Monday, August 17, 2015

Maid in India

Unlike US, India does not have any Social Security concept (although, Americans doubt about timely usefulness about SS). The US Government encourages (in form of tax sops) its people to have IRA i.e. Individual Retirement Account. Moreover, the employer then matches the employee’s contribution (similar to our EPF). However, they still have the mental cushion of the SS.

This is not the case in India. The salaried middle class saves part of their salaries for important goals. Since middle class people generally tend to be educated, they manage to save some amount from their salaries. However, this is not the case for lower income group people like maids (in India).  They do not have any mandatory deductions. They want (may be need) all their money in-hand. For them, CTC is the salary.

Most of the maids are not well educated and hence they are doing daily chores for others. Moreover, they also tend to blow away all the money they get. Major part (if not all) is spent on necessities while some part is spent on the wants.

Average salary of a maid for doing single activity like washing clothes or utensils or washing floor is 600-800 (in Mumbai and surrounding regions). Generally, they do 2 activities in same house. Therefore, the total salary from one house is 1200. Assuming, they have 5 houses to look after, their salary becomes 6000 monthly. Let us assume their spouse too earns similar (if not more) income. Hence, the net income becomes 12000.
From this income, they have to spend on food expenses, commutation to work and back, schooling of their children (increasing trend), liquor (again, increasing trend) and utility bills. Also, they have to cater to occasional medical expenses. Most of the time, they live in a closed community pocket and they often tend to celebrate all the festivals irrespective of religions or caste. These festivals make them forget their hardships, at least for time being. Now, if we see, they do not have anything left to save for retirement.

With all the above points in mind, few noble people like A.Sundaramjee have been investing some amount of money in equity on their behalf. This is over and above the salary. Since, they do not have access to these accounts; they do not see the NAV fluctuations. Also, since this money is over and above the salary, they do not ask for advance or something. They are just happy that this amount belongs to them. For people like A.S, “the smile of the face of poor is the satisfaction of achievement and love” (in their own words).

With all due respect to A.S and dedicated maids, I urge all the readers not to rush to such a cause. Sure, you can initiate such a thing but do not disclose immediately everything. Let us see few points now.

A.S or some other folks who are doing these things are living in the same area for decades (if not from generations). The relationship of their families with their maids is more of family matter.

The new maids and house owners may not have such bonding. However, more than bonding it should be trust. The world is not short of stories where the maids have looted the owners. Without any bonding or trust, do not give impression that you are rich and willing to donate money. Let the trust build. If you trust your new maid and are willing to take risk, do it without their knowledge. Do not let them know that you are saving money for them. Start, let years pass and if there is bonding and trust, you can share the details of your noble plan.

The other factor is: if you tell them immediately, it may do more harm than good to them. They will stop saving anything at all. It is not uncommon to see AC, LED TV, motorcycles in front of their house. While we can debate on the usefulness of these items, the output would be they spending everything on these items (if you reveal your plan).

Conclusion: while we must definitely help poor and needy people, the recent discussion of A.S or other folks should not trigger an immediate knee jerk reaction. Start saving for them, build rapport, build trust. Gradually, reveal everything. This way, both the parties would benefit from this exercise.