Comments on: Should expats pay cheap local rates for local labor?

By: Wendy DeChambeau

Wendy DeChambeau — Mon, 26 Nov 2012 16:48:57 +0000

Here in Ecuador minimum wage is less than $2.50/hr. which is not enough to live on even though cost of living is cheap. While some expats have taken advantage of that (and even payed as little as $1/hour under the table to a desperate single mother) most of us try to pay a fair wage without upsetting the balance. You are right in that severe overpaying can cause problems, but there is nothing wrong with paying a little extra for hard work.

~Wendy http://www.why-ecuador.com.

By: Tom

Tom — Mon, 05 Nov 2012 11:50:33 +0000

In reply to Peter. Peter, thank you for your kind words. The reason I wrote this was because I felt exactly as you did at first, but then discovered that there are many potential downsides to overpaying just because we can afford to. I think it's probably best to start someone at or perhaps just over the local rate, even if it's US$40 per month, and then increase as they go on to reward loyalty or whatever. By then you'd see some potential downsides if there were any. -Tom

By: Peter

Peter — Thu, 01 Nov 2012 18:28:28 +0000

This is a really good article.

I have a friend who grew up in the Philippines who told me that $40 USD buys a full time maid for a month. I’ve always thought that, in that situation, i would pay much more, 5-6 times the local salary in order to not seem like “The cheap foreigner”, as well as that whole altruism thing.

I think i would feel weird not offering at least a little extra, would it be better to offer decent yearly bonus’s instead? And using the example of the Philippines, for a local rate of 40$ per month, what would be an acceptable bonus amount?

By: Tom

Tom — Mon, 01 Oct 2012 12:58:40 +0000

In reply to Steve.

Steve, I agree with you, as I mention in the story, partly because it can actually cause other problems when you overpay someone. But really, US$15 for 4 hours isn’t that out of line. Imagine if the local rate was US$5 for 4 hours of cleaning, as it is (or lower) in many places. You’ve got to admit that it would feel a bit weird, and it would be tempting to pay more, right?

Regardless, it does seem better to pay around the local rate, for the reasons discussed. Thanks for your comments. -Tom

By: Steve

Steve — Mon, 01 Oct 2012 12:51:39 +0000

I think that paying the local wage is the way to go. We live in China and pay our housekeeper 100RMB (about 15 bucks US) for four hours of cleaning, etc, each week. It didn’t cross my mind to pay her any more than that. The same goes for never tipping here (tipping is a non-issue in China, people will chase you down to give you ten cents change). Why would you do anything other than what the locals would do. We are locals!! We also bargain hard every time we go shopping.