FORCED LABOR IN THE PRODUCTION OF ELECTRONIC GOODS IN MALAYSIA
A Comprehensive Study of Scope and Characteristics
by Verité
EXECUTIVE SUMMARY
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The conditions faced by foreign electronics workers in Malaysia have the potential to result in forced labor. In 2012, Verité received funding from the US Department of Labor to conduct a study to determine whether such forced labor does, in fact, exist in the production of electronic goods in Malaysia.
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Forced labor is linked to recruitment fee charging and the indebtedness that follows. Recruitment fee charging of foreign workers was found to be pervasive in the study sample, and fees were often excessive.
Ninety-two percent of all foreign workers surveyed paid recruitment fees in order to get their jobs. The recruitment fees that workers paid for their jobs often exceeded legal and industry standards equivalent to one month’s wage.[2] Of workers reporting recruitment fees paid to employment agents in their home countries, 92% were excessive. Of respondents reporting fees paid to their employment agent in Malaysia, 99% reported excessive levels.
Worker indebtedness was strongly linked to excessive recruitment fees charged to workers in their home countries and in Malaysia.
Seventy-seven percent of workers who were charged fees had to borrow in order to pay them. Workers who had to borrow money to pay recruitment fees reported paying higher fees, on average, than workers who did not have to borrow. This suggests that higher fees mean a higher likelihood of indebtedness for workers.
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Forced labor is also linked to deceptive recruitment: One in five workers in the study was misled in the recruitment phase about the terms of their employment agreement.
Twenty-two percent of foreign workers were deceived about their wages, hours, overtime requirements or pay, provisions regarding termination of employment, or the nature or degree of difficulty or danger of their jobs. These workers had little ability to change or refuse their jobs upon arrival.
Passport retention, which is prohibited by law in Malaysia[3], was widely experienced by workers in the study.
Ninety-four percent of foreign workers in the sample reported that their passports were held by the facility or their broker/agent, and 71% reported it was impossible or difficult to get their passports back when they wanted or needed them.
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Many foreign workers in the study experienced poor living conditions, in housing provided by employers or third-party employment agents.
Thirty percent of foreign workers slept in a room with more than eight people, 43% of foreign workers said that there was nowhere they could safely store their belongings, and 22% of foreign workers said that they did not feel safe in their housing.
It was difficult for foreign workers surveyed by Verité to leave before the end of their work contracts.
Fifty-seven percent of foreign worker respondents reported they could not leave their job before their contract was finished because they would either be charged an illegally high fine, would forfeit wages or runaway insurance, would be forced to pay the balance of the levy, would lose their passport, or would be denounced to the authorities.
Once on the job in Malaysia, 88% of foreign workers said they did not have the option to insist on a different job arrangement, and 92% said they did not have the option of refusing their job arrangement and returning home with job procurement costs refunded.
[...]
But wait, it gets worse ... that always seems to happen when unaccountable Corporations, bend the rules (often that they'd written) -- in order to make another Quick Hundred Million.
Here are some eye-opening details of their Exploitation "means and methods," once again from Verité:
Corruption & Labor Trafficking in Global Supply Chains
www.verite.org | +1.413.253.9227 White Paper December 2013
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Corruption & Labor Trafficking in Global Supply Chains
In this white paper, Verité outlines how trafficking-related activities in global supply chains include corruption, bribery, and other conduct that could result in liability for companies subject to Foreign Corrupt Practices Act (FCPA) jurisdiction. It also provides guidance on how and where companies should respond to the specific compliance risks associated with labor trafficking.
[...]
[...] The FCPA makes it clear that “willful blindness” or “deliberate indifference” to red flags will be sufficient to establish criminal knowledge of corrupt practices.
U.S. companies including foreign subsidiaries, franchisees, joint venture entities, or even suppliers that use third party employment agencies or labor brokers run the risk of potential FCPA liability. [...]
