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Malaysia – Government halts the use of outsourcing companies

05 December 2013

Malaysian Deputy Home Minister Datuk Wan Junaidi has announced that the government has terminated the services of outsourcing companies, following numerous complaints of cheating and abuse of workers’ rights, reports themalaymailonline.com.

Mr Wan Junaidi said: “We stopped using outsourcing companies because of all the cheating and confusion that happened under the system. There is no more outsourcing, now we just use direct dealing with source countries.”

Last week, Bloomberg reported that an unregulated network comprising tens of thousands of labour brokers are still supplying cheap, bonded labour to high-technology production lines owned by international companies based outside of Malaysia.

The business wire claimed that tens of thousands of families from Asia’s poorest sectors have ended up deep in debt to buy jobs through labour brokers to work in factories in Malaysia, a manufacturing hub for the global electronics industry.

The report claimed that interviews with 60 Nepalese workers from 22 companies showed proof of a transnational recruiting system that is rife with abuse, and extends into practically all technology that props up the modern world.

Workers interviewed by Bloomberg claimed to have borrowed money or cleared out their life savings to pay up to MYR 5,670 (USD 1,800) to brokers to secure factory jobs here.

On arrival, many complained of having to leave their passports with their new employers and are even expected to pay fees if they need to leave their jobs for any reason.

The report claimed that the labour situation may put the companies in direct violation of an executive order signed by United States President Barack Obama last year, which bans the selling of jobs, no matter how big or small the fees, to overseas workers for companies that provide any goods or services to the US government, according to lawyers who represent federal contractors and those who help trafficking victims. It also applies to subcontractors.

Some of the companies implicated in the report were Sony, Apple, Western Digital, Motorola and Plexus Corp, though all the companies have denied condoning or having direct knowledge of such practices.

Mr Wan Junaidi acknowledged that the government faced numerous issues when dealing with complaints from foreign workers, who claimed they were not paid their full salaries, did not enjoy the full benefits promised, or had no insurance.

He noted, however, that neither the middlemen nor the employers wanted to take responsibility when confronted with the complaints.

“When these issues came up, (the companies) say we are not the employer, the employer is the outsourcing company. When we go to the outsourcing company, they say they have already handed over the workers to the hiring company,” he said, in explaining the reasons Malaysia ended the middleman system.

To an earlier question, Wan Junaidi said the government has yet to establish whether or not it can issue temporary work permits to foreign workers who have a case against their employers pending in the industrial court.

He agreed that these workers will need a source of income while they wait for the court to dispose of their cases, but stressed that issuing a temporary permit could lead to legal complications.

Mr Wan Junaidi advised that Malaysia issues monthly passes to foreign workers pursuing cases in the industrial court so they can stay and see their cases through, though it does not allow them to find another job.

“The biggest obstacle is the contract. When a worker signs on with an employer, there is a contract between the two and if a case is not settled, the contract is still pending. If we give them the ability to work elsewhere, that means they will have two contracts and that will lead to legal implications on them, the employers and also effects the job,” he concluded. 

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