A Critique of the new POEA Memorandum Circular No. 04 and the Ban on Direct Hiring

Here’s a critique on the latest anti-OFW policy of the Arroyo regime prepared by our compatriots from the Asia Pacific region. Read it and learn why 2008 is never a ‘banner year’ for the OFW sector as boasted by Presidential Spokesman Ignacio Bunye.

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A Critique of the new POEA Memorandum Circular No. 04 and the Ban on Direct Hiring

Mission for Migrant Workers (MFMW) and Asia Pacific Mission for Migrants (APMM)
30 January 2008

On December 18, 2007, the Philippine Overseas Employment Administration (POEA) issued Memorandum Circular No. 04, Series of 2007, entitled Guidelines on the Direct Hiring of Filipino Workers. The order took effect last January 15, 2008.

In a news release of the Department of Labor and Employment (DoLE), the agency directing the POEA, dated January 19, 2008, they said that MC-04 “allows direct hiring of OFWs by foreign employers only upon approval by the Secretary of Labor and subject to screening of employers and employment contract verification by the Labor Attaché or the Philippine Embassy.”

Additionally, it clarified that “direct hiring may be allowed only for members of the diplomatic corps and of international organizations, government officials of ministerial level, and employers who are hiring on one-time or trial basis. The number of employees to be hired directly shall not exceed 5.”

MC-04 puts more severe restrictions for name-hired or direct-hired OFWs. According to DoLE, if prospective employers do not wish to comply with the guidelines, they shall only be allowed to hire OFWs through recruitment agencies “which are willing to assume responsibilities over the employees, including payment of salaries and other employment benefits.”

Furthermore, DoLE Secretary and POEA Board Chairman Artutro Brion declared that the new policy for dircet hires is aimed at “strengthening the protection mechanisms for OFWs.”

In the experience of Filipino migrant workers, when the government starts to drum up slogans of “protection”, it is time to be alert, vigilant and inquisitive. It was the same when they heaved upon OFWs the POEA Guidelines on the Deployment of Filipino Household Service Workers in 2007. It was also the same when they came out with the Overseas Workers Welfare Administration (OWWA) Omnibus Policies in 2003.

The two latter policies were eventually proven to be detrimental to the rights and wellbeing of Filipino migrants.

Memorandum Circular No. 04 deserves no less attention from migrant workers and advocates of the rights of migrants.

In studying the policy and analyzing its impacts to Filipino migrant workers, it can be seen that:

  1. MC-04 will result to loss of jobs and employment opportunities

The new guidelines provide for pre-qualification of employers wishing to direct hire a Filipino worker. It carries no distinction among the Filipino workers being hired that include current OFWs who are renewing their contracts and those with finished contracts or pre-terminated contracts and are transfering employers.

For employers who wish to direct hire a Filipino, Part II, No. 3, Item d of MC-04 said that the employer will submit an undertaking that will include the:

ii. Provision of a performance bond equivalent to the worker’s three months salary to guarantee compliance of the employer with the provisions of the employment contract

iii. Provision of a repatriation bond in the amount of US$5,000 or its peso equivalent to guarantee the following:

iii.a. actual cost incurred for the repatriation of remains and subsequent burial following death from any cause;
iii. b. actual cost incurred for repatriation from other causes such as violation/non- compliance with the contract, rules and regulation of the company and Philippine laws as well as the laws of the host country, except when violation is attributable to the worker or when worker voluntarily resigns or returns to the Philippines

This means that a prospective Hong Kong employer directly hiring a Filipino domestic worker, for example, has to shell out about US$6,320 or approximately HK$50,000 as bonds (US$1,320 for the three-month salary performance bond and US$5,000 for the repatriation bond).

For practical and financial reasons, no employer will be willing to put up this amount.

