Disclosed Project Summaries
Transparentem Warns About Unofficial Recruitment Fees for Workers in Indonesia
Over seven months interviewing workers at apparel factories in Indonesia, investigators for Transparentem uncovered evidence of an alarming, widespread practice: workers paying middlemen substantial sums to secure jobs with suppliers of international brands. Often, these middlemen repeatedly demand extortionate fees, in a racket that harms vulnerable workers and their families.
As explained in the summary “Pay-to-Play, Pay-to-Stay: The High Cost of Indonesian Apparel Jobs,” published by Thomsan Reuters Foundation, our research identified numerous unofficial actors charging workers for their jobs, including security guards, unauthorized agents, and local gang members. Some brokers approach job seekers near factory gates to offer their assistance, for a fee. We found no evidence that these payments are formally orchestrated by manufacturers, although we were sometimes told about connections to factories’ human resources staff, who reportedly get a cut.
The COVID-19 pandemic has made Indonesian apparel workers even more vulnerable. Thousands of workers in the industry have been laid off. Even with no steady income for the foreseeable future, they know they will again need to pay for their jobs once production orders increase. COVID-19-related layoffs will be a boon for black-market recruiters profiting from the desperation of unemployed workers.
However, the pandemic’s disruption to the Indonesian apparel industry presents an opportunity for brands, manufactu ers, the Indonesian government, and civil society organizations to take action to address this disturbing practice. Our op-ed provides suggestions for how brands and suppliers could take some first steps. The workers who are the lifeblood of the industry deserve to be protected from extortionate practices that harm their livelihoods. No one should have to pay for work.
Investigation Highlights Workplace Issues and Evidence of Audit Deception in Myanmar; Prompts Apparel Company and Supplier Collaboration
Myanmar’s garment industry experienced nearly a decade of dramatic growth prior to the outbreak of the global COVID-19 pandemic, creating billions of dollars in export revenue and generating hundreds of thousands of new jobs. However, according to reports from the International Labor Organization (ILO), the U.S. State Department, and civil society organizations, this boom may have come at the expense of worker safety and wellbeing.
Beginning in 2016, spurred by those reports, which detailed widespread child labor and abusive labor conditions, Transparentem conducted a two-part, three-year investigation. That investigation looked closely at three garment factories, and uncovered evidence of practices that appeared to violate international human rights standards and Myanmar law.
Transparentem investigators spoke directly with dozens of workers, a majority of whom were younger than 18. These workers described the conditions faced within their workplaces, including hazardous working conditions and abuses of their vulnerability. Workers described how they relied on excessive overtime or workplace loans from their supervisors or others in order to survive, and how families relied on minors working to help sustain their families instead of going to school. Workers also described instances of deception during social audits intended to monitor conditions for workers, raising questions about whether buyers are fully aware of their suppliers’ troubling practices.
Transparentem provided the results of the investigation to seven apparel companies identified as appearing to have products produced at one or more of the three factories. All seven companies took some form of action, with six companies pursuing factory-level improvements. These six companies conducted their own follow-up assessments of the investigated factories and provided some details of their remediation plans with Transparentem. Two companies also leveraged their partnership with SMART Myanmar to focus on industry collaboration.
Despite some resulting improvement goals on specific issues at each factory, such as enhanced age verification, stronger health and safety protections, and better wage documentation, much work remains to ensure that progress is sustainable both within facilities and across the wider industry. This is particularly true now, as the COVID-19 pandemic has brought a contraction of the Myanmar garment industry and further reports of widespread abuse.
Child Labor and 14- and 15-year-olds Employed Beyond Legal Restrictions
Some workers who said they were 14 and 15 described working in excess of four hours, the maximum shift length workers this age were permitted to work under Myanmar law at the time of the investigation. Workers also said managers did not properly verify the ages of job applicants and hired individuals with fake or borrowed identity documents. A few workers who said they were hired before turning 16 stated they did not need to show any identification when they applied. “I got hired when they were short of workers,” one of these workers said. “They didn’t even look at my ID. They hired me right there.” Transparentem also spoke with some workers in two of the factories who said they were 13 or younger at the time of their interviews. Employing children under 14 in factories is illegal in Myanmar. Companies told Transparentem that they could not confirm these findings.
Transparentem found evidence that workers, including two children under age 14 at one factory, stuffed garments with down feathers, and that management only gave workers thin, inadequate masks. Workers said high workplace temperatures made it difficult to wear the masks without discomfort and they did not regularly use them. Exposure to fine organic dust from down feathers can cause short-term health problems and permanent lung damage, risks which are elevated for children.
Wage and Overtime Violations
Workers at all factories said managers sometimes required them to work against their will, or, at two factories, without pay. One worker noted that workers “have no options” to refuse overtime work and that the absence rate for unpaid overtime was low because “workers are afraid that they will get scolded.” Some workers said they were required to work part of or all day on Sundays—a day of rest under Myanmar law—without compensation. One worker stated: “I never got paid for working on Sundays. If I can’t finish my tasks in time, they note them down and make me work [overtime] instead. If I don’t want to work [overtime], then I get scolded and they do swear.”
Workers said management did not provide them with pay slips they could understand or use to calculate their pay. Workers also identified problems with their employment contracts, or the way the factory communicated the terms of their employment. Some were not given copies of their labor contract; others were made to sign a contract without having its terms explained to them.
Workplace Loans and Debt
Workers told Transparentem they borrowed money with interest from other employees, including supervisors and security guards. Such loans, particularly from factory staff with supervisory authority, are a potential source of coercion.
