Migrant workers squeezed in Taiwan debt bondage – What are Walmart, L’Oreal, Bosch and Continental doing about debt bondage risks in Taiwanese supply chains?
Migrant workers squeezed in Taiwan debt bondage. Would you borrow the equivalent of three to four years’ wages to pay for a job abroad? Vinh, Ping and Ngoc from Vietnam are quick to reply: ‘Yes, I borrowed all the money from the bank to pay the recruiters, before I departed for Taiwan,’ said Vinh, who works for Shinkong Synthetic Fibers. ‘My parents said I was lucky to get the job, so we mortgaged our house to finance the job fees,’ said Ping, who works for Chin Poon Industrial. ‘The pay is much higher abroad. I could support my family back home,’ said Ngoc, who previously worked for Hwa Hsia Glass. All three companies are Taiwanese.
Original Article: Le Monde diplomatique by Peter Bengtsen, 14 February 2023
Ping, Vinh and Ngoc are not alone. Around 150,000 Vietnamese people migrate for work each year to higher-income countries, mostly Taiwan and Japan, where they toil in global supply chains. Many in Taiwan pay fees of up to €6150 or more, corresponding to three to four times Vietnam’s annual minimum wage, to Vietnamese agencies that facilitate the recruitment process for Taiwanese firms. Most workers incur substantial debt to finance their fees, which binds them to their employers’ whims and exploitation while they pay it off.
‘I felt squeezed. It took a year to pay off my debt. I feared losing my job and means to pay off my debt,’ said Ngoc, who paid recruiters over €5000 for her first three-year contract and over €4500 for her second.
For decades, it has been publicly known that migrants working in Taiwan have risked – or endured – forced labour. But public attention to specific Western companies profiting from the exploitation at certain Taiwanese suppliers is rare. So, over the past few years, I investigated how Vietnamese workers are recruited in high numbers to low-skilled jobs, where they make plastics, electronics, bottles, glass, fibres and car parts for multinational firms, which sell to you and me. Since I first brought these issues to light in mid-2022, those companies began addressing the problem.
Bosch-supplier compensates migrant employees
Bosch, Continental, Hella, Magna and Visteon are major suppliers to the global automotive industry and buy directly from the car electronics manufacturer Chin Poon Industrial (CPI), where workers told me of exorbitant fees, punitive fines and more. After a few months of dragging its heels, Bosch committed to addressing the problems. Continental and Hella also promised to approach their supplier. Magna, one of Canada’s biggest companies, and Visteon did not (2).
Now, six months later, CPI has started reimbursing its migrant workforce around €737,000 for recruitment fees. Vietnamese employees will receive €2000 each, while Thai and Filipino employees get €1200. Workers confirmed to me that they received the first tranche in December 2022. CPI says the final tranche is due in March 2022. CPI also promised that no future recruits will pay recruitment fees.
‘I was surprised. I never imagined getting my money back, although it is far from my total fees,’ said Ping, who, like many of her Vietnamese colleagues, paid €4000-6150 to recruiters.
Buyers such as Hella believe that workers are ‘reimbursed in full for their recruitment fees’, Hella said, ‘based on the information and the contracts from workers that we examined’. However, CPI was straight with me about not planning to increase its reimbursement amounts to workers and said the amounts are ‘fair and equal for all foreign workers from the respective countries. Otherwise, any discrepancy between [people from] the same country is expected to cause more issues among them.’
Walmart says repay recruitment fees
Throughout 2022, Vietnamese employees of the huge plastics maker Shinkong Synthetic Fibers Corporation (SSFC) told me about recruitment fees up to €6350, fines, deductions, retention of ID papers, tight curfews and other forced labour risks.
Walmart, the world’s biggest company, is buying indirectly from SSFC via Niagara Bottling, which makes billions of water bottles from SSFC’s plastics. Continental and the Dutch State Mines (DSM) have sourced directly from SSFC for years, according to shipment data from Panjiva. They all began addressing the problems with their supplier, which promised that workers recruited after December 2022 will not pay any recruitment fees. It also promised to loosen its grip on migrant employees.Also read Peter Bengtsen, “Malaysia’s dirty gloves”, Le Monde diplomatique, March 2021.
Vietnamese workers now confirm to me that they hold all their ID papers, punishment has decreased for coming back after the nightly curfew kicks in and they don’t have to ask for permission to leave the premises any more. They say it eases their stress. But SSFC has continued to reject the idea of reimbursing its migrant workforce for their recruitment fees, and some workers are still in debt.
Walmart’s standards for suppliers are clear. It says: ‘If such fees are charged, repay them’. Walmart told me this January that it is actively investigating Niagara Bottling regarding the allegations, and that its ‘standards for suppliers prohibit charging workers recruitment of similar fees, even if such fees are allowed under local law. We expect our suppliers to communicate these standards throughout their supply chain and hold their suppliers to the same standards.’
Also in January, Niagara Bottling told me about its recent audit at SSFC in which it found SSFC ‘receptive to making material changes in their practices to adhere to our supplier standards and requirements’.
If Walmart expected Niagara to ensure SSFC workers were reimbursed, and Niagara believed SSFC was receptive to change, would SSFC change its mind and reimburse its employees, or potentially lose a major customer? The plastics manufacturer had already lost DSM, renowned for its sustainability, and told me it was not satisfied with SSFC after months of discussions about migrant workers’ conditions.