Thus, an OFW who just have to renew a contract with the same employer or has another employer already in line must still register with a recruitment agency in order for her papers to get processed. This will be a cause for massive confusion among the OFWs and the employers on top of the inconvenience that it will put in an otherwise simple process. What will happen to OFWs in Macau, for example, who are mostly directly hired? Or those in countries like Kuwait where a worker is allowed to directly seek an employer if the previous employer for at least two year permits him or her?

Even worse, this will lead to more unnecessary fees for OFWs for the recruitment agencies will surely charge them for a “service” that is not even needed in the first place.

With the additional hassle of passing through agencies, an employer who wants to direct hire a worker will be strongly discouraged to hire a Filipino. The potential loss of job opportunity is a greater tragedy for any OFW who could have been assured of an employer if not for the MC-04.

  1. MC-04 puts Filipino workers under the control of recruitment agencies and makes them vulnerable to overcharging and other malpractices of unscrupulous recruitment agencies

Since the new pre-qualification of employers for direct hires/ name hires is impossible to meet, all workers have to, by force majeure, go through recruitment agencies.

It should be noted that according to the announced procedure of the new program for dircet hires by the Philippine Consulate General in Hong Kong (PCG-HK), “Workers coming to Hong Kong on employment visa for the FIRST TIME are not allowed under this program.” This means that NO DIRECT HIRING will be allowed for first time applicants at all.

This will mean that recruitment agencies will have a field day with overcharging. Not yet content with the floodgate for overcharging it has opened with the POEA Guidelines on the Deployment of Filipino Household Service Workers, the government has now completely given unscrupulous recruitment agencies the free rein to exploit for maximum financial benefit the desperation of Filipino migrants to work abroad.

In an initial survey of the MFMW among its clients, overcharging has remained rampant if not even worse than before.

Out of the initial 526 respondents surveyed from the MFMW clients, about 80% paid more than P25,000 to agencies. Of this, about 25% paid P60,000 to P100,000 while 31 of the respondents said that they paid more than P100,000.

In Taiwan, Filipino workers are charged by as mush as P190,000. Even the Taiwan government has recognized the gravity of the problem of workers with recruitment agencies and, since the start of this year, has initiated moves to allow direct hiring for returning caregivers.

If a host government such as Taiwan acknowledges this problem, why is the Philippine still bent in shoving its own nationals to the mercy of recruiters?

How can the government still claim that putting OFWs in the hands of recruitment agencies is for their protection?

Following the government’s logic, it appears that they consider direct hiring as the problem of OFWs and not overcharging. They cannot be more wrong.

It is widely-acknowledged by migrant workers and institutions serving distressed migrants that malpractices of unscrupulous recruitment agencies is the source of many serious problems of Filipino migrants. Overcharging of fees in particular has put Filipino migrants in a situation where they are unable to escape from the debt trap cycle. This condition has recently even worsened with the sliding value of OFW remittances that now cannot even meet the basic needs of their families in the Philippines.

Of the 743 cases handled by the MFMW last year, 492 indicated that their employment was facilitated by recruitment agencies. Ninety-six per cent (96%) of them experienced problems in their employment.

This just shows that incidence of abuse and rights violations is not tempered by the recruitment agencies’ facilitation of employment. If the government believes that processing of employment through recruitment agencies will decrease violations of rights fo OFWs – or vice versa, direct hiring of OFW by employers themselves increases violations of OFW rights – then this government is really not in touch with what is happening to their nationals abroad.

Hostaging of OFWs by recruitment agencies shall surely increase by leaps and bounds with the implementation of MC-04.

  1. MC-04 belies the fact that recruitment agencies are not there to protect OFWs but are in fact accessories to, and even promoter of, many cases of abuse.

When did recruitment agencies ever become champions of OFW services and protection? Never!

Aside from being the source of OFW woes, recruitment agencies even aggravate the situation of abused migrant workers. There have been many cases wherein a worker whose rights have been violated is dispatched back to the Philippines by the recruitment agency instead of being provided with the needed assistance.

Distressed migrants are oftentimes left to fend for themselves. If they approach the PCG, they will be directed to the agencies. If they go to the agencies, either they are directed to the airport or asked to seek help from the government.

