on working or staying at home after balancing their income with the total cost of employing a foreign domestic worker. The trend of increasing female labour force participation rates over the years show that the levy has not deterred women from working. In any case, working women should not consider foreign domestic workers as the only option in managing their households. I would like to point out that countries such as Japan has a higher female labour force participation rate compared to Singapore, and yet does not have a large pool of domestic workers.

Furthermore, working women who employ foreign domestic workers, be it to take care of children or the elderly, can claim tax relief of twice the levy paid for the year. This tax relief helps them to meet part of the cost of employing domestic workers and thus providing incentive for more women to work. Hence, I do not think that the levy revision will deter housewives from returning to work especially if they are able to earn an income that more than offsets the cost of employing a foreign domestic worker.