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Labor trafficking-related activities that violate the FCPA
Companies subject to the FCPA need to understand that the agents and brokers they hire may be paying bribes to an assortment of players in the foreign labor supply chain including sub-agents and labor department officials involved in immigration, border control, and law enforcement. Often these commissions or bribes may be funded by excessive fees charged to workers which are almost invariably illegal and so excessive that workers take on considerable debt at usurious interest rates in order to secure what they were fraudulently led to believe would be well paying contract jobs. The unfortunate workers who have been deceived end up in a forced or bonded labor situation, effectively and commonly working for free for months or even years to pay off their debt, often to the very “agents” who engineered their exploitation in the first instance. Moreover, kick-backs are frequently paid to those in the workplace who choose the agent or broker over others, thus creating the potential for liability under other applicable laws and regulations, including those laws and regulations that target commercial bribery.
The DOJ consistently takes the position that FCPA responsibilities extend to a wide range of third parties in supply chains including agents, business partners and even suppliers where an “improper business advantage” accrues to the U.S. connected company. The concept of improper business advantage is very broadly defined and can include indirect or direct financial benefits such as cheap labor used in the manufacture of its products. Companies cannot afford to ignore signs that suppliers, agents, or intermediaries may be engaged in trafficking-related activities that violate the FCPA. Avoiding knowledge of the conduct of third parties in the supply chain will not reduce a company’s potential liability
The nexus between corruption and labor trafficking is not new
There is a high correlation between public sector corruption and trafficking in persons for labor exploitation. Many sending countries that Verité knows to be labor trafficking hot spots, including Indonesia, Thailand, Vietnam, Bangladesh, India, Myanmar, Nepal, Mexico, Guatemala, Ecuador, and the Philippines also rank among the lowest on Transparency International’s 2012 Corruption Perceptions Index. Globalization and the opening up of new markets and borders generates a supply of migrant workers eager to escape poverty and unemployment in their home sending countries and meet the labor shortages in receiving countries in Southeast Asia and the Middle East in particular. This supply-demand equation creates a “high return-low risk” venture for labor traffickers. Labor trafficking is an insidious and often hidden abuse. Victims are rarely identified and few offenders ever held to account.
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I learned about these "Worker Exploitation" and "Forced Labor" situations, that are often the key linchpin of very profitable capital arrangements, when multi-national Corporations take advantage of their Free Trade agreements -- I learned about this by listening to Senator Sanders today.
Senator Sanders made bold and direct reference to "Worker Exploitation" and "Forced Labor," in his fact-filled Floor Speech, that helped to block Fast Track authority [Trade Promotion Authority, TPA] -- when the Senate voted it down today.
Senator Sanders:
[...]
Mr. President, it is not just NIKE and it is not just Vietnam. Another country that is part of the Trans-Pacific Partnership is Malaysia. Today there are nearly 200,000 electronics factories in Malaysia where high-tech products from Apple, Dell, Intel, Motorola instruments are manufactured and brought back to the United States. If the T.P.P. is approved, that number will go up substantially. Well, what's wrong with that? It turns out that many of the workers at the electronics plants in Malaysia are being forced to work there under horrible working conditions.
According to Verité which conducted a two-year investigation into labor abuses in Malaysia, an investigation which was commissioned by the U.S. Department of labor, 32% of the industry's nearly 200,000 migrant workers in Malaysia were employed in forced situations because their passports had been taken away because they were straining to pay back illegally high recruitment fees. In other words, American workers are going to be forced to compete against people in Malaysia, immigrant workers there whose passports have been taken away, who can't leave the country, who are working under forced labor situations.
That's our Bernie, not afraid to be bold and direct. And always ready to defend the little guy -- no matter how widely dispersed we may be.
Now, someone really needs to "compare and contrast" this
next map with the last one ... and perhaps connect a few more "exploitation" dots, behind that so-called "
Comparative Advantage" of Free Trade arrangements ...
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-- Trans-Pacific Partnership (TPP) Countries: Comparative Trade and Economic Analysis
When it comes to shady "Labor Brokers" and the "Cheap Labor" they routinely provide to their Free Trade clients -- there is far too often the exact opposite of "Freedom" for those Foreign Workers, who get haplessly caught in these unfair Corporate "supply chain" webs ...