Over 1,500 people signed up for Seoul’s pilot program to bring 100 Filipino household helpers within five days. The city will match 100 of these helpers with 300 households. With more than 10 days remaining before the August 6 application deadline, competition has already exceeded 5-to-1.
The overwhelming response to Seoul’s pilot program shows the country’s pressing need for affordable domestic helpers. The Bank of Korea assessed that there would be a shortage of 1.55 million care workers, including domestic helpers and caregivers, by 2042. The central bank proposed two policy solutions: increasing foreign workers and adjusting minimum wages for these workers.
A dual-income household in South Korea spends an average of 2.64 million won monthly on a domestic and childcare helper, usually the equivalent of one spouse’s entire income. Excessive childcare costs are one of the major factors contributing to Korea’s record low birthrate. Around 1.4 million married women have left the workforce due to childbirth and childcare. Introducing affordable foreign domestic helpers could boost productivity across the economy and help improve the country’s low birthrate problem.
But even Filipino helpers are not as affordable under Korea’s minimum wage system. The hourly wage of a Filipino domestic helper is set at 13,700 won ($9.9) per hour, which includes the minimum wage (9,860 won) and four insurance premiums. Wages are five to eight times higher than in Hong Kong (2,797 won) and Singapore (1,721 won). Singapore sets the minimum wage for foreign domestic helpers after consulting with eight countries that employ these helpers. Hong Kong exempts foreign domestic helpers from the regional minimum wage policy. Despite lower wages, foreign domestic helpers in Hong Kong, who receive around 770,000 won per month with room and board, express high job satisfaction, and the vast majority are willing to continue working. Given the circumstances, a monthly wage of 1 million won could benefit both Koreans and Filipino helpers.
The government insists on guaranteeing a minimum wage because of an International Labor Organization (ILO) convention prohibiting wage discrimination between domestic and foreign workers. But as the Bank of Korea suggests, an alternative is to bypass the ILO convention by utilizing private contracting, where individual households directly hire foreign workers. The minimum wage system should be updated so that households can employ foreign domestic helpers at a lower cost.
