Use of forced labor 'systemic' in Malaysian IT manufacturing

Almost every brand-name company sourcing from the country is impacted by the practice, said a new report

The use of forced labor is so prevalent in the Malaysian electronics manufacturing industry that there is hardly a major brand name that isn't touched by the illegal practice, according to a report to be published Wednesday.

The report is the result of a two-year study funded by the U.S. Department of Labor and undertaken by Verité, a nonprofit organization focused on labor issues.

It surveyed more than 500 migrant workers at around 200 companies in Malaysia's IT manufacturing sector and found one in three were working under conditions of forced labor.

Problems usually begin when they fall for a deceptive job advertisement at home, said Dan Viederman, CEO of Verité.

The job looks good enough that they pay a broker to apply, often borrowing money from friends and family to do so. Upon arrival, their passport is taken by their employer and they're threatened with deportation if they don't work overtime. Indebted at home, without access to their passport and with little knowledge of the legal process, they accept the increased workload.

"It's a form of exploitation that should long ago have been confined to the past," Viederman said in a conference call with reporters.

Particularly crippling are the fees paid to brokers to obtain the overseas work. More than nine out of 10 workers surveyed said they paid such fees, and three out of four said they borrowed money to do so. More than half said it took more than a year of work -- in a standard two-year contract -- to clear the debt, and the vast majority couldn't leave Malaysia until it was paid.

Many of the factories were operated by subcontractors or suppliers to major brand-name companies, although Verité didn't name the companies.

"Any and all companies sourcing from Malaysia should audit their supply chain," said Viederman.

He said companies should amend their codes of conduct for suppliers to ban the payment of fees to brokers and ensure workers are allowed to keep their identity documents when they arrive.

"They should conduct specific investigations, not the typically flawed social audits," Viederman said. "They have to train suppliers and educate them on the risks."

The report comes three months after the U.S. Department of State said the situation in Malaysia had worsened in its annual report on human trafficking. The government there made "limited efforts to improve its flawed victim protection regime" despite assurances it would work to solve the problem, the report said.

Last month, the death of a migrant worker at an electronics factory operated by JCY International led to riots involving hundreds of workers and sparked a fire that destroyed part of the factory, in Johor, in the south of Malaysia near Singapore. In a statement, the company said the working conditions and compensation at its factories were in accordance with Malaysian law.

Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com

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