Transparentem does not release the complete details of its investigations to the public. During the limited disclosure of each Consolidated Intelligence Report (CIR), we provide key partners, such as investors and regulators, with detailed follow-up evaluations of brand and retailer responses and their effects on investigated areas. After each CIR disclosure, we will also post brief summaries of our work here.
FORCED LABOR PROBE IN MALAYSIA DRIVES BUYERS TO ACT
In late 2016, Transparentem began what would become an 18-month investigation into the hardships faced by many of Malaysia’s garment-industry workers. We spoke with dozens of current and former workers employed at five factories and uncovered evidence that some workers manufacturing clothes for major retailers were working in conditions that included indicators of forced labor.
Migrant workers from poor countries such as Bangladesh, Nepal, and Indonesia, told us they had gone deep into debt to pay fees to recruitment agents for jobs in Malaysia, in hopes of securing a better life for themselves and their families. Upon arrival, however, many workers discovered they had been betrayed — deceived by the recruitment agents who had promised them different jobs and better wages than they were paid. Many of these workers’ new employers confiscated their passports, making it virtually impossible for them to leave their jobs and return home. Some found themselves sleeping on floors in squalid, over-crowded company dormitories. And some reported abusive working conditions at the factories.
“The way they treat us is unspeakable,” said one worker, who said supervisory staff abused laborers verbally and physically. “I am trapped in trouble,” said another worker, when asked what message he would give to other migrant workers traveling to Malaysia.
Far from the bright future they had dreamed of, some migrant workers returned home with less than they started. One former worker had borrowed more than three thousand dollars to pay recruitment fees, sold land to pay off his debt, and still owed his recruiter $250 when he was sent home because of illness. “I have started begging now from other people,” he told us when we last spoke to him. “Now I don’t have anything left.”
The Malaysian garment industry employed between 3 and 4 million migrant workers in 2016, comprising 20 to 30 percent of the country’s workforce. In 2017, Malaysia exported about $3.6 billion in textiles and apparel. The top three export destinations were the United States, Japan, and Turkey.
Transparentem’s interviews with current and former workers at five facilities offered a glimpse into the human cost behind the Malaysian-made clothing sold by major brands and retailers. Our investigation revealed a number of indicators and risk factors for human trafficking, including the following:
Recruitment Fees: Nearly 90 percent of the workers we spoke with reported paying recruitment fees, which ranged from more than $700 to nearly $4,500. For context, the yearly per capita gross national income in Bangladesh, home country of many migrants in Malaysia, was $1,470 at the time of the investigation. In Nepal, another common source of migrant labor, it was only $790. And in Indonesia, it was $3,540.
Some workers sold land or borrowed money to pay these fees, going deep into debt with the expectation of earning financial security. Many workers we interviewed came to rue their decision to seek work in Malaysia.
“At present, I am without money,” one worker said. “The property that I lost [to pay the recruitment fee], with this property I would have been able to eat [for a] whole year with my children.”
Deceptive Recruitment: Migrant workers from several different countries told us that recruiters had deceived them about their salaries, the nature of their new job, and fees and salary deductions. One worker referred to labor brokers as “thieves and thugs” who “victimize poor, innocent people.”
“They lure you with a big dream that if you work in such and such companies, you can make this and that much money,” this worker said. “However, the reality would be quite the opposite of one’s dream. And to the people [in my home country] who are unemployed and wanted to work overseas, I’d like to tell them not to fall into the traps of the recruitment brokers and agents.”
Retention of Passports: Workers at all five factories Transparentem investigated told us the factories had taken their passports and charged a deposit if workers needed to use their documents for any reason. (At one factory, the passports were returned before our investigation concluded.) The deposit could be as much as three times the monthly minimum wage for factory workers in Peninsular Malaysia.
“The day I came here, they took [my passport] from me at the airport and I have not seen my passport since,” one worker said. “If my passport is getting old or not, if it has a cover or not, if it got wet or not, even if it exists or not, I don’t know. If the company threw it away or not, I don’t know.”
Poor Living Conditions: Workers at four of the five factories told us they lived in dormitories that were overcrowded, dirty, cramped, or without adequate kitchens or bathrooms, or even sufficient protection from the weather.
One worker said he and 23 others lived in a room with broken windows, infested with bedbugs. “The bed they gave us when we went there—after a couple of months we all had to throw it out, so many bedbugs. After we threw out our beds, we would throw a bedsheet on the floor and sleep there,” this worker said. “The glass in the windows was all broken. When it rained, water would come inside our room. And rain in Malaysia—every couple of days it would rain.”
