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Forced Labor in Malaysia: 2014 Study
Malaysia’s electronics sector workforce includes hundreds of thousands of foreign migrant
workers who come to Malaysia on the promise of a good salary and steady work – an
opportunity to make a better life for themselves and their families. But many are subject to high
recruitment fees, personal debt, complicated recruitment processes, lack of transparency about
their eventual working conditions, and inadequate legal protections. Unscrupulous behavior on
the part of employers or third-party employment agents can exacerbate vulnerability to
exploitation, but the system in which foreign workers are recruited, placed and managed is
complex enough to create vulnerability even in the absence of willful intent to exploit. The
conditions faced by foreign electronics workers in Malaysia have the potential to result in forced
In 2012, Verité received funding from the US Department of Labor to conduct a study to
determine whether such forced labor does, in fact, exist in the production of electronic goods in
Summary of Main Findings:
Forced labor is present in the Malaysian electronics industry.
Twenty-eight percent of all workers in the study sample were found to be in situations of forced
labor. The rate of forced labor among only foreign workers was higher, at 32%, or nearly one in
every three foreign workers. As mentioned above, this finding is based on conservative measures
and should be understood as a minimum estimate of the problem.
Forced labor was found in the study sample in significant numbers across all major producing
regions, electronics products, foreign worker nationalities, and among both female and male
workers. 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.
The key factors that contributed to forced labor conditions for the workers interviewed
Forced labor is linked to recruitment fee charging and the indebtedness that follows. Recruitment
fee charging of foreign workers was found to be pervasive in the study sample, and fees were
often excessive. Ninety-two percent of all foreign workers surveyed paid recruitment fees in
order to get their jobs. The recruitment fees that workers paid for their jobs often exceeded legal
and industry standards equivalent to one month’s wage.
Of workers reporting recruitment fees paid to employment agents in their home countries, 92%
were excessive. Of respondents reporting fees paid to their employment agent in Malaysia, 99%
reported excessive levels. Worker indebtedness was strongly linked to excessive recruitment fees
charged to workers in their home countries and in Malaysia. Seventy-seven percent of workers
who were charged fees had to borrow in order to pay them. Workers who had to borrow money
to pay recruitment fees reported paying higher fees, on average, than workers who did not have
to borrow. This suggests that higher fees mean a higher likelihood of indebtedness for workers.
When workers took on debt to pay for fees, this debt represented a significant and ongoing
burden during their stay in Malaysia: 95% of workers who borrowed money to pay recruitment
fees took longer than three months to pay off the debt, and 50% took longer than a year. When
one considers that the typical work contract for a foreign worker is two years in duration (with
the option of a third year extension), this means 50% of workers were paying off recruitment
debt for at least half of their first work contract.
Recruitment-related debt compelled workers to work.
Of respondents that had not yet paid off their debt, 92% reported feeling compelled to work
overtime hours to pay off their debt, and 85% felt it was impossible to leave their job before
paying off their debt. The rate of forced labor was higher among currently indebted workers
(48%) than it was in the general respondent pool (28%). This finding lends credence to the
notion that excessive fee charging and the debt that follows increases vulnerability to forced
labor: Workers in this study who were charged higher recruitment fees were more likely to
borrow, and, in turn, were more vulnerable to forced labor.
Forced labor is also linked to deceptive recruitment: One in five workers in the study was misled
in the recruitment phase about the terms of their employment agreement. Twenty-two percent of
foreign workers were deceived about their wages, hours, overtime requirements or pay,
provisions regarding termination of employment, or the nature or degree of difficulty or danger
of their jobs. These workers had little ability to change or refuse their jobs upon arrival.
Passport retention, which is prohibited by law in Malaysia, was widely experienced by workers
in the study. Ninety-four percent of foreign workers in the sample reported that their passports
were held by the facility or their broker/agent, and 71% reported it was impossible or difficult to
get their passports back when they wanted or needed them.
Foreign workers interviewed by Verité were highly constrained in their freedom of movement.
Passport retention was a strong contributing factor. Sixty-two percent, or nearly two thirds of all
foreign workers interviewed, reported that they were unable to move around freely and safely
without their passports or other travel documents.
Thirty-five percent of workers reported needing a pass or permit to go beyond a certain distance
from their housing. Many foreign workers in the study experienced poor living conditions, in
housing provided by employers or third-party employment agents. Thirty percent of foreign
workers slept in a room with more than eight people, 43% of foreign workers said that there was
nowhere they could safely store their belongings, and 22% of foreign workers said that they did
not feel safe in their housing. It was difficult for foreign workers surveyed by Verité to leave
before the end of their work contracts. Fifty-seven percent of foreign worker respondents
reported they could not leave their job before their contract was finished because they would
either be charged an illegally high fine, would forfeit wages or runaway insurance, would be
forced to pay the balance of the levy, would lose their passport, or would be denounced to the
Once on the job in Malaysia, 88% of foreign workers said they did not have the option to insist
on a different job arrangement, and 92% said they did not have the option of refusing their job
arrangement and returning home with job procurement costs refunded.