This Lewis Silkin article discusses the recent issues in regards to policing the working conditions of international supply chains as highlighted in a report by Verité. Focusing on immigration in Malaysia, this article considers the challenges and opportunities faced by multinational companies with a globally diverse workforce, and how forced labour issues can creep into these worldwide supply chains.

International supply chains were once again in focus last month, this time in the form of a report by Verité, the NGO which monitors international labour rights. The report, based on a two-year study of labour conditions in the Malaysian electronics industry, found that up to one-third of workers in the industry are working in conditions that amount to forced labour.

Working conditions within multinational companies

The report highlights the problems faced by multinational companies in policing the working conditions of their international supply chains. Accountability in large and fragmented supply chains is almost impossible to achieve – and is doubly difficult in Malaysia, where Verité has identified the use of third-party recruitment agents by workers as a major factor in the abuse of workers in this sector.

Third-party recruitment agents operate in many countries (including Bangladesh, India, Indonesia, Nepal and Vietnam) and supply a flow of migrant workers to Malaysia. Lured by the promise of higher wages, 77% of migrant workers borrow money to pay the agents’ excessive fees and are then tied in to work on arriving in Malaysia to pay off the debt. Despite a law prohibiting the practice, over 90% of migrant workers have their passports confiscated upon arrival in Malaysia, leaving them trapped in a cycle of debt bondage. The use of these third party agents by workers, rather than employers, is another barrier to multinationals being able to effectively monitor their suppliers’ workplaces because, as Verité has pointed out, it “blurs accountability for labour conditions”.

92% of all foreign workers surveyed paid recruitment fees in order to get their jobs

Fees often exceed industry standards

90% of migrant workers have their passports confiscated

Trapped in a cycle of debt bondage

99% report excessive levels of fees paid to employment agents in Malaysia

Debt linked to forced labour (Modern Slavery)

71% say it is difficult or impossible to get their passport back when they need it

Passport retention is unlawful in Malaysia

Forced labour

To tackle what Verité has called an “absolutely systematic” use of forced labour in Malaysia, the report highlights the need for multinational companies to look beyond the workplace itself and examine the recruitment methods used in the labour supply chain. In the absence of international laws regulating international recruitment practices, Verité suggests that multinational companies should consider boycotting factories that use recruiters who are known to operate on a debt-bondage basis or who are unable to show that they comply with Malaysian law regulating the confiscation of passports. Verité has sought to support this by providing training directly to factories to improve and raise awareness of proper recruitment processes and working conditions.

For more on the challenges and opportunities faced by multinational companies with a globally diverse workforce, read our article on ITUC's Global Rights Index.


By Richard Miskella and Sarah McWhinney, Lewis Silkin



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