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The Unheard Voices in Malaysia’s Palm Oil Industry

This article is part of AASYP’s “Break the Chain” programme that highlights innovative solutions to modern slavery, human trafficking and forced labour.


On 30 December 2020, Sime Darby Plantation became the second Malaysian plantation company after FGV Holdings Bhd to be slapped with a ban from the U.S. Customs and Border Protection (CBP) due to alleged forced labour in the production process following a petition filed by Hong Kong–based organisation, Liberty Shared.


Allegations of forced labour practices are not new in the Malaysian palm oil industry. The most irrefutable evidence is that for nearly a decade, Malaysian palm oil has always been identified as products produced by forced labour under the “List of Goods Produced by Child Labour or Forced Labour” published by the U.S. Labour Department. The recent CBP ban is another major blow to the industry after the EU called for progressive phasing out of the use of palm oil in biofuels by 2030. These events could potentially trigger further concern amongst global companies and consumers when sourcing palm oil from local companies.


The harsh reality in the industry

Malaysia’s palm oil activities rely heavily on migrant workers with about 85 percent of workers in the plantations coming from Indonesia, Nepal, Bangladesh, Cambodia, and India. The labour-intensive industry is not particularly attractive to the locals given the 3Ds (dirty, dangerous, and difficult) nature of the jobs that are often construed as lowly and demeaning. Unfortunately, many migrant workers are not getting the protection and treatment they deserve despite playing such an important role in supporting the growth of this industry.


Like many others in the agricultural sector, workers are forced to work long hours and perform arduous jobs to meet the production target of the companies. However, they are not paid fairly and there is little to no social protection for migrant workers in the case of workplace injuries or ill health. The precarious situation can be compounded by the intolerable living environment where many of them are living in cramped shipping containers that are extremely hot and uncomfortable for rest. In addition, there is limited supply of electricity and running water in some places, especially in remote areas with poor healthcare and financial facilities.


Many foreign workers come to Malaysia with the hope that they could earn higher wages to improve their livelihood at home. But they very often fall into the trap of unscrupulous recruiting agents who promised them good wages and working environment, only to find themselves deceived and charged with exorbitant fees that are not listed on the contract signed. Upon their arrival at the workplace, employers often confiscate their passports and they will only be given an I-card to travel to a nearby town. The nature of work differs from what has been promised by the agents and salaries will be deducted to repay the extortionate recruitment fee. Therefore, they become more heavily indebted and trapped in the vicious cycle of poverty.


In addition, wages have been notoriously low in the palm oil industry. In fact, the wage system used in this industry is called “piece-rate” or “productivity linked wages”, which means the wages of the workers are tied closely to their productivity level. It is common to see that many workers often sacrifice their own health to meet the unrealistic production target set in exchange for a higher income. Although some of them manage to earn the minimum wage of RM 1200, it is still insufficient for them to cover their living costs as a huge portion of the money is used to repay their debt and utility bills. This output-based wage system has often come under repeated criticism as it allows for payment that is significantly lower than the statutory national minimum wage and treats workers as a mere factor of production.


Listen, Engage and CHANGE…

To ensure ethical and responsible recruitment practices, companies should progressively move towards a direct hiring system that clearly sets out the rules in the hiring process and prohibits charging of any sort of hidden fee on workers. Workers should be given the freedom to enter employment voluntarily and the right to terminate a work agreement if any deception is found without the threat of penalty. Discrimination based on religion, race or nationality at all stages of employment must also be avoided.


Apart from that, a living wage should be paid to all workers. The wages paid must reflect the average living costs in the area of interest. Working hours should always be recorded to ensure that workers are entitled to receive the legal minimum wage for all hours they commit. All overtime work should be on a voluntary basis and at a premium rate consistent with national law or a collective agreement stipulating the amount to be paid to workers who work extra hours. Employers should also set a production target that is realistic and achievable within normal working hours.


Perhaps one of the most effective ways to tackle forced labour issues within the industry is through engagement. Employers should take every chance to engage with all workers to better understand their plight. A credible grievance mechanism that allows workers to lodge complaints or raise any concerns they have is crucial to prevent exploitative practices. The grievance mechanism should be easily accessible by all workers and all reports lodged must be confidential. Persons in charge of handling all employment-related issues must act impartially to avoid any biases in the investigation process. Companies must guarantee protection to whistle-blowers who disclose any improper conduct such that no retaliatory actions would be taken against them.


While environmental factors have garnered much of the attention relating to palm oil production, social factors should also have equal footing as the former, particularly in line with the effort to change negative perception worldwide on the commodity of palm oil and to prove that Malaysia is the leading example in driving sustainable change within the palm oil industry.


Migrant workers have made significant contributions to the development of this industry, and it is now time to uphold their rights and provide them with the respect they deserve. Forced labour is a crime and should not be condoned as an opportunity for companies to earn profit. It is but a total disgrace to humanity and a threat to the global economy!


This article was written by Shei Ming, edited by Dhini Hardiyanti, and reviewed by Choo Qian Ke.

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