Migrants’ organizations and service institutions are the ones that take on the responsibility of providing assistance to distressed migrants. More often than not, it requires the determination of the distressed migrant worker and the support of migrants’ organizations and service institutions to push the government to provide the assistance that the worker needs.

Recent concrete cases of these are those of Jocelyn Dunluan in Canada, Marilou Ranario in Kuwait and of Miriam Espiritu – an OFW who died in Hong Kong and was only repatriated by the OWWA after the pressure exerted by her family and the MFMW.

  1. MC-04 negates the gains of Filipino migrants in previous struggles for their rights and wellbeing.

In 1994, the POEA issued Memorandum Circular No. 41 that made passing through recruitment agencies mandatory for OFWs. This triggered a widespread outrage among OFWs especially in Hong Kong where the campaign was most intense.

In the face of such sustained opposition, the government was forced to revoke MC-41 at least for OFWs in Hong Kong.

Department Order No. 11 issued in October 26, 2001 by then DoLE Sectretary Patricia Sto. Tomas entitled Revoking POEA Memorandum Circular No. 41, Series of 1994, stated that:

“In line with the State policy to afford adequate protection to Overseas Filipino Workers, POEA Memorandum Circular No. 41, Series of 1994, is hereby revoked.

Employers in Hong Kong shall have the option to hire Filipino household workers either through licensed recruitment agencies or through the name hire facility of the Philippine Overseas Employment Administration (POEA).”

Ironically, the same line that the government used to repeal MC-41 and allow direct hiring is the same line that they are now peddling to justify MC-04 and practically ban direct hiring! It is totally irrational and illogical to use a principle as basis to revoke one policy and then use the same principle to institutionalize a new one that is essentially the same as the repealed rule.

This alone makes the rationale behind MC-04 highly-suspect. The government dishes out the slogan of “protection” whenever it is convenient for them. It just shows how shallow their commitment is to actual, concrete and effective protection of OFWs.

Aside from the success of the campaign against MC-41, Filipino migrants were also victorious in the campaign against the collection of the Mandatory Insurance and Repatriation Bond (MIRB) implemented in 1991. OFWs then asserted the responsibility of the government in the repatriation of distressed migrant workers. Finally, the MIRB was scrapped in 1992.

MC-04 resurrects the horrors that policies like MC-41 and the MIRB have brought to migrant workers.

  1. MC-04 translates to the deregulation of the Philippine labor export industry and relieves the government of its responsibility for protection and services to their nationals abroad.

The deregulation of the Philippine labor export industry is a long-standing agenda of the government.

Simply put, deregulation means the erosion of the government’s regulatory powers in different aspects of the migration process and giving it to the private sector – such as recruitment agencies. Notably, the deregulation policy is focused on scheduling of fees and the provision of services and protection to OFWs. Government’s function is then limited to the “facilitation” of the migration process.

This plan was crystallized in the Republic Act 8042 or the Migrant’s Act of 1995 . Amidst the clamor against neglect, the government of then President Ramos swiftly passed the Magna Carta for OFWs that contained motherhood statements of protection and services while also slyly pushing through the deregulation agenda.

Filipino migrant workers, however, were not fooled. The campaign against deregulation was advanced. Recently, Articles 29 and 30 of the law that stipulated deregulation were repealed from the Magna Carta.

Deregulation assures the government of its steady income from OFWs – remittances and standard government charges to migrant workers – while divesting itself of the “burden” of providing services and protection such as shelter for and repatriation of its distressed nationals.

However, aside from earning from OFW themselves, the government is also set to harvest more income from the expansion of the recruitment industry.

The current Licensing and Regulation rules of the POEA for recruitment agencies stipulate that:

Section 2. Payment of filing fee. Upon receipt of an application with complete requirements, the Administration shall require payment of a non-refundable filing fee of P10,000.00 and submission of proof of payment thereof.