In addition to these findings, Transparentem’s investigation uncovered evidence of two other systemic problems that may impede companies’ ability to detect and remediate labor violations at the factories:
Inadequate Grievance Systems
Workers at two factories were either unaware of grievance mechanisms available to them or skeptical that such avenues were safe and effective. This suggests that factory managers have failed to provide appropriate grievance mechanisms or have not adequately informed workers of the existence of such mechanisms. It may also indicate that grievance hotlines planned following company-contracted audits were not effectively designed and implemented.
Workers at all three factories told Transparentem that factory managers concealed underage workers and others from auditors by hiding them or sending them home during audits. One worker told Transparentem, “When the auditors come in, they can make a fuss and say these kids are too young. On the days we are audited, [managers] send them back [home].” Workers at two factories also said managers instructed workers to lie to auditors, and in some cases, coached them on how to do so.
All seven companies took some form of action. The six companies that conducted factory audits as a result of this investigation shared “factory improvement goals” resulting from those audits that align with Transparentem’s findings. Improvement goals for all factories included improving wage documentation procedures, and enhancing age verification, although companies also told Transparentem they could not verify the presence of workers under the age of 18 in the facilities.
For some factories, improvement plans included additional measures such as improved health and safety protections, better mechanisms to ensure overtime is voluntary, and improved practices around contracts and workplace loans. Some improvement plans also included remedies to issues not found in Transparentem’s initial investigation, such as ensuring freedom of movement for workers and the provision of paid leave and severance payments as required by law.
When Transparentem contacted the suppliers for comment, representatives from two factories confirmed they had been working with a third-party auditor contracted by the companies to make improvements. One factory did not mention any audits, but said the facility “conduct[s] and control[s] all the working activities strictly under Myanmar law.” Another factory stated that, after taking steps recommended by the audit firm, it ceased production before the end of 2019.
Myanmar’s foray into the global economy after decades of isolation and military rule creates a complicated business environment, plagued by widespread reports of worker exploitation. At the same time, as this report was going public, Myanmar’s garment industry faced severe disruptions as a result of the global COVID-19 pandemic. By the end of April 2020, more than 60,000 garment workers were unemployed and 175 factories had ceased operations.
The growth of Myanmar’s garment industry, prior to the emergence of the pandemic, represented a moment of opportunity for hundreds of thousands of Burmese workers. As the COVID-19 crisis exacerbates the existing vulnerabilities among the workforce in Myanmar, much is left to be done to ensure that progress is sustainable. With appropriate human rights due diligence, pro-active systems to assess suppliers’ commitment to workers’ rights, and robust systems to detect audit deception, it is possible to do business responsibly in Myanmar.
Over the long term, buyers, working alongside the government and local civil society, must invest in building strong, dedicated, strategic partnerships with their Myanmar suppliers to develop principled international labor rights standards. Buyers and those interested in business opportunities in Myanmar should assess and address their risks prior to conducting official business, and should develop ongoing, worker-inclusive monitoring and dialogue in partnership with credible, independent, local organizations.
Ensuring human rights and good governance in the Burmese apparel industry will take a concerted effort by multiple stakeholders. Major clothing companies should reassess their role in ensuring safer worker conditions, better jobs, and fair wages. Critical labor issues, such as those outlined in our report, require that international apparel buyers practice innovative and sustained vigilance. Companies should collaborate with their suppliers, local civil society groups, worker representatives, and unions to raise standards in all garment facilities.
See also this Just-Style article about our work in Myanmar for additional information about this project.
Buyer/Supplier Collaboration Leads to Immediate Fee Reimbursements for Migrant Workers in Malaysia
Following an 18-month investigation of conditions facing foreign migrant garment workers in Malaysia, in May of 2020, Transparentem began facilitating a regular dialogue between buyers and a major international apparel manufacturer on the findings of the investigation and how to improve conditions for workers in factories owned by the manufacturer. By July 2020, as explained in this article in The New York Times, Transparentem’s process successfully led to the immediate, partial reimbursement of recruitment fees to more than a thousand workers.
Transparentem’s investigation raised serious questions about whether migrants working at two investigated factories in Malaysia, owned by the same international apparel manufacturer, had experienced debt bondage, deception, intimidation and threats, and abusive living conditions—all listed among the International Labour Organization’s (ILO) eleven indicators of forced labor. Compounding the urgency and seriousness of this situation, the COVID-19 pandemic arrived just as Transparentem was completing the investigation. This also coincided with the supplier’s announcement of the impending closure of the two factories, increasing the vulnerability of workers through looming loss of livelihood and potentially dangerous work, housing, and travel conditions.
At a critical moment of intertwining global and personal crises for these workers, Transparentem called upon the manufacturer and its customers to act urgently and collaboratively to address the workers’ immediate needs. In June of 2020, despite the challenges with the pandemic, a group of buyers and the manufacturer began to work together on a near-term Collective Action Plan. The immediate steps include an independent third-party assessment of health-and-safety conditions at the facilities, and the reimbursement of recruitment fees.
Reimbursement of these fees will help workers navigate a difficult time during which some may still be paying off debt they incurred in order to become employed. For example, one worker had previously told Transparentem, “I have already spent so much money to come here, if they send me back then I will lose that money. And the land I have sold to come here is gone anyway.” Increasingly, international organizations including the ILO; trade associations; national governments; non-governmental organizations; and companies have recognized that workers should not pay for their recruitment fees and related costs.
Transparentem will continue to work with all companies involved in this project to pursue further avenues to improve conditions for workers from the investigated facilities, during their closure, and in the garment sector broadly. The speed of the initial response on this project for worker remedy by the manufacturer and its customers provides encouragement that further progress and long-term improvements are attainable.
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.