THE LABOUR SUPPLY CHAIN: HOW FOREIGN WORKERS END UP INDEBTED IN MALAYSIA

Since the 1990’s, Malaysia’s manufacturing industries have been highly dependent on the cheap labour of foreign workers. Last year, there were 2,2 million registered migrants in Malaysia and the number of undocumented migrant workers was estimated to be between 2 and 4 million according to the International Organization for Migration. Today those workers mainly originate from Bangladesh, Nepal, Myanmar and Indonesia.

While high skilled and semi-skilled migrant workers are often recruited at high cost by employers, uneducated low skilled workers mostly have to pay for their work and recruitment  in Malaysia.

These workers often end up paying extortionate fees for recruitment into low skilled work, which may plunge an entire family into debt and make workers vulnerable to debt bondage in Malaysia.

Workers like Alina and Binsa, that Danwatch interviewed, claim to have paid 950-1100 euros in recruitment fees – the equivalent of 4-5 months’ basic wages, which they used their first year in Malaysia to pay off.

But Malaysian media investigations frequently expose how workers – especially from Bangladesh – have paid up to around 4.200 euros to get work permit approvals and a flight ticket to the country.

“RIDICULOUS AMOUNTS UNDER THE TABLE”

The reason the amount can grow to such size is mainly because of the amount of entrants making money on the route from the migrant’s origin country to Malaysia, workers rights advocates in Malaysia claim.

According to Andy Hall, a migrant worker rights specialist in Southeast Asia, a whole “syndicate” of recruitment agents and sub-agents in both Malaysia and the origin countries result in “ridiculous amounts of money being paid under the table.”

Hall explains that most often, the first actor in the labour supply chain is the Malaysian company recruiting the worker, who tries to secure the highest amount of profit from offering a labour demand letter to the highest bidder amongst Malaysian recruitment agencies. The Malaysian agent then sells that demand letter to the highest bidding recruitment agent in the migrants’ origin country, and this agent then forwards these costs down the supply chain to a number of subagents.

The subagents then go to villages and towns where they recruit migrant workers and asks them to pay excessive amounts of money, covering the profits of all the actors involved.

If the worker cannot pay that amount immediately, he or she then often have to work off the fee when arriving at the factory in Malaysia. Here, the employer may also be unwilling to pay for the official Malaysian levy for employing foreign workers, though this is per 2018 supposed to be covered by the employer.

“On top of this, there may be corruption costs at each stage of the recruitment process including for visa and other documents as well as additional expenses for housing and transportation – all paid by the worker”, Andy Hall says.