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Forced Labor Is the Backbone of the World’s Electronics Industry

Poor people around the world are streaming into Malaysia in search of factory work. Once they arrive, they often find only hardship.
Ariel Ramchandani
Jun 28, 2018

A foreign worker sweeps a parking lot in front of the Kuala Lumpur skyline.Olivia Harris / Reuters

KUALA LUMPUR, Malaysia—Malaysia bills itself as “heaven for foreign companies.” Since the 1970s, the Southeast Asian nation has drawn 5,000 foreign firms from more than 40 countries to set up facilities in parts of the country specially set aside for business development. The electronics industry—the country’s largest manufacturing sector, which makes everything from semiconductors to TVs to computer keyboards—accounts for over 36 percent of the country’s exports and a quarter of its employment, according to the country’s manufacturing-development agency. United States electronics companies have invested billions in their Malaysian operations to date.
The results are plain. In Kuala Lumpur cranes stretch outward among the gleaming towers in a perpetual construction boom powered by foreign investment. The streets are spotless and well policed, the water is clean, and the politics are relatively stable. Consumers around the world benefit from products like mobile devices, circuit boards, and LED screens.
At the heart of this economic success are migrant workers. From Bangladesh, Nepal, the Philippines, Indonesia, and India, they arrive at Kuala Lumpur International Airport by the scoreful, papers in hand, hoping for a better life. Estimates of the number of foreign workers in Malaysia vary widely, from the government’s count of almost 1.8 million to perhaps twice as many, which would amount to a quarter of the country’s workforce. Migrant-worker advocates estimate one-third of those workers are undocumented.

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People forced to work in circumstances beyond their control

Many foreign workers believe “Malaysia is the land of milk and honey,” said Joseph Paul Maliamauv, of Tenaganita, a workers’-rights organization, when I met him at the group’s office in Petaling Jaya, a suburb on the outskirts of Kuala Lumpur. “They come out there, and think the streets are paved with gold.”
But upon arrival, migrants find this paradise doesn’t extend to them. Malaysia is “a booming economy and one of the most developed economies, multicultural and multinational, with a huge amount of foreign investment,” said David Welsh of the Solidarity Center, an affiliate of the labor group AFL-CIO, when I met him in Kuala Lumpur. “But in a region plagued with human-rights abuses and labor abuses, Malaysia is in many ways transparently the regional leader.”
Malaysia provides a window into a troubling part of the global economy that makes the whole system work, one that touches and connects practically every part of the world and billions of people: a flow of humans that shapes lives, creates the world’s things, and is built on the availability of a massive, inexpensive, and flexible labor supply. In Malaysia, it’s possible to see what maintains that flow: the recruitment strategies that bring workers to factories, the government policies that are so ineffective at protecting workers, the struggle to improve working conditions up and down supply chains, and the global political and economic realities that sustain the demand for cheap, unremitting work.
In 2014, the watchdog organization Verité released a study on migrant workers in the electronics sector in Malaysia. Among a sample of more than 400 foreign electronics workers, at least 32 percent were, by Verité’s definition, forced to work against their will. According to the report, “these results suggest that forced labor is present in the Malaysian electronics industry in more than isolated incidents, and can indeed be characterized as widespread.”
That same year, the U.S. State Department ranked Malaysia “Tier 3” in its annual Trafficking in Persons (TIP) report, the worst rating possible, alongside countries such as Iran and North Korea. This rating is reserved for countries that commit egregious human-rights abuses. The next year the country was upgraded to a “Tier 2 Watch List” country, and then a full-fledged Tier 2 country in 2017—upgrades that many felt were unwarranted, especially because in 2015 graves of upwards of 130 suspected human-trafficking victims were found at the country’s border with Thailand. “It made a mockery,” Shawn MacDonald, the CEO of Verité, said of the State Department’s revision. Malaysia had “literally done nothing—if anything a slide backwards.”
Welsh and others said that the upgrade was widely assumed to be because of a side agreement, part of the Trans-Pacific Partnership (TPP), between the United States and Malaysia that would give workers more rights. MacDonald alleges that the U.S. improved Malaysia’s ranking because of the country’s “very, very adamant” support for the TPP. The TPP fell apart (bringing the side agreement down with it), but nevertheless the State Department upgraded the ranking, one of the best ways to encourage improvement on the human-rights front.

