Published: October 2024
In October 2024, Transparentem released a report called “Paying to Work” that highlights worker reports of ongoing exploitation at three apparel suppliers in Malaysia, including many conditions that may constitute indicators of forced labor. In particular, Transparentem continued to find workers reporting serious issues at Classita, an investigated supplier, including many abuses that may constitute ILO indicators of forced labor.
This report outlines Transparentem’s initial investigation that took place between November 2019 and February 2020, the response by the suppliers and their buyers, and a subsequent investigation from March 2022 to January 2023. During the initial investigation, workers reported critical issues such as high recruitment fees, deceptive recruitment practices, abusive living conditions, and other violations of workers’ rights. Transparentem engaged directly with brands sourcing from these factories, leading to varied responses, including some improvements for workers and limited repayment of recruitment fees.
During the initial investigation, Transparentem investigated three suppliers: Classita (M) Sdn. Bhd., Ghim Li Fashion Sdn. Bhd., and K.N. Lee Knitting Industries Sdn. Bhd. Six buyers, including Bravado Designs, Buck Wear, Centric Brands, H. Best, Macy’s, and Under Armour, collaborated directly with suppliers to address workers’ conditions, resulting in the partial reimbursement of recruitment fees to 800 workers paying an average of $867 per worker. The repayments to workers, however, did not cover the total amounts workers reported paying.
Further, at Classita, it took over three years to implement their repayment plan, which contributed to the risk of debt bondage. Unlike Classita’s buyers, buyers from Ghim Li and K.N. Lee worked closely with the factories to remediate the problems identified in Transparentem’s original investigation, which led to some improvements, including some relief of overcrowding in hostels and the establishment of new grievance mechanisms at both factories. This progress, albeit uneven, shows how active engagement by buyers and their suppliers can lead to real improvements for workers and lays bare how insufficient action at suppliers like Classita leaves workers at a greater risk of forced labor.
Please see the responses from buyers and suppliers to our original investigation for more details.
Transparentem continued to monitor conditions at all three factories from March 2022 to January 2023. Workers continued to report problems such as passport retention, inadequate overtime compensation, and financial penalties for resigning. These problems continued to place workers at risk of forced labor. At Classita conditions reportedly remained especially dire.
Audits commissioned by Centric Brands, Macy’s and Under Armour and conducted in 2023 highlighted ongoing concerns and resulted in the development of corrective action plans.
Transparentem calls for comprehensive action to protect vulnerable workers. We urge buyers and suppliers to fully and immediately reimburse recruitment fees, ensure ethical recruitment, provide unrestricted access to important documents such as contracts and passports, and guarantee payment of withheld wages and safe, decent living conditions.
We urge buyers, suppliers, civil society, the Malaysian government, and other stakeholders to work together and improve conditions for migrant workers in Malaysia.
For detailed responses from buyers and suppliers and more information on our ongoing efforts, please refer to the full report.
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