Section 3. Action upon the application. Within fifteen (15) calendar days from receipt of an application with complete requirements including proof of payment of the filing fee of P10,000.00, the Administration shall evaluate the pertinent documents, inspect the offices and equipment and determine whether or not to grant or deny the application. Denial of an application will result in the forfeiture of the filing fee.

Section 4. Payment of Fees and Posting of Bonds. Upon approval of the application, the applicant shall pay a license fee of P50,000.00. It shall submit an Escrow Agreement in the amount of P1,000,000.00, confirmation of escrow deposit with an accredited reputable bank and a surety bond of P100,000.00 from a bonding company acceptable to the Administration and accredited with the Insurance Commission.

Agencies with existing licenses shall, within four years from effectivity hereof, increase their Escrow Deposit to One Million Pesos .

But similar to other businesses, recruitment agencies will likely pass on whatever it paid for in taxes, bonds and other charges of the government to its “consumers” who are the migrant workers. Again, it is the OFWs who will carry the ultimate burden.

Be it from recruitment agencies, employers or the OFWs themselves, the government has the most to gain from the deregulation of the labor export industry. If without the deregulation, the government is already bloated with monetary gains, what more if the extra expenses for the already mediocre services and protection they provide are taken off their hands?

With MC-04, the government is now again on top of its deregulation drive. By making it mandatory for OFWs to pass through recruitment agencies that will suppossedly also provide OFWs the protection they needed, the government has practically concretized its deregulation plan.

In effect, this government is also violating its own laws. If the deregulation provisions of Republic Act 8042 have been repealed, then a mere circular by an adjunct agency of the executive branch should not be able to circumvent this.

Additionally, while the government divests itself of its responsibility of welfare provision and protection to OFWs, it also continuously collects fees for the “welfare fund” in the OWWA. As what have been exposed in the past, the OFW money that is in the OWWA Fund has been a rich source of corruption involving no less than whoever sits in Malacanang.

Now with the deregulation taking shape on one hand and the OWWA Omnibus Policies on the other, the OWWA Fund shall be a bottomless well of money for corruption and expenses not even remotely related to OFW welfare.

In summary, MC-04 is a policy that shall put Filipino migrant workers in a worse situation than before.

As migrant workers have put it, it is a policy that throws them to the wolves and opens them up to more exploitation, abuse and hardship. It plays right into the government’s plan of “unburdening” itself of its responsibility to its nationals abroad without grave impacts to its own gains – in fact, it stands to gain more – from the migration of Filipinos.

As institutions providing services to migrant workers and advocating for their rights, we urge the government to:

  1. Immediately scrap POEA MC-04.
  2. Scrap the POEA Guidelines on the Deployment of Filipino Household Service Workers.
  3. Institutionalize effective mechanisms that will curb, if not not finally stamp out, overcharging and other malpratices of recruitment agencies.
  4. Improve the onsite services for and protection of Filipino migrant workers. Scrap the OWWA Omnibus Policies.
  5. Stop the deregulation of labor export. Institute policies and mechanisms for effective and concrete protection of Filipino migrant workers.

———— ——— ——— ——— ——— ——— ——— ——— —–
Ramon Bultron
Managing Director
Asia Pacific Mission for Migrants (APMM)
G/F, No. 2 Jordan Road, Kowloon, Hong Kong SAR
Tel. (852) 2723-7536 / (852) 9477-3141
Fax. (852) 2735-4559
E-mail: rbultron@gmail. com / rbultron@netvigator .com / apmm@hknet.com
Website: www.apmigrants. org

26 Comments

  1. A lot of OFW are truly disappointed with this corrupt Memo, and have been trying to voice out their concerns.

    http://www.ipetitions.com/petition/antiOFWcircular/signatures.html

    Many have written to the media about this but then, the major media and papers would rather cover “Greta Chronicles”, “Bring ‘bayong,’ shoppers told “, a kidnapper killed, and other nonsense.