American State Department workers in Malaysia who contributed to the trafficking report “were very upset” at the upgrade, Charles Santiago, a member of parliament for Klang, an area near Kuala Lumpur, told me over lunch. “Really upset.”
“I went to the State Department and simply said, ‘You guys should be embarrassed. You have done a disservice to your own government.’” (The State Department told me that a new TIP report was imminent, and that it would withhold comment until the next report was released.)
Still, Malaysia has made some improvements, at least on paper. According to Jodie Mitra, from the International Labour Organization, the UN’s labor-standards agency, the government’s efforts to address human-trafficking issues have “improved, as we note increasing trafficking investigations, prosecutions, and convictions.” But, Mitra told me via email, “enforcement and implementation efforts … need to be strengthened as abusive labour practices of migrant workers that may amount to forced labour continue to exist.”
When I visited Malaysia in April, the country’s election was looming; party flags, especially the blue and white scales of the Barisan Nasional, the ruling coalition, hung in rows off the front of practically every building, it seemed. Everyone said it would be business as usual, that despite the scandals that plagued then-Prime Minister Najib Razak, whose party had been in power for 60 years, gerrymandering would ensure that he continued to hold power. But in May, at age 92, Najib’s mentor and the country’s former leader, Mahathir Mohamad, became prime minister.
The new regime is made up of a center-left coalition that includes the Democratic Action Party (DAP), Santiago’s party. “I can tell you there’s been direct reach-out at the highest levels to members of parliament asking what priorities should be to provide road maps of priority issues,” Welsh said. The Labor Consistency Plan—the workers’-rights reforms that had been discussed during the TPP negotiations—is back on the table. And yet, advocates aren’t wholly pleased with the new regime. Against the wishes of the DAP, the government announced the end of a rehiring program for foreign workers at the end of May, which will remove legal protections from hundreds of thousands of undocumented workers. (The country has tried to address the problem in the past by either granting large numbers of illegal workers amnesty or trying to deport undocumented workers.) “The government has not yet established its strategies on labor migration,” said Catherine Laws, a technical officer at the ILO.
Still, the election results might be the impetus to move forward, to build a system of worker protections where there had before been none. The absence of strong labor laws presents an enormous opportunity, said Welsh.

There are many ways for a migrant worker to become trapped in a forced-labor situation, in which a worker has no recourse if work conditions are poor or he or she is not being paid. But the problem typically begins at recruitment, the kickoff to a cycle of debt and bondage that can trap people for years and decades. The Verité study found that 92 percent of foreign workers paid recruitment fees to get their jobs, often exceeding what’s standard in the industry (one month’s wages). The money often goes to both a recruiter in Malaysia and in the worker’s home country. These fees are due well before the worker leaves his or her home country, and often plunge an entire family into debt.
This was the case for Novita Marbun, a worker from Medan, Indonesia, whom I spoke with. When Marbun originally came to Malaysia at the age of 19, she paid 1,500 ringgit—the equivalent of about $375 —to get her job, much more than she makes in a month. Her parents took out a 15-year loan on their house to help pay the fee and other costs of her trip. The money she makes now only covers daily expenses and feeding her son, who is still in Indonesia, but she cannot get enough hours to make enough tohelp her parents. “I can’t save more money,” she said. As MacDonald puts it, “The system is designed to make the most poor pay the costs of recruitment.”
Workers coming from rural regions around Asia can amass large amounts of debt just in an effort to get to a big city where they can get recruited. Anne Beatrice, of the North South Initiative (NSI), an organization based in Kuala Lumpur that supports workers both in their home countries and when they come to Malaysia, told me that by the time a Nepali worker reaches the capital city of Kathmandu, she typically has already procured a sub-agent in her home village, sometimes at great expense to her family. When she reaches the city, she has already invested so much it can feel like it doesn’t matter if she doesn’t like the look of the recruiter or the contract, or the recruiter substitutes the contract before she gets on the plane. “Recruiters have sub-sub-sub-recruiters and sub-sub-sub-agents,” said Sumitha Shaanthinni, a lawyer who works with migrants. “The recruiter doesn’t go to the village; the sub-agent goes to the village.”
Once she arrives in Malaysia the charges continue to accrue. Workers can find themselves paying for a levy for a work permit (a cost which now the law has shifted to the employer, at least in theory), as well as fees for housing and their visa. Although it is against the law, many employers also confiscate and hold workers’ passports in order to keep them from leaving an untenable situation. (Recruiters have their own costs to cover—often some that are less above-board than others. Maliamauv, of Tenaganita, describes a situation in which government officials provide recruiters with more work permits than there are jobs available. How a recruiter “got that bid, those jobs on paper, you need to guess. Paid a bribe.”)

