"Forced labour" rife in Malaysian electronics factories - report

Venture

17/09/2014 05:05

By Trinna Leong 
    KUALA LUMPUR, Sept 17 (Reuters) - Nearly a third of some 
350,000 workers in Malaysia's electronics industry - a crucial 
link in the international consumer supply chain - suffer from 
conditions of modern-day slavery such as debt bondage, according 
to a study funded by the U.S. Department of Labor. 
    The survey by Verite, an international labour rights group, 
found that abuse of workers' rights - particularly the tens of 
thousands from low-wage countries like Nepal, Myanmar and 
Indonesia - was rife in a $75 billion sector that is a mainstay 
of the Southeast Asian country's export-driven economy. 
    Several U.S., European, Japanese and South Korean 
multinationals have operations in Malaysia, including Samsung 
Electronics Co Ltd  005930.KS , Sony Corp  6758.T , Advanced 
Micro Devices  AMD.N , Intel  INTC.O , and Bosch Ltd  BOSH.NE . 
    Some big brands use suppliers such as Flextronics  FLEX.UL , 
Venture Corporation  VENM.SI , Jabil Circuit  JBL.N , and JCY 
International  JCYI.KL  to make parts for smartphones, computers 
and printers.  
    The U.S. government funding adds credibility to a report 
which is likely to come as a surprise to many consumers. 
    Malaysia is a middle-income country where labour standards 
have been seen as better than in some of its Asian neighbours 
such as China, where questionable labour practices have drawn 
scrutiny in recent years. 
    Verite did not single out any companies in its report, 
released on Wednesday, but blamed a system in which government 
and industry policies have given Malaysian recruitment firms 
increasing control over workers' pay and other conditions. 
    "These results suggest that forced labour is present in the 
Malaysian electronics industry in more than isolated incidents, 
and can indeed be characterized as widespread," the group said. 
    Several U.S. companies with operations in Malaysia told 
Reuters they could not comment until seeing the full report. An 
Intel spokesman said most of the chipmaker's 8,200 employees in 
the country were Malaysian and it did not use contractors. 
Flextronics said it was aware of issues related to foreign 
workers and had "rigorous" policies to prevent abuses. 
    Malaysian government officials did not immediately respond 
to requests for comment. 
    The study comes three months after Malaysia was downgraded 
to Tier 3 in the U.S State Department's annual Trafficking in 
Persons report, which cited a lack of progress in protecting the 
rights of about four million foreign workers. 
    The report, based on interviews with 501 workers, found that 
28 percent of employees were in situations of "forced labour", 
where work is coerced through factors including indebtedness 
from excessive fees charged by recruiters. 
    That figure rose to 32 percent for foreign workers, who are 
often mislead about salary and other conditions when they are 
recruited in home countries, and are commonly charged excessive 
fees that lead to indebtedness. 
    Verite said the numbers were based on conservative 
definitions. It found that 73 percent of workers displayed "some 
characteristics" of forced labour. 
     
    STABILITY, LOW COSTS   
    Malaysia's electronics and electrical industry made up 33 
percent of exports in 2013. In 2011, foreign investment in the 
sector accounted for $2.68 billion, or 86.5 percent of the 
total.  
    Malaysia has benefited in recent years from a reputation for 
stability and low costs, gaining fresh investment after floods 
in Thailand in 2011 crippled factory operations there. 
    On average, workers in the survey were found to have paid 
2,985 ringgit ($925) to brokers in their home country and in 
Malaysia as payment for their passage and jobs. That is more 
than the average per-capita annual income in Nepal. 
    Unable to afford a lump sum upfront, more than two thirds of 
workers who paid broker fees had to borrow money. 
    One in five immigrants were working more than the suggested 
60 hours of overtime a week - the industry's international 
standard limit - the group said. Malaysian law allows employees 
to clock up to 72 hours of overtime. 
    Malaysian laws have been amended in recent years to 
encourage the growth of recruitment companies that provide 
workforce services to multinationals, including paying, 
accommodating and disciplining employees. 
    "Liability over violations of worker rights is obscured, 
creating vulnerability on the part of the worker to exploitation 
and abuse," the group said. 
    The group found workers' passports were often confiscated by 
recruitment firms, which is illegal in Malaysia. Some firms were 
found to charge more than $1,000 for a worker to "borrow" his or 
her own passport. 
($1=3.21 ringgit)     
     
 
 (Additional reporting by Noel Randewich in San Francisco; 
Editing by Stuart Grudgings and Robert Birsel) 
 ((trinna.leong@thomsonreuters.com; +60323338034;)) 
 
Keywords: MALAYSIA LABOUR/REPORT