Exclusion of Domestic Workers from Labor Laws and the Way Forward

There are over 75 million domestic workers around the world, representing 2.3% of total employment and 4.5% of all employees worldwide (International Labor Organization [ILO], 2021). In many countries (such as the Arab States), they represent the largest share of total employment and of wage employees, and in several low- and middle- income countries they represent almost 10% of total employment (ILO, 2021)[i].

Domestic workers provide an extremely important service, not only performing several household activities, but also allowing household members who hire them (especially women) to participate in the labor market (East & Velásquez, 2022). However, in most countries (especially developing economies) they lack the same rights that other wage employees enjoy (such as minimum wages, maximum working hours, holidays, sick and maternity leave, etc.), and sometimes they are completely excluded from labor laws. The reason for this difference is rooted in the belief that the employer (a household) does not make a profit from the domestic worker’s work, and its association with colonial-era servitude (ILO, 2016).

In 2011, the International Labor Conference adopted Convention 189 on Domestic Workers, which stipulates minimum rights that domestic workers should be granted. Since this convention was adopted, many countries have passed legislation to extend coverage of labor laws to domestic workers. However, in many cases this was not done by including domestic workers in general labor laws, but rather by creating or modifying regulations specifically for this sector, so that domestic workers still enjoy fewer rights than other wage employees. As a result, to this date only a little over 10% of domestic workers around the world enjoy the same rights as other wage employees (ILO, 2021).

In addition to the lack of legal and social protection, in cases where domestic workers are entitled to certain (or all) rights, most employers do not register their employees in the social security (either because they do not want to, or they do not know they are obliged to do it). This prevents domestic workers from enjoying many of these rights.

All this means that 80% of domestic workers are not covered by labor regulations, either de jure or de facto (ILO, 2021). This is extremely relevant considering that three out of four domestic workers are women. Therefore, the conditions of domestic workers in terms of legal and social coverage have a direct impact on the gender gap.

Policies to improve the labor rights of domestic workers

Efforts to include domestic workers within the scope of national labor laws could improve both workers’ wellbeing and gender inequality in terms of legal rights and social protection coverage. On the other hand, researchers point out that the costs incurred by firms (and in this case, households) to comply with labor regulations are the reasons why a large informal sector exists (Djankov et al., 2002). Therefore, it is not straightforward how governments and policymakers should act.

In the last decade, several countries have introduced reforms that increased the labor rights of domestic workers but also introduced other policies to either make registration easier or increase compliance with the law. In Brazil, a law passed in 2013 granted certain domestic workers (those employed regularly by the same household) the same rights as other wage workers (including a limit on hours worked per week, the right to overtime pay of no less than 50% of the regular hourly wage, insurance against work-related accidents, etc.). The amendment generated a significant debate in the society, and highlighted efforts by the government to increase the formalization of domestic workers (though the amendment did not include any reference to formalization)[iii]. De Melo Costa et al. (2016) estimate that the reform increased the registration of domestic workers in the social security system by 10%, while hours worked by domestic workers decreased by approximately 2.5%. The authors argue that this reduction was a result of compliance with the new maximum hours of work that domestic workers became entitled to. 

In Argentina, Congress passed a similar law in 2013, putting domestic workers’ labor rights on par with those of other wage employees, including the monetary sanctions that employers would face if they failed to comply with such labor rights. In addition to that, the government implemented a media campaign to create awareness of the need to register domestic workers in the social security administration, and the tax authority sent letters to high-income individuals (based on their tax reports) who had not registered any domestic worker to remind them of the need to do so[iii].

Feld (2022) estimates that this policy increased registration rates of domestic workers by 31%. In addition to this, domestic workers’ monthly earnings increased by 4% despite working fewer hours after the reform. These two results combined imply that hourly wages of domestic workers increased approximately 8%, and domestic workers had more time to either find additional work or spend it at home. In addition, after the reform children of domestic workers were 7.2% less likely to participate in the labor force than children of similar workers not affected by the policy, which may be a consequence of domestic workers obtaining certain social benefits such as health insurance and pension coverage.

The experiences of Brazil and Argentina suggest that, in order to cope with the higher costs of hiring a domestic worker, employers prefer to reduce the hours they hire them rather than terminating the labor relationship entirely.

Specifically on the point of letters to encourage registration, Ohaco and Vello (2019) performed a randomized controlled trial in which a group of taxpayers received a letter similar to those sent by the tax authority and compared the share of those individuals who registered a domestic worker with respect to a control group that did not receive such letters. The authors estimate that sending these types of letters increase the probability of registering a domestic worker by 0.22 percentage points, or 9% with respect to the registration rates exhibited by taxpayers in the control group. The evidence from Argentina suggests that monitoring and raising awareness that domestic workers are no different from other wage employees (and they deserve the same rights) is key to increasing compliance with labor laws.

On the other hand, flexible compliance mechanisms which account for different employment relationships may be needed. Countries like Uruguay, Colombia and Ecuador have also introduced reforms in this regard, allowing employers to pay lower payroll taxes when they hire domestic workers on a part-time basis (ILO, 2016). In some cases (like Ecuador) harsher sanctions for employers who do not comply with the current labor regulations are also in place, including jail time. While there have not been rigorous evaluations of the reforms implemented in these countries, there is encouraging evidence of increased formalization rates after these reforms (ILO, 2016), suggesting that policymakers should acknowledge the specificities of the domestic workers’ labor market when they implement reforms to increase their labor rights.

[i]  The ILO (2018) defines domestic workers as “those workers in the care economy who work in or for a household or households on an occupational basis”

[ii] Since 2006 employers were able to claim any social security contributions paid on behalf of domestic workers as income tax deductions.

[iii] Previously, in 2006, the government created a simplified registration form for domestic workers and determined payroll taxes as step-functions of the number of hours a domestic worker was hired for, instead of a percent of the gross income, as is the case for other wage employees. These taxes were set at relatively low levels to encourage registration, but it did not have the intended effect.

References

• de Melo Costa, J. S., de Holanda Barbosa, A. L. N., & Hirata, G. (2016). Effects of domestic worker legislation reform in Brazil.
• Djankov, S., La Porta, R., Lopez de Silanes, F., & Shleifer, A. (2002). The regulation of entry. The Quarterly Journal of Economics, 117(1), 1–37.
• East, C. N., & Velásquez, A. (2022). Unintended Consequences of Immigration Enforcement: Household Services and High-Educated Mothers’ Work. Journal of Human Resources, 0920-11197R1.
• Feld, B. (2022). Direct and spillover effects of enforcing labor standards: Evidence from Argentina. Journal of Human Resources, 0221-11490R2.
• International Labor Organization. (2016). Policies to formalize paid domestic work in Latin America and the Caribbean.
• International Labor Organization. (2018). Care work and care jobs for the future of decent work.
• International Labor Organization. (2021). Making decent work a reality for domestic workers: progress and prospects ten years after the adoption of the Domestic Workers Convention, 2011 (No. 189).
• Ohaco, M. & Vello, F. (2019). Efectos en la registración laboral de los trabajadores de casas particulares: Evidencia empírica de una política de difusión dirigida a empleadores. Observatorio de Empleo y Dinámica Empresarial (OEDE)