  2. Sad but true cheska. But dont fret,Im sure OFWs wont be taking on this latest of Arroyo’s evil scheme’s sitting down. Protests are already being generated in a global scale, courtesy of Migrante International, to call for the immediate scrapping of POEA MC-04.

  3. This critique says it all. The Philippine government should not be stubborn. Listen to OFWs. Scrap MC-04 now!

    By the way, what’s the latest on this memo?

  4. hi joe,

    no news from the government side on the memo as of yet. But one thing that is certain though is the collective outcry of our OFWs on the memo.

    Tama ka, govt shouldnt be stubborn. They should scrap it immediately.

  5. […] a primer on the issue that is fast galvanizing the worldwide OFW movement. Mackybaka published the primer released by the Mission for Migrant Workers (MMW) and the Asia Pacific Mission for Migrants […]

  6. It is ironic! Our first time (group of engineers) to go out with a salary 5 times our earning here in the philippines….then this MC-04 pops up and it seems that our employer is backing out. Scrap MC-04 now!

  7. la n tlga kuenta goverment natin… kaya nga aalis ng pilipinas ang isang pinoy,para makaahon sa kahirapan.tapos ganyan gagawin nila.. patay na ang carabao .. bago pa mkapaga araro… letse..

  8. hi M.E., Jason..

    Here’s a bit of good news. Migrante Int’l has stormed the POEA office to protest MC-04.

    Read on.

    News Release
    February 4, 2008
    For reference: Connie Bragas-Regalado, Chairperson

    Migrante pickets POEA to protest new guidelines on direct hiring

    An alliance of organizations composed of overseas Filipinos and their families today led a picket at the Philippine Overseas Employment Administration this morning to demand the immediate scrapping of the POEA MC 04 guidelines on direct hiring.

    “These guidelines intensify further the Arroyo administration’ s clear abandonment of OFWs. Through the stipulation regarding the performance and repatriation bond, regardless of the amount paid, the Arroyo administration tries to absolve itself of any responsibility regarding OFWs in distress. Worse, under the guise of passing accountability onto employers – the burden will clearly fall onto the OFWs,” says Connie Bragas-Regalado, Migrante International Chairperson.

    “Instead of ‘direct hiring’ guidelines, the memo will also essentially force OFWs to submit to the often very exploitative process of recruitment agencies. From very high placement fees to the outright disregard for OFWs rights and welfare, recruitment agencies are notorious for pushing OFWs into conditions of debt-bondage and modern-day slavery,” she added.

    POEA MC 04 was passed last December and implemented January 15 this year. Recently, the Philippine Consulate in Milan said the guidelines do not apply with the general condition of Filipinos in Europe while the Philippine Embassy in Singapore announced its suspension until further notice.

    “As we dare other Philippine posts to follow suit, we will accept no less than its immediate scrapping,” said Bragas-Regalado.

    In the coming weeks, Migrante announced that its member organizations will lead forums, rallies and delegations to their local Philippine embassies or consulates as part of its global campaign to scrap the POEA MC 04. The group said they will also escalate their oust Arroyo campaign given that they hold her accountable for this latest trampling of rights and welfare. #

  9. This MC-04 is non-sense! Can they do something else better in helping the OFW and those who wants to be an OFW?

  10. Congratulations OFWs!

    Workers welcome POEA retreat
    By Jerome Aning
    Philippine Daily Inquirer
    First Posted 01:56:00 02/17/2008
    MANILA, Philippines — Migrant workers on Saturday welcomed the indefinite suspension of new government guidelines on direct hiring of overseas Filipino workers.

    The leftist group Migrante International attributed to “OFW Power” the indefinite suspension by the Philippine Overseas Employment Administration’s of its Memorandum Circular No. 4 (MC-04), which, among others, required foreign employers to post up to $8,000 in repatriation and performance bonds for each Filipino worker they hired.