Migrants in Malaysia do not usually enter illegally, labor advocates told me. It’s not “people climbing over fences. Most of them come documented,” said Maliamauv. Instead, workers find themselves undocumented when they flee a job, or their employment contract is not renewed, since their visas are tied to their employers. And being undocumented means a worker is at risk of being deported during a raid, and that they have no protections against exorbitant fees when their recruiter gets them another job.
“After you pay the levy deduction, the passport deduction, and the shelter deduction, your salary is so low,” said Beatrice. The contract doesn’t mention these other charges, and what workers are left with is often not enough. When the workers complain, an agent will encourage them to do the job, or, said Beatrice, the agent says, “‘Leave the job, I will find you another place.’ [The workers] don’t realize they can’t do it, and will become undocumented.”
Once settled in, undocumented or not, workers face very difficult living conditions. When I spoke with Manjoj Chapagain, a translator and migrant worker, he had just come from taking Malay doctors around a migrant-worker camp near the city of Petaling Jaya, a suburb of Kuala Lumpur. Five or six thousand workers live in the camp, by his estimation. He said the doctors were “very surprised” by the living conditions, in which 20 people can sometimes share a 1,000-square-foot house, with 10 sleeping there at night and 10 in the morning, as they rotate in and out for different work shifts. There’s no clean drinking water and no plumbing. “The doctors had never seen this kind of mess and kind of smell,” he told me. These living conditions can further place workers in a precarious situation, as they are not allowed to stay in Malaysia if they contract certain diseases, such as hepatitis, according to Maliamauv.
Often workers fall ill “because the living conditions are so bad,” Maliamauv said. Female workers are also frequently sent home if they get pregnant. According to the Nepali embassy, 386 Nepali workers died in Malaysia in 2016. By the embassy’s count, about 300 on average have died per year since 2005. The cause of death isn’t always determined, and unexpected deaths can be extremely hard financially on their families, who are left with the debt to recruiters but no earnings, to say nothing of the emotional toll.
The treatment of workers is not uniformly bad across companies and sectors. Well-known multinational companies, many of which are monitored by watchdog groups here and abroad, tend to have better track records. The problems come further down in the supply chains. “The big corporations, the multinational companies, I don’t think have a problem much,” Shaanthinni said. “They mostly comply with the code of conduct that they have and don’t deduct wages or keep the passports, things like that. But their supply chains do that. How much they are monitoring [that] is another question altogether.”

Many companies emphasize that they push their supply chains to function at the same standard that they do. And many major electronics brands say on their websites that they expect companies in their supply chains to comply with both legal standards and human-rights standards. However, supply chains are complicated, with factories of varying sizes, employers who are often recruiters, and, in Malaysia, worker protections that are both weak and inadequately enforced.
Since 2004, many companies have looked to a watchdog organization, the Responsible Business Alliance (formerly the Electronic Industry Citizenship Coalition, or EICC) to help them monitor their supply chains. Bob Mitchell, from the RBA, told me that the organization relies on “diversity in approaches to addressing endemic issues in supply chains,” because the problems are so complex.
“The further you get down, the less leverage you have as a company or an individual company,” Mitchell said. RBA works to harness the power of the brand names to pressure the downstream suppliers. But some lawyers and workers’-rights advocates say this approach has not improved the situation, in part because of the lack of transparency from companies about which suppliers are in their supply chains. Even the companies that have prioritized treating their workers well, such as Patagonia, still struggle with the further reaches of their supply chains.
And of course, many workers do not know where the fruits of their labor end up either. “If you are going to produce a small component, sometimes you don’t even know what the component is,” Shaanthinni said. “If it is a screw, how are they going to know? … Lower down, they provide the metal. You say, ‘What’s your job?,’” and the worker answers, “‘Oh, I cut metal.’ How am I going to know what company it is going to?”

This article is part of a project called “The Unfree,” which is supported by Dignity Health Foundation and Silicon Valley Community Foundation.

Ariel Ramchandani is a writer based in Brooklyn.

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