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New Report Uncovers Labor Abuses in Malaysian Clothing Factories — and Shows How Brands Should Respond

Whitney Bauck

Implicated brands include Nike, Asics, Under Armour, Target and Brooks. Thankfully, some are committing to change for the better.

A garment being sewn in Malaysia. Photo: Tengku Bahar/AFP/Getty Images

Even as increasing consumer demand for consciously made clothing has retailers from Net-a-Porter to Madewell trying to up their ethical fashion cred, ongoing reports of labor abuses prove that the industry has a long way to go. 

A just-released report by Transparentem, a non-profit dedicated to investigating apparel supply chain ethics, uncovered multiple violations at five factories that supply to well-known Western brands. Nike, Global Brands Group (which creates licensed products for the likes of Calvin Klein and Juicy Couture), Asics, Under Armour, Target, Fruit of the Loom, Primark and Brooks are among the brands directly implicated.

The kinds of issues uncovered during Transparentem's 18-month investigation include laborers in Malaysia — who are often migrants from nearby countries like Cambodia, the Philippines and Sri Lanka — being charged "recruitment fees" to secure their jobs. These fees, which can range from $745 to $4,356, are so high that some garment workers sold homes, mortgaged land or borrowed from banks just to be able to pay for the opportunity to work.

"The property that I lost [to pay the recruitment fee], with this property I would have been able to eat [for a] whole year with my children," one garment worker said in the report.

At all five factories investigated, laborers said they were also misled about the amount they'd actually be making once they started their new jobs — so much so that many came to regret taking the jobs in the first place.

The underpay and excessive recruitment fees are compounded by disciplinary fines, wherein factory workers might see deductions in their paychecks if machinery breaks while they're using it, if they don't hit production targets or if they make mistakes in their work. For some, these can pile up to essentially land them in debt bondage, where they end up owing their employer more than their employer owes them, forcing them to keep working even if they'd like to leave.

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One worker borrowed over $3,000 to pay recruitment fees, sold land to pay off debt and still ended up owing his employer $250 when he was sent home because he fell sick. "I have started begging now from other people," he told Transparentem. "I don't have anything left."

It's not just payment issues plaguing garment workers in Malaysia. Other problems include verbal abuse and the use of physical force (like kicking and punching) by managers and unsanitary or overcrowded living conditions. In one instance, 28 people were sharing a single toilet and living together in one room.

"The bed they gave us when we went there — after a couple of months we all had to throw it out, so many bedbugs. After we threw out our beds, we would throw a bed sheet on the floor and sleep there," one worker said. "The glass in the windows was all broken. When it rained, water would come inside our room. And rain in Malaysia — every couple of days it would rain."

The problem for many workers, though, was that by the time they figured out they'd been sold a fantasy, it was too late. Employees at four of the five factories reported that the companies that enticed them into the country would collect and withhold their passports once they arrived in Malaysia. They would then charge workers a hefty fee if they ever wanted to access their own documents.

"The company fears that we will run away if we get to keep our passport," one worker said.

Though these situations are dire, the good news is that some of the brands involved are looking to take responsibility.

One of the unique things about Transparentem's approach is that it always contacts the brands implicated by its investigations before releasing findings to the media. Transparentem's founder, Benjamin Skinner, is a former investigative journalist who understands the power of the press as a form of accountability for brands, but he also believes that when you name and shame specific factories, the brands that work with them are more likely to immediately sever ties to avoid blame than to do the hard and important work of coming alongside those factories to help them change for the better.

Transparentem's approach encourages the latter. And in the case of the Malaysian factory investigation, the approach has yielded real reasons for hope. Of the 23 brands or buyers the non-profit identified and contacted, 17 began remediation efforts. 

Brooks in particular stood out for its willingness to share the cost of recruitment fee reimbursement with one factory, even though it had technically never authorized the factory to produce its apparel (Brooks's order likely ended up there as part of a sub-licensing deal made between factories). Moreover, Brooks had stopped sourcing from that partner in 2015, according to a report by The Guardian. Considering that it's extremely common for brands to avoid taking responsibility by using the excuse that they didn't know a particular factory was making their product, Brooks's response presents a shining example of what real corporate responsibility should look like.

Nike, unfortunately, did the opposite. Although the brand did make positive steps toward addressing recruitment fees and other issues in one factory, The Guardian reported that Nike basically pulled the standard line about not being responsible for subcontractor abuses, since they were never officially authorized, with regards to two other factories that were making Nike product. This was in spite of the fact that Nike was called out for similar abuses in its supply chain in Malaysia over a decade ago by the Wall Street Journal, and therefore has had plenty of time to create a system that better ensures ethical sourcing within the country.

In terms of other brands, Primark and Target earned praise from Transparentem by pushing for improvements in factories they had stopped sourcing with. Four unnamed buyers extended their remediation efforts to another Malaysian factory not even included in Transparentem's report, meaning that the investigation is having a positive domino effect on other facilities in the country. By May 2019 — before Transparentem's report was shared with press, but after the non-profit had begun open conversations with brands and buyers — over $1.7 million of recruitment fees had been paid or scheduled to be paid back to workers, and 1,600 workers had received the passports that were taken from them.

In short: there's a lot that needs fixing in Malaysian fashion manufacturing, and these five factories are likely just the tip of the iceberg. But the responses of a number of conscientious brands proved that companies can accomplish more good by taking responsibility for their existing supply chains than they can by severing relationships as a knee-jerk response to negative reports. 

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