    “This is the result of the united protest of OFWs around the world and that of our families in the Philippines. We sustained the campaign and were not deceived by the promise of protection of MC-04 nor of the tricky exemption,” said Samahan Laban sa Katiwalian ng mga Recruitment Agencies at Patakarang MC-04, a coalition against the POEA rule.

    “Filipino migrant workers claim victory over the POEA’s MC-04. This is the result of the united protest of OFWs around the world and that of our families in the Philippines,” said Dolores Balladares, chair of Migrante’s Hong Kong chapter, the United Filipinos in Hong Kong (Unifil).

    In Manila, the Center for Migrant Advocacy said it hoped the government had “learned its lesson” in not consulting the OFW sector before imposing a “burdensome” regulation such as MC-04.

    “MC-04 did not look good to OFWs not only because of its being tedious, drastic and costly but also it seemed to them that the government does not want to have the responsibility of bailing out OFWs in distress,” CMA executive director Ellene Sana told the Inquirer.

    Sana said the OFW groups would be willing to sit down with the POEA to craft regulations that would “really” extend protection to OFWs, particularly the directly-hired.

    “The process of making rules should be transparent and participatory. If we keep on promoting a labor-export policy, we should be ready for distressed migrants. So the government must touch base with OFW communities and hear from them how their welfare may be best protected,” she said.

    POEA suspended the guidelines on Feb. 14, “until further orders,” less than a month after they were implemented. In suspending the guidelines, the POEA cited President Macapagal-Arroyo’s directives to relax rules on hiring white-collar OFWs and the need to deliberate further on the matter.

  11. san tayo kkha ng ganon klking pera? tpos pag may problma ang isang ofw dmi nla che-che-bureche.they wont give assistance unless u give them some kind of palaman!!!!

  12. pang-2010 election lang yan!!!!!!!!!

  13. POEAs MC-04 has gravely affected people like me seeking employment abroad..knowing i’m well qualified for the jobs and because of that companies will not risk hiring Filipinos because of the desperate measure of the gov’t to obtain funds. Putting the MC-04 on indefinite suspension means that the anytime they can tell you that is in effect when it’s not..They have to SCRAP POEA MC-04 and release a statement that will abolish that..All Filipinos abroad are bleeding and the gov’t is such a decoration for a mere excuse for having sovereign gov’t the mere fact that they cannot really help us..i was able to fly without their help..the immigration peeps just gave me a hard time..In other words, Filipinos has just been disadvantaged further because of that MC-04 by POEA..ABOLISH POEA MC-04!!

  14. because..I DID IT MY WAY!!

  15. New POEA Rules MC-04 should be totally abolish despite OFW great dismay about the rules.

    They should think instead of helping OFW rather than depriving us the opportunity to get higher pay directly from employer.

    No employers will invest for 8t dollrs to filipinos but rather hiring other asean workers.

    The person behind this rules should step down soon.

    I am thankful to migrant workers and other pilino groups demanding the complete eradication of these rules to ease the Pilipnos chnges of getting new job opportunity rather than preventing us a chance to get into.

    Please, abolish!abolish!abolish! totally without hidden ….

    Doha

  16. i would like to send me a letter about the procedure to apply as a caregiver .please send me a letter here 329 lucas nueve st Lian, Batangas. I am going to POEA but i ask some in a preson there how to apply and there procedure and what window i get more information. thank you

  17. tama ka kapatid!

  18. Was this lifted or revoked already?

  19. Ano na balita MC 04?

  20. Ano na balita sa MC 04?

  21. Juan i think umatras ang POEA na iimplement ito dahil sa tindi ng protesta ng mga OFW. Pero siyempre umasa tayo na ipipilit pa rin nila ito kaya dapat bantay lang tayo.

  22. Good Day, a follow-up on your blog, wala kasi akong update if na supersede na itong MC04. thank you

  23. as i said above, the POEA decided not to implement MC04.

  24. great post

  25. I am the latest victim of this POEA MC04-2007

  26. POEA MC04-2007 has been suspended before…but lifted in 2008… I’m a victim of this POEA MC04-2007


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