A US-funded study has found that at least 28 per cent of workers in a
sample of 501 workers in the Malaysian electronics industry “were found
to be in situations of forced labour”. Is this the type of investment
we want?
The retention of workers’ passports is a major issue. So too the
deduction of foreign workers’ levies (payable by the employers) from the
workers’ salaries. And the use of outsourced labour provided by
external contractors which leaves workers even more vulnerable.
Miti must act ASAP to ensure the survival of Electrical and Electronic Industry in Malaysia
In 2012, US Labour Department funded a global NGO called Verite to
conduct a study whether forced labour exists in Malaysia. In September
2014, Verite published a report called “Forced Labour in the Production
of Electronic Goods in Malaysia”.
In the report, Verite interviewed 501 male and female workers across
all major producing regions, electronic products and foreign
nationalities. They found about 28% of workers to be in situation of
forced labour. The issues they highlighted were:
- Recruitment fee charging and indebtedness compelled workers to work.
- Deceptive recruitment
- Passport retention, constrained in freedom of movement.
- Poor living conditions, in housing provided by employers or third party employment agents.
- Foreign workers difficult to leave before the end of their work contracts.
This report will be key to US Government’s decision on “International
ranking on Forced Labour”. From information provided to me, US labour
department will put Malaysia on watch list by 1st December 2014 (less
than 2 weeks time). If US Government ranks Malaysia unfavourably, it has
potential damning implications for the E&E sector in Malaysia. Some
of the implications might be:
- US companies maybe prohibited to do business with Malaysian Manufacturers.
- Shrinking of future FDIs into Malaysia
- E & E export products to US-Europe market affected where labour practice compliance is required.
In short, this is the single biggest threat to the survival of E & E sector in Malaysia.
In the last several years, Malaysia’s agriculture industry had
suffered 2 major bans by EU and China. In 2008, EU banned Malaysian
Seafood and live fish export that did not meet EU standards. In 2011,
China banned Malaysian bird’s nest after failing to comply with China’s
permissible nitrite level. Billions of ringgit lost and both industries
have not recovered fully since the ban.
We cannot afford to have Malaysian E&E sector placed on watchlist
by US authority, because E&E is the largest sector in total export
of Malaysia. In 2013, RM236.8 billion export are E&E product,
equivalent of 32.9% of total export of Malaysia. E&E currently
employs millions of Malaysian including massive downstream industries.
It is the major FDI attraction into Malaysia and Penang particularly.
Penang now hosts major E&E global companies such as Intel, Western
Digital, AMD, Dell, Osram, Motorolla, Agilent Technologies, National
Instruments and etc.
Not everything reported in Verite report is entirely true. Malaysia
in fact has comprehensive laws and regulations to protect workers,
irrespective of whether local or foreign, such as below:
- Employment Act 1955
- Workmen’s Compensation Act 1952 (Act 273)
- Occupational Safety and Health 1994
- National Wages Consultative Council Bill 2011 (Act 732)
- Factories and Machinery Act 1967 (Act 139)
- Passport Act 1966 (Act 150)
- Anti-Trafficking in Persons Act 2007
The Electronic Industry also self regulate themselves by creating
Electronic Industry Code of Conduct (EICC code) that provides guidelines
on social, environment and ethical aspects to the global electronics
supply chain. This is to ensure basic working condition for individuals.
In Penang, where most of the E&E companies are located, sample
surveys by InvestPenang showed that 4 out of 5 companies are already
EICC compliance. EICC imposed higher standards in terms of recruitment
process, living conditions, safekeeping of passport and breaking of
contract.
However, these improvements are not properly communicated by MITI to
US Labour Department. The US embassy has alerted MITI as well as other
stakeholders as early as October. However, no feedbacks were presented
to counter Verite report by December 1st deadline. That could result
into one-sided decision by US Labor Department. The incompetency will make the largest economic sector suffer
tremendously, same fate like Seafood blacklisting by EU and bird’s nest
ban by China.
MITI must to immediately respond to this urgent issue. They must immediately do the following suggestions:
- Respond to US Labor Department to counter the issues raised by Verite Report.
- Work with American Chambers of Commerce (AMCHAM) to produce counter report.
- Strictly enforce existing laws to clean up irresponsible parties.
- Assemble all stakeholders including E&E chieftains and labour representatives for emergency meeting to find solutions.
- Commit to best practices of labour standards.
- Reduce foreign labour dependency and prioritize local workers
- Allow E&E sector to set up labour unions to improve workers conditions.
Source: Ghost Sim T. T.
