KOROR, Palau — Palau’s plan to more than triple the annual fee for foreign worker permits from $150 to $500 is sparking concern among employers and retirees who depend on overseas labor. The increase, embedded in the FY 2026 budget bill, would also raise the two-year permit from $300 to $900.
The measure — embedded as a policy rider in the government’s annual spending bill — would also increase the two-year permit fee from $300 to $900. It is now under third reading in the House of Delegates and will be transmitted to the Senate for consideration.
President Surangel Whipps Jr., who submitted the bill, said the fee hike is intended to both slow the rising number of foreign workers and increase government revenue.
“The number of foreign workers is increasing and will keep increasing,” Whipps said during a July 16 press conference. “There’s no reason to bring big investments to Palau that bring more foreign workers that burden us while we don’t have enough money to take care of things. Why is it in the budget bill? It’s a part of the budget that we can use to help our government.”
Employers fear loss of essential labor
Harry Besebes, owner of HBO Construction, HBO Medal a Bai Farm, and HBO Let’s Go Fishing, said foreign workers are “the backbone” of his operations, helping in fishing, construction, farming and livestock work.
“If the permit fee goes up, the number of foreign workers may drop, and that’s something we don’t want,” he said. “They help a lot in local businesses.”
In the tourism sector, Lance, who operates a tour company, said hiring is already challenging during the low season. Efforts to recruit guides from Taiwan have been hampered by climate concerns and limited demand. “That is a big jump from $150, and that will just add to the difficulty of hiring,” he said.
Retirees weigh costs against daily needs
For some retirees, the increase could mean choosing between keeping help and cutting back.
A retired woman who employs a Bangladeshi worker for farm work and occasional house chores said she may not be able to afford the higher fee. “I am retired and $500 is a lot to pay for me,” she said. “It would be sad for me and for my employee, who came here to make a better living.”
Another retiree, who employs two workers for farming, tree cutting and home maintenance, said the increase “brings in more money to our government to hopefully move forward and advance the economy” but acknowledged it could be “saddening” for those who can’t afford it.
Labor market near full capacity for locals
According to the Palau Government’s Economic Fiscal Update 2024, the domestic labor market is close to full employment for Palauan workers, most of whom are in the public sector. Additional labor needs are met by foreign workers, whose numbers are projected to reach a peak last seen in 2017 by FY25.
Demand for foreign workers is expected to grow at an average of 3.5% annually in the latter half of the 2020s, fueled by tourism and construction. Overall labor market growth is forecast at 1.9% per year through FY30.
The proposal has placed Palau at a policy crossroads: whether to prioritize revenue and reduce reliance on foreign labor, or to maintain the workforce that sustains farms, small businesses and tourism — key drivers of the nation’s economy.