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Assessments of factories and labour providers in Malaysia
Driving improvements on the ground for migrant workers in Malaysia.
What we found
Foreign workers are used extensively in Malaysia to service the low-skill end of manufacturing, plantation work and domestic service. There is a legally mandated application process for foreign workers. However, according to some estimates, over one million Indonesians are currently working in Malaysia illegally the largest illegal migration after the migration over the U.S/Mexican border. According to Malaysian law, a worker cannot leave his employer to find work elsewhere in Malaysia and workers’ flights home are paid by the employer. This situation effectively bonds workers to one employer. As a result workers are not able freely to leave their work and seldom question their working conditions or go to the authorities. Foreign workers are often viewed as second class citizens by local Malaysians and are not well integrated into society.
What we did
In 2006, Impactt was commissioned to work with a supplier factory using agents in Malaysia. Impactt discovered that the agents were using illegal foreign workers. Impactt also discovered that the agents did not know about their legal obligations towards these workers and that the conditions for workers provided by agencies were worse than for other workers in factory.
- Most worryingly, there were no employment contracts between the agents and the workers.
- Agency workers were working excessive hours - 16 hours common with instances of 25 hour shifts.
- The labour providers had weak ID checks and age verification.
- Cleaners had not been paid for 3 months, many of them were starving. The only meal they got every day was given to them by kitchen staff who gave them food out of kindness
Impactt worked with the factory and the purchaser to develop a strategy for improving the conditions for agency workers at the factory. Impactt discovered:
- All the agents had different competencies and attitudes to change. One agency was run by Chinese management with an autocratic approach. the second agency had a number of young managers who had been educated to MBA level and were open to change. The third agency openly admitted there were illegal workers working for them, however they argued ‘at the prices negotiated what did the factory management expect?’
- Impactt discovered that there had been very little discussion between the procurement department at the factory and the HR team.
- Contracts had been negotiated on price with very little regard for the needs of the agency labourers.
The outcomes
As the direct result of the Impactt visit to assess the labour standards of 3 agencies in a factory:
- Workers hours were reduced to 12 hours per day (previously as high as 16-25 hour shifts)
- Workers were paid the legal overtime premiums for the last 4 hours of the 12-hour shift (previously no OT premium was paid)
- Contracts between the factory and the agencies were re-negotiated based on new cost structures which allowed the agency to pay workers a living wage and the correct benefits and overtime premiums
- The worst performing agency is no longer used
- The cleaning agency is no longer used as they had not paid foreign workers for over 5 months. To ensure these workers were paid their outstanding monies, the factory withheld the last month’s payment to the agency until they received confirmation that the workers’ wages had been paid in full.
More about Impactt’s production site assessment work