Forced Labour in Malaysia is being funded by EU Healthcare Systems

May 3, 2019 •

By Shekinah Apedo
Intern, Danish Institute for Human Rights

European health services are saving lives at home but destroying lives abroad by purchasing rubber gloves and condoms produced through forced labour in Malaysia. Malaysia and the European states purchasing these goods should take immediate action to address such human rights abuses through laws, policies, and guidance, and use their leverage as buyers to demand with a unified voice that businesses respect the human rights of their workers.

In November 2018, Temos International Healthcare Accreditation revoked Malaysian glovemaker Top Glove’s certification for undisclosed reasons. A month later, The Guardian published a story investigating the UK’s National Health Service (NHS) procurement of medical gloves from Malaysian factories accused of exploiting migrant workers, including factories in Top Glove’s supply chain. Interviewed workers highlighted practices of debt bondage, passport seizures, forced overtime and withheld wages, which are all forms of forced labour. In January 2019, the Telegraph revealed that Karex, a supplier of condoms to the NHS, perpetrated human rights abuses against its workers at rubber factories through unethical and expensive recruitment schemes. In contrast to its initial defence of Top Glove, the Malaysian Human Resources Ministry announced that it would take action against WRP, a rubber glove manufacturer, for withholding salaries from its workers.

The world’s largest exporter of medical gloves

Malaysia is the world’s leading supplier of medical gloves with an estimated value of USD $4.6 billion in revenue in 2018. Companies like Top Glove, Hartalega, Kossan, and Supermax manufacture 63% of the global supply, while Karex leads the market in condom-making. The EU receives 24% of its rubber products from Malaysia and Germany is one of Top Glove’s distribution hubs. With a monopoly over the glove and condom industry, labour rights violations in these Malaysian companies have a major impact on the supply chain of states, NGOs, and other businesses in 195 countries as well as international organisations such as the UN Population Fund.

A proliferation of modern slavery in foreign labour recruitment

Most migrant workers in Malaysia are from Bangladesh, Nepal, India, and Myanmar. As highlighted by Australia’s ABC News, this systematic exploitation involves high recruitment fees that average USD $5,000 for Bangladeshis and more than USD $1,000 for Nepalis. Some migrants take out high-interest loans to meet these fees which can result in debt bondage. Top Glove confirmed deducting recruitment fees from workers’ salaries but asserted that such deductions do not exceed the 20% legal limit allowed under Malaysian law and therefore claimed they are not illegal. Workers also told ABC that there are salary deductions for meals at the factory canteen, whether they eat there or not. Payslips provided to The Guardian show overtime between 120 and 160 hours a month, which is in violation of the 104 hours permitted under Malaysian law. Moreover, Top Glove admitted in a letter to stakeholders that it confiscates workers’ passports, but described it as a safekeeping mechanism.

A January 2019 Telegraph article highlighted that Karex employees faced poor living conditions in dormitories procured for workers by Karex. For a monthly wage deduction of USD $12, the Karex employees were provided cramped living quarters that house 12 to a room in steel bunkbeds. The accommodations lacked basic facilities for living. Workers allege a broken toilet and a kitchen with a homemade dining table and two gas burners. At WRP, 2,000 Nepalese workers at a factory in Sepang organised a three-day strike protesting against the company’s failure to pay wages since November 2018. The Malaysian Human Resources Ministry announced in January 2019 that legal action would be initiated against WRP despite it agreeing to pay the withheld wages.

What does human rights law say?

According to the Global Slavery Index, an estimated 212,000 people are living in modern slavery in Malaysia. Low wages, excessive wage deductions, and high debt reinforce labour abuse and fall within ILO indicators of forced labour.

The United Nations’ Guiding Principles for Business and Human Rights (UNGPs), adopted by the UN Human Right Council in 2011, provides a framework to address the negative impact of business activity on human rights. The UNGPs oblige states to protect those within their territory, regardless of citizenship, from business-related human rights abuse, by setting standards of conduct for businesses. The UNGPs highlight that businesses have a duty to respect human rights, which includes addressing human rights abuses in their supply chains. The UNGPs also detail that victims of business-related human rights abuses should have access to remedy.

In practice, this means that Malaysia should develop laws, policies, and guidance to address the reported abuses in rubber glove and condom factories and provide effective remedy to victims. This could be achieved, for example, through the adoption of a national action plan on business and human rights, or through specific legislation mandating that businesses undertake human rights due diligence.

States which purchase goods produced in these factories through their national health systems should take steps to address such abuses by introducing human rights protections within their public procurement processes. The EU Directive on Public Procurement (2014/24/EU) places responsibility on EU Member States to ensure that the performance of public contracts comply with labour law obligations. EU Member States procuring rubber gloves and condoms from Malaysia should therefore provide guidance and support to business and use their leverage as buyers to demand with a unified voice that human rights abuses are not acceptable and that businesses should respect the human rights of their workers.

Furthermore, businesses with abuses occurring in their factories, or within their supply chains, should introduce their own human rights protections to prevent such abuses from occurring and to provide remedy to victims through internal grievance mechanisms. The first step is for businesses should be to undertake a human rights due diligence exercise.

What happens next?

After the British exposé, news media in Sweden and Australia reported on the public procurement scandal that also concerns their tax-funded healthcare providers. The Swedish government, NHS, and Australian glove-provider, Ansell, have stated they will conduct internal audits. U.S.-based medical supplier, Medline, terminated their contract with Top Glove after audits showed troubling results. The Vice President of the European Parliament called for support in advancing effective public procurement processes in the EU and a Parliamentary Question was submitted to the European Commission asking what steps it is taking to ensure socially responsible public procurement into the future.

Prior to the media attention at the end of 2018 and early 2019, NGOs and migrant rights activists had urged the Malaysian government to intervene on Top Glove’s illicit  practice of labour violations, but the government failed to act. Since, mediating the workers’ strike at WRP,  the Human Resources Ministry announced in February, that it will file 42 charges against WRP and that it is currently monitoring 10 factories, where labour law violations have been found.

In 2015, the Malaysian Government announced the drafting of a National Action Plan on Business and Human Rights, however progress has been slow. Considering the poor working conditions in its rubber industry, developing the NAP and including a focus on forced labour should be a priority to demonstrate that Malaysia is serious about respecting and protecting human rights in the sphere of business activities.

A previous version of the article stated that “Karex employees faced poor living conditions in company-owned dormitories”. We have corrected this inaccuracy – Karex procured privately owned accommodation for their employees. We apologise for this inaccuracy. The previous version also stated that employees were housed “12 to a room in steel bunkbeds without mattresses”. This statement was based on an allegation made in a Telegraph article which is now explicitly acknowledged.