The Environmental, Social & Governance (ESG) wave is growing in Malaysia. Under the Social (S) Pillar, businesses that hire migrant workers confront the importance of eliminating modern slavery, human trafficking, forced labour and other exploitative employment practices in their workforce and supply chains through ethical recruitment. Unfortunately, most businesses in Malaysia, especially SMEs (which make up 97% of the Malaysian economy) often struggle to even begin addressing these concerns.

If you’re an SME owner you might find yourself juggling tight margins and ambitious growth, and the need to comply with anti-forced labour and ethical recruitment mandates might feel like another hurdle.

1. Limited awareness of forced labour, human trafficking and modern slavery

Many employers are not fully aware of activities that may constitute forced labour, human trafficking and modern slavery. For example, charging workers recruitment fees, retaining their passports and restricting their freedom of movement, though considered normal and commonplace in Malaysia, are all indicators of forced labour and human trafficking. These practices further often go unchallenged due to a lack of awareness regarding their implications.

2. Complex recruitment processes and reliance on agencies

As a recruitment agency, Pinkcollar is well-acquainted with the complex processes in sourcing, recruiting and hiring foreign workers. Complicated recruitment processes often force employers to heavily rely on recruitment agencies that may in turn depend on a complex network of sub-agents or brokers in the countries of origin to source workers. The intricate nature of this web makes it challenging for employers to monitor or keep track of the entire recruitment process, which may involve elements of trafficking and forced labour.

3. Lack of unified laws across origin and destination countries

While Malaysian employers are obligated to adhere to local laws, the lack of harmonised or unified laws on recruitment practices between Malaysia and source countries (Bangladesh, Nepal, Indonesia, etc.) can pose a significant challenge. This discrepancy may lead to situations where recruitment partners in the origin country do not face the same level of oversight on recruitment practices.

4. Costliness of compliance

Even for businesses that are knowledgeable and intend to practise ethical recruitment, compliance can be costly, especially in the beginning, when companies have to learn new ways of operating and undo/reverse entrenched practices. While this is a reality, the costs, if not borne now, will be borne later. Not complying will eventually result in legal risks and reputational damage. Furthermore, exploitative practices invite fines, compensation requirements, lawsuits, and negative publicity.

Despite the challenges, it is imperative to begin the journey towards complying fully with ethical recruitment. Here are some starting points:

1. Educate yourself and your team (particularly Human Resources) on forced labour: Equip yourself with knowledge on forced labour and its ramifications for both workers and your business. There are many resources available from various reputable organisations such as the International Labour Organisation, the International Organisation for Migration (IOM) and Responsible Business Alliance
2. Map and understand your migrant workforce’s journey into Malaysia: Extend your criteria for recruiting foreign migrant workers beyond skills and recruitment fees. Consider running a focus group with your migrant workforce, asking them questions about their entire journey to Malaysia, from sourcing all the way to their arrival. 
3. Conduct due diligence on recruitment partners: Once you understand more about ethical recruitment, ensure that your recruitment partners are licensed and adhere to fair recruitment practices. Enforce contractual obligations, particularly the principle that workers should not bear any recruitment fees. Regularly verify their compliance through due diligence measures