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Monitoring Sustainability of Globalisation in Malaysia's E&E Sector

This report explores the impact of globalisation on Malaysia's Electronics and Electrical (E&E) sector and the migration of workers. It examines state policies, infrastructure, and worker experiences, highlighting issues such as passport withholding, bonded labor, and poor working conditions.

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Monitoring Sustainability of Globalisation in Malaysia's E&E Sector

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  1. PROCURE IT Pathma Krishnan Monitoring Sustainability of Globalisation (MSN), Malaysia

  2. Agenda • Introduction to Malaysia’s E&E sector • Infrastructure of Migration • State Migrant Policies on Migrant Workers • Field Studies • Conclusion

  3. Introduction to Malaysia’s E&E sector • 1972: First semiconductor plant in Penang • 1970s: 577 employees with 4 companies • Now, they have more than 1500 companies with more than 600, 000 employees • Total investment of RM 108 billion (USD 34.83 billion) • 2008: Overall export valued at RM 233.8 billion (USD 75.4 billion)

  4. Infrastructure of Migration • Malaysia is a recipient of various communities in Asia • It is both a receiving and sending country • In the last 18 years, there has been substantial increase in regular and irregular migration into the country • 2007: Malaysia recorded 72.7% increase in migrant labor • 2010: 2 million registered regular & 1 million irregular migrants

  5. Migrant flow- receiving country

  6. Selection Of factories and profile • Two major Electronic Manufacturing Services (EMS): Jabil Circuit and Flextronics • JABIL: 15 Fortune 500 company • Designs, test, manufacturers ODM and OEM • Clients: Cisco System, HP, Echostar, Nokia, Gateway 2000 and others • Malaysia : About 5000 over employees, both local and outsourced migrant workers

  7. Continued • FLEXTRONICS : Asia Pacific HQ in Singapore • Global in 30 countries, 4 continents • Electronic Manufactures Service (EMS) • Clients: Dell, Microsoft, Motorolla, Palm, HP, Xerox and others • Employees : About 7000 and more; locals and outsourced migrant workers

  8. Structure of interviews • Questionnaire agreed by WEED and Monitoring Sustainability of Globalisation (MSN) • Incorporating ILO Co Labor Standards and Codes (EICC) • 46 workers interviewed: 26 from Jabil and 20 from Flextronics with translators • Nationality: Nepalese, Bangladesh, Indonesians, Cambodians, Burmese, and Vietnamese • Interviews of workers: July 12th and 13th and July 23rd and 24th. At Dormitories and outside dormitories

  9. Regular versus Irregular migrants Regular Worker Irregular Worker versus Agency unknown Licensed agency; Legal placement fee Passed relevant skills test Skills set unknown Medical examination completed No medical examination Approved employment contract No legal contract Unknown pre departure preparation Required pre departure completed

  10. State migrant Policies • Malaysia manages migrants from law and order and security perspective • Policy measures; work permit, levy, bilateral agreements, memorandum of understanding (MOU) • Policy measures needed to monitor and eliminate irregular migration; • Biometric security system • Detention camps • Punishment of whipping • Amnesty • Special security operations

  11. State migrant Policies • Policy instruments • Legal Instruments • Immigration Act 1959/ 1963: Controls related entry and departure • Immigration Regulations 1963 Sect 9(3): Work permit only valid in particular employment; not transferable • Employment Act 1955: Apply equal employment opportunity to all workers. • Passport Act 1966 • Mandatory medical examination • Sect 8(3) of the Immigration Act • Mandatory medical examination which includes HIV, Hepatitis and pregnancy at selected entry points • Yearly pregnancy test required

  12. Field studies • Passport withholdings/ Incidents of bonded labor • Non payment of wages and/or illegal deductions/ withholdings • Contract substitution/ Breach of contract • Exorbitant recruitment/ Placement fee • Unsafe and poor living and working conditions • Lack of redress mechanisms/ No right to association • Key findings

  13. Physical and verbal harassment • Higher medical expenses • Threat of imprisonment and forcible deportation from labor brokers • Lack of pre departure/ skills training • No effective monitoring system for labor brokers • Lack of protection under national law

  14. Case studies • “Om, 20 years, Nepal, we paid RM170 for accommodation deposit and we were asked to sleep at the dormitory corridors for nearly a week” (worker outsourced to Jabil) • Abdul 19, Bangladesh, I was verbally abused, slapped and threatened to be deported because my wages were not paid (4 months) by the labor agent…” (worker outsourced to Flextronics • “We had to prostitute ourselves to survive for two months because we did not have work…” • (Female workers from Nepal)

  15. Passport Withholding/ Incidents of bonded labor • Workers are forced to sign a blank form/ consent form • Deposit required to return passport to the holder (RM500 to RM 3000; USD 166 to USD 1000) • Non payment of wages and/or illegal deductions/ withholdings • Late payment • Non payment/ Higher Debt • Discipline wages • Utilities deduction • Accommodation deduction • Forced savings deductions • Contract substitution/ Breach of contract • Terms and conditions of receiving and sending countries differ • Contract written in English- A language most migrants do not understand/ speak

  16. Exorbitant recruitment/ placement fee • Above legal limit • Anywhere between RM2400 to RM 10000(USD 800 to USD 3400 approx.); depending on nationality • Unsafe and poor living and working conditions • About 500-600 sq ft., 12 to 15 people occupy • One bath, one toilet • No mattresses, no fan • Health and safety hazards - electrical wiring etc. • Lack of redress mechanisms • The laws of the country do not provide for special complaint or redress mechanisms

  17. No right to association • The contract prohibits any association/ to join trade union in Malaysia • Physical and verbal harassment • By labor brokers • At work (supervisors, local workers – language barrier) • Higher medical expenses • Workers have to bear expenses above amount stipulated in contract • Threat of imprisonment and forcible deportation from labor brokers • Police, RELA and labor brokers

  18. Lack of pre departure/ skills training • Inadequate training • Misleading information • Language barrier • No effective monitoring system for labor brokers • Poor enforcement in Malaysia • Suppliers not managing labor brokers effectively • Lack of protection under national law • The lack of effective regulation and enforcement within the country • Labor workers treated as commodities

  19. Conclusion/ recommendation • Government, MNCs, Stakeholders must hold recruiting agents/ outsourcing companies accountable for any violations of migrant workers. • Adjust code of conduct to include protection for migrant workers • Training and audit for suppliers • Most importantly, to make purchasing decision based on ethical treatment of migrant workers

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