Malaysia, explained.
Migrant workers harvest chillies in Malaysia's Pahang state (Mohd Rasfan/AFP via Getty Images)
A zero-cost migration model can break the cycle of debt and exploitation.
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Tackling forced labour in Malaysia begins with re-examining its migration modelTackling forced labour in Malaysia begins with re-examining its migration model
In 2023, the Global Slavery Index suggested that in Malaysia, 6.3 out of every 1,000 people were affected by modern slavery – up from 4.2 per 1,000 in 2016, ranking it above regional neighbours Thailand and Vietnam. A year earlier, the US State Department had labelled Malaysia a “tier 3” country in its Trafficking in Persons (TIP) Report, a rank shared with some of the worst countries in the world for human trafficking, including North Korea and Afghanistan.
As Malaysia’s National Action Plan on Forced Labour (NAPFL) 2021–25 nears its end, it seems its success in eradicating forced labour in the country by 2030 has been limited. Under the current model, migrant workers often have to bear exorbitant fees charged by private recruitment agencies and intermediaries. These fees often plunge migrant workers into debt bondage, placing them in a cycle of debt and dependency that makes them vulnerable to exploitation.
Several high-profile cases highlight the severity of forced labour in Malaysia, illustrating the consequences of a flawed migrant worker management system. The cases include a group of migrant workers coerced into working without pay on a vegetable farm in Gua Musang for up to seven months; unpaid back wages of more than US$240,000 to 733 migrant workers brought legally to work in Johor but not provided with employment; and a local contractor supplying components to major Japanese electronics firms failing to pay more than 200 of their foreign workers since April 2023.
Globally, forced labour in the private economy generates US$236 billion in illegal profits per year, estimated at almost US$10,000 profit per victim from recruitment fees and wage underpayment. The flipside is the large opportunity cost of reducing forced labour. Estimates suggest that bringing these workers into formal employment with adequate social protections would unlock about US$611 billion in additional GDP worldwide.
While there is no single solution to tackle the large and multifaceted issue of forced labour, scaling up a zero-cost migration model for migrant workers of all nationalities would strike at its financial root. And here is where a version of Malaysia’s model may work.
First implemented by the Malaysian government in 2018 for Nepali workers, a zero-cost migration model puts the onus on employers who want to hire migrant workers to pay for them. The same model was adopted, in principle, for domestic workers from Indonesia and the Philippines. This way, employers rather than workers would cover the medical, insurance, equipment, travel, lodging and other expenses related to recruitment. This is in line with International Labour Organisation Convention No.181, which prohibits charging recruitment fees to workers, instead compelling employers to pay or subsidise costs through government-to-government arrangements. By eliminating the significant upfront costs to workers, this model helps prevent them from falling into debt bondage – a common precursor to forced labour.
A zero-cost migration model balances the interests of migrant workers, employers and host-country nationals – protecting the rights of workers while ensuring firms can access the labour they need.
Evidence supports the effectiveness of this model. A 2018 impact study on the Nepal–Jordan corridor compared conventionally recruited workers with fairly recruited workers under zero-cost schemes. The study showed that the latter group exhibited higher productivity and were also more likely to have a positive experience with their supervisors and managers. Put simply, a zero-cost migration model balances the interests of migrant workers, employers and host-country nationals – protecting the rights of workers while ensuring firms can access the labour they need.
Many economies have already transitioned to such a model. Taiwan has successfully implemented models where employers cover all recruitment costs, including processing, travel and other fees, rather than passing these costs onto migrant workers. Hong Kong allows recruitment fees for domestic workers to be capped at no more than ten per cent of the worker’s first month’s salary, while in Singapore, licensed intermediaries can charge no more than one month of a worker’s fixed salary for each year of employment, with a cap of two months. Thailand has also adopted the zero-fee principle for migrant workers and offers competitive wages, making it a more financially attractive destination compared to Malaysia.
Of course, in practice, such a model would require careful implementation and monitoring. Legitimate concerns exist that unscrupulous employers might circumvent these models through “kickbacks” from intermediaries or by offsetting recruitment costs through reduced wages, fewer benefits, or increased working hours – essentially perpetuating migrant worker exploitation through different means.
To address these vulnerabilities, implementing a robust monitoring and regulatory framework is essential to ensure transparency and effectiveness. This includes labour inspectors empowered to audit recruitment practices throughout supply chains and deal with recruitment-related offences. Equally important are effective and accessible grievance mechanisms that allow workers to report forced labour conditions and seek justice without fear of retaliation.
Malaysia’s struggle to eliminate forced labour cannot be fully resolved through surface-level reforms alone. It requires addressing the root cause: a migration system that financially exploits vulnerable workers before they even begin employment.
To this end, a comprehensive zero-cost migration model offers the most promising path forward. Not only would this approach honour Malaysia’s international commitments and improve its global standing, but also strengthen the country’s economy and labour markets through increased productivity and reduced exploitation. After all, truly ending forced labour will mean taking aim at systems that profit from human exploitation.
About the author
Yvonne Tan
Yvonne Tan is a Senior Researcher in Social Policy and National Integration at the Institute of Strategic and International Studies (ISIS) Malaysia.
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