The winds of change reached SSFC in February of this year, when the plastics manufacturer committed to reimburse its current foreign workers an amount equivalent to the legal recruitment fee levels in their home countries. All payments are expected to be completed by the end the year at the latest, SSFC said.
L’Oreal commits to helping workers
L’Oreal, the world’s biggest cosmetics company, sourced glass products indirectly from Hwa Hsia Glass (HHG) via one of its direct suppliers in the past few years. HHG also exports to Veritiv and other major American packaging firms.
Vietnamese workers shared detailed feedback to me about paying recruiters exceedingly high fees for jobs, having passports confiscated for years, unpaid overtime, fines, threats and more. When confronted, HHG told me that passports had been returned to workers, denied that overtime is unpaid, said ‘fines are minimal, meant to ensure they follow company policy’ and that ‘ethical recruitment is our policy. We [have] no fee, but foreign workers they have their own policy when they sub-contracted with local labour firms — we are actually the top choice for [Vietnamese workers] when they consider working in Taiwan.’
L’Oreal immediately decided to cut ties with this Taiwanese sub-supplier and does not source its products any more. Though the cosmetics giant cut it didn’t run, and promised to help affected workers by having its direct supplier audit HHG in the near-future, so that L’Oreal could ‘monitor the findings from these audits and [ensure] that a remediation action plan and potential mitigation measures are applied for the potentially affected workers.’
L’Oreal said its direct supplier frequently does in-person audits at HHG. The most recent audit was in 2018, where my worker interviewees said the abuse was going on.
Walmart, Niagara, Bosch, Continental, Hella, DSM, Magna, Visteon and Veritiv wouldn’t disclose if they had ever audited their Taiwanese suppliers, despite having sourced from them for up to ten years. Since my mid-2022 reporting, a number of audits have been scheduled.
Migrant worker fees here, there, everywhere
For years, migrant workers at both CPI and SSFC had 6-7% of their monthly base wage deducted by Taiwanese labour brokers, which is legal in Taiwan and impossible for workers to avoid. The fee is not shown on payslips, but deducted directly from workers’ bank accounts. SSFC actually owns its labour broker and in that way recoups part of the migrants’ salaries. CPI and SSFC said they will bear those costs from now on, and workers confirm they aren’t charged anymore.
Taiwan’s manpower industry pockets €450 million annually from migrant workers by broker fees alone, a recent study concluded. But they often face a range of other exploitative and sometimes illegal fees, including resignation fees, contract renewal fees and fees for changing employer in Taiwan.
Several workers at SSFC told me about paying transfer fees in 2022, which SSFC denies. Others talked about resignation fees, which SSFC denies too. Workers also told me of illegally high recruitment fees to Vietnamese agencies; SSFC denied this by sharing documents that had been signed by workers with me, to prove fees are below legal limits. Workers confirmed that they signed such documents, but say they paid recruiters a much higher amount under the table — some even shared paperwork with me. SSFC still denies this and repeatedly stresses that all matters are handled according to the law.
It is to the credit of the Taiwanese manufacturers that they have kept responding to my updates and questions. They may disagree with the results of my investigations, but the communication between us is cooperative. In contrast, US company Walmart did not reply for half a year, while over the last five to six months German conglomerate Continental’s replies have been variants of: ‘It is our company’s policy not to comment on customers and business partners, which includes possible corrective actions by our suppliers’. Canadian manufacturer Magna provided even briefer replies, while US firm Visteon said nothing at all.
Forced labour is prohibited by all the multinationals’ codes of conduct for suppliers. Walmart, L’Oreal, Bosch, Continental, Hella and DSM go one step further and do not allow supply chain workers to pay to get jobs, though my findings show a shocking gap between corporate policies and practices.
Walmart and L’Oreal are also members of the ‘Human Rights Coalition’, an initiative by 30 of the world’s largest consumer goods companies that recently published detailed guidance on repaying recruitment fees to supply chain workers. But who should finance the actual repayments?
Walmart, L’Oreal and DSM expect suppliers to bear the costs. Neither Bosch, Continental, Hella, Magna or Visteon have contributed to CPI’s worker reimbursements, CPI told me. The bill is pushed down the supply chain, which also happened in Malaysia, where I recently revealed debt bondage at the world’s biggest disposable glove suppliers to Western healthcare giants, which left the Malaysian manufacturers with the bill for reimbursement.
Will legislation hold companies to account?
Multinationals have faced little, if any, legal responsibility for supply chain abuses, nor are they legally obliged to disclose suppliers. For years, this left corporate watchdog organisationsappealing to companies’ — voluntary — Corporate Social Responsibility (CSR) to address the labour abuses of suppliers.
But a paradigm shift is slowly happening as European countries, and the EU itself, increasingly draft and adopt binding legislation on companies to prevent human rights abuses in cross-border supply chains or potentially face sanctions. France was first in 2017; the most recent law to come into force was in Germany on 1 January, 2023.
As proper implementation has yet to come, lawsuits by civil society actors in UK France and elsewhere are testing to see if current legislation can hold domestic companies responsible for supply chain issues abroad.
Already, the American Tariff Act allows US authorities to ban imports from foreign companies based on forced labour concerns. US authorities have increasingly issued such import bans over the past four to five years, including on the disposable glove makers in Malaysia. In 2022, a petition raising forced labour concerns at the Taiwanese manufacturer SSFC was filed to the US authorities.
See also: 30th May 2023: Nepal to pay off loan to Malaysia – debt bondage and poor working conditions.