The most significant contributor to the ongoing presence of debt bondage or forced labor in global supply chains is the burden of recruitment fees and expenses on migrant workers. Many employers and recruiters in high risk global supply chains build business models on charging unskilled and low-skilled workers fees for employment. Specifically, employers pay no or insufficient professional service fees to the recruitment agents they engage to find them workers. Rather, they knowingly allow agents to recoup revenue and the significant legitimate expenses associated with international labor migration—such as government approvals and travel costs—from the workers themselves.

One to Three Years of Debt in Taiwan
Verité’s experience is that the fees charged to foreign workers prior to their departure for Taiwan range between USD 1,500 and 6,000 per worker. While the fees charged vary depending on the workers’ country of origin and the type and location of the job, the reasonable costs of migration are significantly and invariably less. To secure a job abroad, desperate migrant workers must incur loans at exorbitant interest rates to pay the recruitment fees, exacerbating their vulnerability to debt bondage, human trafficking, and forced labor. Considering it can take workers anywhere from one to three years of employment to pay off these loans, they are essentially working for free. These amounts represent only the costs incurred by workers in their countries of origin, and do not account for the monthly service fees that workers may be charged by Taiwanese brokers when they start work.

Fortunately, an increasing number of buyers require their supply chain partners across the globe to comply with international standards and absorb the cost of recruitment and employment; they prohibit charging or transferring these costs to workers. But even the most socially responsible and vigilant brands and buyers encounter resistance in Taiwan.

Permission to Charge Foreign Workers in Taiwan
The Employment Services Act prohibits Taiwanese manpower agencies that provide recruitment services to employers from charging brokerage fees. The agencies are supposed to be paid for their services by their clients, the employers, however Verité’s on-the-ground analysis indicates that across virtually every sector that recruits foreign workers in Taiwan, Taiwanese manpower agencies require origin country recruitment agents to pay a brokerage fee to fulfill job orders on behalf of clients. The origin country agent then passes the cost of the job order to the workers before allowing them to depart for Taiwan.

Taiwanese regulations also permit manpower agencies to charge foreign contract workers a monthly service fee for services such as documentation processing, translation, and welfare services during their employment. International standards and the contractual and code provisions of the vast majority of international buyers require the cost for these services be borne by the employer, not workers. Based on Verité’s work in Taiwan, these services are consistently contracted between the employer and manpower agency as human resources-type support for the employer, but the cost is passed along to workers. Additionally, Taiwanese regulations permit agencies to charge foreign workers fees and costs for work permits, Alien Resident Certificate application fees, medical examinations, insurance premium contributions, food, lodging, and return airfare.

Substituting One Contract for Another
Taiwanese provisions frequently conflict with regulations in workers’ home countries that govern their clearance to migrate, and the contract of employment they signed prior to departure. For example, the Philippines Overseas Employment Administration (POEA) Rules and Regulations Governing the Recruitment and Employment of Land-based Overseas Workers expressly requires that recruitment costs are the responsibility of the employer. Yet when the workers arrive in Taiwan, they are required to sign a separate employment contract reflecting they will be responsible for many of these costs. Employers’ reliance on these cost-saving provisions permitted under Taiwanese law creates a de facto contract substitution situation—a key risk indicator of forced labor.

In the last couple of years alone, Verité clients sourcing in Taiwan across multiple sectors required their suppliers to reimburse millions of dollars in recruitment charges to foreign workers. Through dynamic programming and innovative monitoring tools like the CUMULUS Forced Labor Screen™ , Verité is engaging buyers, suppliers, and stakeholders across diverse sectors in Taiwan to remediate these abuses and advance principles of fair recruitment.

More needs to be done. Multinational buyers and stakeholder groups are urging the Taiwanese government to: tighten and enforce the regulations that prevent manpower agencies charging broker fees; hold Taiwanese employers accountable for paying for the costs of recruitment; impose vicarious liability on Taiwanese employers for the actions of their manpower agencies and origin-country recruitment agents; and apply sanctions that act as a deterrent. For positive change to occur, the Taiwanese government must prioritize the rights of foreign workers and heed these calls for reform.

For more information, contact Declan Croucher.