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Report Cites Forced Labor in Malaysia’s Electronics Industry


SEPT. 17, 2014

Nearly one in three migrant workers in Malaysia’s thriving electronics industry toils under forced labor conditions, essentially trapped in the job, a factory monitoring group found in a report issued on Wednesday.

The monitoring group, Verité — which conducted a two-year investigation commissioned by the United States Department of Labor — found that 32 percent of the industry’s nearly 200,000 migrant workers were employed in forced situations because their passports had been taken away or because they were straining to pay back illegally high recruitment fees.

The report said those practices were prevalent among the migrants from Bangladesh, India, Myanmar, Nepal, Vietnam and other countries who work in Malaysia’s nearly 200 electronics factories. Those factories, which produce consumer electronics, motherboards, computer peripherals and other electronic goods, account for a third of Malaysia’s exports and produce for many well-known companies, including Apple, Flextronics, Samsung and Sony.

The Verité report said that 92 percent of the migrant workers in Malaysia’s electronics industry had paid recruitment fees and that 92 percent of that group had paid fees that exceeded legal or industry standards, defined as more than one month’s wages.

The report said about half of the migrant workers who borrowed for their recruitment fees spent more than a year paying off those fees. According to the report, 94 percent of the migrants did not have their passports when Verité’s investigators interviewed them, and 71 percent said it would be impossible or difficult to get their passports back when needed.

“This most modern of industrial sectors is characterized by a form of exploitation that long ago should have been relegated to the past,” said Daniel Viederman, chief executive of Verité. “The problem is not one of a few isolated cases. It is indeed widespread.”

Labor Department officials commissioned the study because the federal government frowns on the importation of goods made by forced labor. They sought an investigation after seeing evidence that the problem was serious in Malaysia.

Twelve investigators working for Verité interviewed a total of 501 workers from nearly 200 Malaysian factories. According to the study, “92 percent reported feeling compelled to work overtime hours to pay off their debt, and 85 percent felt it was impossible to leave their job before paying off their debt.” Seventy-seven percent had to borrow money to pay their recruitment fees.

“Workers are paying too much to get their jobs,” Mr. Viederman said. “That leaves them vulnerable to being trapped in their jobs.”

He told of a migrant worker from Nepal who spoke good English and was the only one of five children with a college degree. His family paid a recruitment agent $1,500 for his job, which was more than twice the annual income in Nepal, and they borrowed much of that at a 36 percent annual interest rate.

When the Nepali arrived in Malaysia, his passport was taken from him at the airport, and he has not seen it since, he told the Verité interviewer. “He has now completed 14 months of a three-year contract, and he has not been able to save any money” because he is still paying back the recruitment fees, Mr. Viederman said. The Nepali works 12 hours a day, often seven days a week, and said it would take two years to finish repaying the loan.

“He doesn’t want to be in Malaysia anymore,” Mr. Viederman said. “He wants to quit and return home, but then he would have to pay a hefty fine and purchase his own plane ticket and still have the loan payment hanging over his head. He wasn’t sure if he could get his passport back.”

The report found that 30 percent of foreign workers said they slept in a room with more than eight people, and 43 percent said there was no place where they could safely store their belongings. Twenty-two percent of the workers said they had been deceived about their wages, hours or overtime requirements during the recruitment process.

Mr. Viederman said many workers faced a “one-two punch” — being charged high recruitment fees and then being paid less than they had been promised. He said many workers were told that their wages would be withheld or they would be reported to authorities if they complained or protested.

The Malaysian Embassy in Washington did not respond to inquiries — Tuesday was a national holiday.

Officials from Samsung and Sony did not respond to questions about Malaysia.

Asked about the reports of forced labor, Chris Gaither, a spokesman for Apple, said: “This is an issue we have paid a lot of attention to and done a lot of work on. We were the first electronics company to mandate reimbursement to workers who were charged excessive recruitment fees.”

Mr. Gaither said Apple’s supply chain, which employs 1.5 million workers worldwide, employs 18,000 in Malaysia, including 4,000 migrant contract workers. He said that since 2008, Apple had helped migrant workers in Malaysia and elsewhere to reclaim $19.8 million in excessive recruitment fees, which he defined as more than one month’s wages. Apple uses about 30 factories in Malaysia, and Apple had audits done at 18 of them in the last year to investigate forced labor and other problems.

Mr. Viederman said companies should strengthen their codes of conduct to bar payment of recruitment fees for workers at any factories they use and to prohibit supplier factories from taking migrant workers’ passports. He said companies should make sure their factory monitors engaged in aggressive investigations to unearth such practices. In addition, he called for a grievance procedure for workers that would hold the companies, suppliers and labor brokers accountable.

The Verité report found 62 percent of migrant workers said they were unable to move around freely without their passports. Fifty-seven percent said they could not leave their job before their contract was finished because they would be charged an illegally high fine, lose their passport or be denounced to the authorities.

Forty-six percent reported having encounters with police, immigration officials or a volunteer citizens security corps. Most of the 46 percent said they had to pay a bribe, were detained or were threatened with detention or physical harm. Twenty-seven percent of the foreign workers said they could not come and go freely from their housing.

Correction: September 17, 2014

A picture with an earlier version of this article was published in error. While it showed an industrial zone in Malaysia, the companies whose names were evident on buildings in the picture were not named in the Verité report on labor practices in the country. (The report did not discuss any specific companies.)

A version of this article appears in print on September 17, 2014, on page B1 of the New York edition with the headline: Report Cites Forced Labor in Malaysia.