Opinion04 Mar 2019

Forced labour number one issue for Malaysian business, says world’s largest industry coalition

Businesses and governments are more aware than ever before of the scale of forced labour in global supply chains. But does their willingness to take action measure up?

Worker at Cell Phone Factory
A worker in a factory Penang, Malaysia. Photo Credit: Shepard Sherbell/CORBIS SABA/Corbis via Getty Images.

Forced labour has ranked as the number one issue for Malaysian businesses for the last three years, according to the world’s largest industry coalition dedicated to corporate social responsibility in global supply chains.

Each year the Responsible Business Alliance (RBA), surveys its member organisations, which include the world’s largest companies, on a range of business issues, including operating risks. For the last three years, forced labour has been called out as their biggest concern.

An RBA conference on forced labour recently held in Malaysia was attended by more than 90 companies, and 350 of their suppliers, which represent more than 300,000 workers in Malaysia. These companies make products that are exported across the world to developed countries like Australia, the United States, the United Kingdom and across Europe.

Why is the interest in this issue so high? Walk Free’s Global Slavery Index estimates that 24.9 million people globally are victims of forced labour and more than two-thirds of these are located in the Asia- Pacific region. I spoke at the conference to recommend ways government and business can work together to tackle this issue.

The challenges are significant, but the opportunities have never been greater than they are today. Businesses are willing, governments are listening and moving forward, investors are asking questions about ethical capital, and consumers are making conscious decisions about the clothes they wear and the products they use.

Business leaders recognise that their organisation acting to address these crimes is not only the right thing to do, it also makes good business sense. It has been well established modern slavery distorts global markets and undercuts responsible business, exposes business to significant legal and reputational risks, increases corruption and undermines the social benefits of economic growth by creating inefficient labour markets.

While many businesses are proactively and voluntarily tackling the issue of forced labour, many aren’t, and this is where government must step in to set minimum standards for businesses to follow in areas such as supply chain transparency and worker protection.

In 2018, The Bali Process Government and Business Forum endorsed the “AAA Recommendations”. These recommendations set out a pathway for both business and government to contribute to solutions and importantly include a call for legislative reforms for supply chain transparency, ethical recruitment and remedies for workers and victims.

It is disappointing that today, only one of the 43 countries represented in the Bali Process, Australia, has legislation that requires companies to report on supply chain transparency. In addition to this, many of the countries rely on migrant workers either as destination countries to supplement their domestic workforce or benefit from remittances earned by their own workers who travel overseas and do not make it illegal to charge workers recruitment fees. In some cases, this is as high as $US5,000 each, a debt burden which is often never able to be repaid, increasing the vulnerability of the worker. At Minderoo Foundation’s Walk Free initiative we endorse the principle of ‘no worker should pay for a job’.

Australia introduced modern slavery legislation in December last year and now has the most comprehensive response in the world. The legislation includes mandatory reporting requirements for businesses with turnover greater than $AU100 million, as well as government entities. It requires documentation of the structure, operations and supply chains of the entity, modern slavery risks, actions taken to assess and address these risks, assessment of the effectiveness of their actions and a publicly accessible online register for all statements to be uploaded. The Minister responsible will submit an annual report on performance and has the mandate to call out non-compliant companies.

Walk Free congratulates the government on this move, but remains committed to further amendments to strengthen the legislation, such as the inclusion of an independent statutory position. This independent role would support businesses in the implementation of the requirements, facilitate the coordination of many government agencies, hold the government accountable for the effective roll out of the legislation, and consider appropriate penalties for business for wilful non-compliance, as well as considering victim remedies and possible compensation plans.

The enforcement of the Australian Modern Slavery Act, and the laws of varying degrees that exist in several countries, is critical. To date, enforcement has been lacklustre and as a result, many of these terrible human rights abuses go unpunished with no deterrent to slave masters, unscrupulous labour recruiters, traffickers and other offenders.

As evidenced by the RBA conference and survey, awareness of these issues is greater than ever before but more action is needed, particularly in the Asia-Pacific region where Australia can take a leading role.

Walk Free is the secretariat of the Bali Process Government and Business Forum, of which the Responsible Business Alliance is a signatory partner.