Abuse of Vulnerability and Abusive Working Conditions: At two factories, workers said supervisors sometimes physically abused and threatened them.
“[A supervisor] came and kicked me two [or] three times. After kicking me he asked me, ‘Why are you sleeping?’” one worker said. “So, I quickly got up. He also slapped me a couple of times.”
“They threaten to send us back home when we speak up for [overtime pay],” said another worker. “So, we remain silent. Even if we are aware of the law, we cannot speak about it.”
Beginning in the spring of 2018, Transparentem contacted 23 major apparel brands we had identified as likely having recent or ongoing buying or licensing relationships with the five factories we investigated. We sat down with leaders of many of these companies, presented what we had learned about the hardships faced by the workers in their supply chains, and urged them to act.
Most of the brands we spoke with took action. Of the 23 companies Transparentem identified and engaged, 15 collaborated on remediation efforts, one worked independently, and one later joined remediation efforts after a change in ownership at the company. The remaining companies, to our knowledge, declined to participate in remediation.
Buyers commissioned audits or assessments at four of the five facilities, which confirmed many of our findings and secured commitments for remediation, including reimbursing recruitment fees and returning passports.
Two buyers chose to share the cost of recruitment-fee reimbursement with their supplying factory, even though one of those buyers had ended their purchasing relationship with the factory in 2015. Two additional buyers who were no longer sourcing from the factories re-engaged and assumed leadership roles in the remediation process. And four of the buyers at one factory elected to expand their remediation efforts to a related Malaysian factory that was not part of Transparentem’s investigation.
As of May 2019, the total amount of recruitment fees already paid back or scheduled to be refunded to workers was more than $1.7 million, and 1,600 passports had been returned to workers. An additional factory had already begun returning passports shortly before Transparentem engaged with buyers. According to one audit report at another factory, five workers who recovered their passports immediately stopped working and left.
Transparentem also began speaking with the American Apparel and Footwear Association and the Fair Labor Association to encourage them to work with their membership to ensure that no workers pay for their job, that workers retain control of their travel documents and have freedom of movement, and that all workers are informed of the basic terms of their employment before leaving home.
On October 22, 2018, the two organizations announced a new industry effort – a “Commitment to Responsible Recruitment” — to combat exploitation of migrant workers in global supply chains. Today, more than 130 companies have pledged to add forced-labor standards to their social compliance programs by the end of 2019, and to periodically report on their actions to prevent forced labor. In March 2019, the AAFA/FLA released an “Action Plan on Responsible Recruitment in Malaysia.”
The AAFA/FLA pledge is not perfect: it remains voluntary for the organizations’ membership and lacks specific enforcement mechanisms. But is undoubtedly a positive step. Likewise, the Malaysian government’s announcement this year of a “War on Forced Labor” is a welcome development, although it remains to be seen what changes will result.
Despite this progress, more work remains to be done. Transparentem continues to monitor conditions at the five facilities and in Malaysia more broadly. With Malaysian and foreign governments taking notice, and Western brands putting pressure on their suppliers, we look forward to a Malaysian garment industry where forced labor is a practice of the past.
Investigation of Bangladeshi Leather Industry Speeds Shutdown of One of World’s Ten Most Polluted Places
Transparentem’s initial two-year investigation of leather tanneries in Hazaribagh, Bangladesh, documented widespread abuses, including gross environmental degradation, child labor, and hazardous working conditions. Those abuses directly affected some 30,000 workers and indirectly affected hundreds of thousands more people in surrounding areas.
Transparentem scrutinized the links between Hazaribagh tanneries, or their apparently affiliated manufacturers, and eleven US and European companies. Beginning in October 2016, we presented individualized Primary Intelligence Notes (PINs) to those brands and retailers. We carefully described what we did and did not know about how much, if any, leather from Hazaribagh may have wound up in their footwear or handbags. Most of these brands and retailers took swift action, starting in the grace period. We began to disclose the consolidated reports, noting brand and retailer response, in late March 2017.
For forty years, this cluster of more than 150 tanneries harbored grave human rights abuses, and was known as one of the world’s ten most polluted places. On April 8, 2017, the Government of Bangladesh enforced a Supreme Court order to close down Hazaribagh’s wet tanning operations and cut water, electricity and gas to the tanneries. The action was a vital step toward the industry’s relocation to a more sustainable tannery estate in Savar.
The Bangladeshi government and leather industry still must overcome significant challenges before they fully protect the people and environment in and around Hazaribagh and Savar. We will continue to monitor the remediation and restoration process as that industry settles into its new home.