Malaysia Targets Middlemen to End Debt Bondage of Migrant Workers

By Thomson Reuters Foundation 20 December 2018

KUALA LUMPUR — Under pressure to crack down on labor abuses, Malaysia is moving to eliminate middlemen who charge millions of foreign workers exorbitant recruitment fees, leaving them saddled with debt and vulnerable to exploitation.

From factories to construction sites and plantations, the Southeast Asian nation relies heavily on foreign workers for jobs usually shunned by locals.

Many arrive having borrowed huge sums to pay recruitment agents, meaning they have to work for years earning virtually nothing — a form of modern-day slavery known as debt bondage.

In a bid to address this, recently Malaysia struck a deal with Nepal to directly recruit workers there, without going through agents. The agreement came after Nepal temporarily suspended sending workers due to concerns about their treatment.

“This is aimed at curbing human trafficking and exploitation of workers,” Malaysian Human Resources Minister M. Kulasegaran told the Thomson Reuters Foundation.

“They must not be in a bondage situation in this country and caught in a vicious cycle of earning to pay back money.”

Under the agreement, which came into effect on Oct. 29, Nepali workers will be hired on a government-to-government basis. Malaysian employers will have to bear all the recruitment costs, including airfare, and visa and medical check-up fees.

Kulasegaran said Malaysia is negotiating similar agreements with Bangladesh, Indonesia and Vietnam.

Bangladesh, Indonesia and Nepal are the top providers of Malaysia’s nearly 2 million registered migrant workers, government figures show. There are millions more without work permits.

Overworked

The world’s largest glove maker, the Malaysian firm Top Glove, said this month it would cut ties with unethical recruitment agents, after some of its migrant workers were found to have clocked excessive overtime to clear debts.

Campaigners for years have asked Malaysia to eliminate the middlemen who charge migrants up to 20,000 Malaysian ringgit ($4,790), a debt they often toil for years to pay off.

Debt bondage is one of the most prevalent forms of modern slavery, which affects more than 40 million people worldwide, according to the United Nations’ International Labor Organization.

The U.S. State Department’s 2018 Trafficking in Persons report put Malaysia in its Tier 2 Watch List — the second-lowest ranking — for not meeting the minimum standards in efforts to eliminate human trafficking, including debt bondage.

Since a reformist government swept into power in May — ousting a long-ruling, corruption-mired coalition — it has suspended a key recruitment firm accused of exploiting workers, and initiated a review on migrant worker policies.

High recruitment fees mean that migrants often become trapped, working excessive hours in the hope of repaying their debt more quickly.

Indra, who left Nepal for Malaysia in 2011 to work on a plantation, said he had to fork out $1,100 to pay an agent.

He managed to repay the debt within six months by borrowing money from relatives. But he said others are not so lucky, and are instead forced to turn to moneylenders who charge interest of at least 3 percent monthly.

Migrant workers must work extra hours to service the debt as the interest builds up, but they struggle to pay it off entirely, he said.

“Many workers have to ask for overtime work, because they have no other options to survive if they don’t do that,” said Indra, who now works at a laundry firm in downtown Kuala Lumpur and declined to give his full name for fear of reprisals.

“Change the system”

Kulasegaran, the government minister, has urged major firms operating in Malaysia to take the lead in ensuring there are no labor abuses among migrant workers.

While Top Glove has pledged to cut ties with unscrupulous agents, the issue remains sensitive for many companies, including the electronics brands Samsung and Panasonic, which both declined to comment.

A spokeswoman for the palm oil giant Wilmar, a Singapore-listed firm with nearly 9,500 migrant laborers on its plantations in Malaysia, said the company has been paying recruitment costs for foreign workers since 2012.

Aegile Fernandez, from the Malaysian migrant rights group Tenaganita, welcomed the government’s plan to eliminate recruitment agents. But she warned that foreign workers continue to be exploited in other ways.

“No recruitment fees, no debt bondage — this is a good step that helps workers,” she said. “But what about when they arrive here for work?”

Fernandez urged the government to address other abuses by employers, such as underpaying wages, refusing to secure the proper documents for migrant workers and keeping their passports to prevent them from leaving.

“We need to change the system. We need to put in place a comprehensive labor migration system,” she said.