After Pressure, Growing Transparency in Malaysia’s Glove Industry

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After Pressure, Growing Transparency in Malaysia’s Glove Industry

From rock bottom four years ago, much of Malaysia’s glove industry has embarked on efforts to achieve greater transparency and better conditions.

After Pressure, Growing Transparency in Malaysia’s Glove Industry

A worker inspects disposable gloves at the Top Glove factory in Shah Alam on the outskirts of Kuala Lumpur, Malaysia, Wednesday, Aug. 26, 2020.

Credit: AP Photo/Vincent Thian

Today, Malaysia’s glove industry is increasingly scrutinized for workplace abuses. But back in 2019, public attention was almost non-existent, so to learn more about conditions we interviewed migrant workers from Supermax, Hartalega, YTY Industries, and Central Medicare, all prominent suppliers of gloves to Western healthcare systems. Many interviewees spoke of appalling conditions.

Much progress has happened since then. All four major glove makers, and many more, reimbursed all or some workers all or some of the exorbitant recruitment fees they paid to local agents. Workers at some plants had their passports returned, dorm conditions were sometimes improved, and so on.

A key catalyst for change was, and is, the fear of profit losses via U.S. import bans, which so far have hit six glove makers, including Top Glove in 2020 (revoked in 2021), Supermax in 2021 and YTY Industries in 2022. 

A major challenge was, and remains, a lack of transparency about workplace conditions by the industry and its auditors. Hence the need to ask workers directly for their side of the story. That isn’t always easy. Speaking to journalists is not encouraged by the industry. Curfews, walls, guards, CCTV, and unfavorable locations don’t make it any easier. It took over a year to properly reconnect with workers from Supermax and Central Medicare. The curfews and government lockdowns in most of 2020-2021 were an additional barrier to overcome.

Unprecedented Developments

In 2021, Supermax workers again spoke out about working and living conditions, which was followed by an American import ban and a Canadian federal import pause on Supermax gloves due to forced labor concerns. In early 2022, legal action on behalf of former Supermax workers was taken against the U.K. government because of its decision to keep Supermax as a healthcare supplier.

In early 2022, Supermax said in a statement that it had recently implemented a new foreign worker policy to speed up the process of meeting International Labor Organization (ILO) standards, while former employees spoke about abusive conditions. Like other glove makers, Supermax initiated a reimbursement process for predatory recruitment fees in the latter half of 2020, and by mid-2021 it had fully repaid its direct employees before turning to its subcontracted workers. In 2022, it provided a 5,000 Malaysian ringgit ($1,150) one off ex-gratia payment to all its workers and is currently reaching out to former workers to repay fees, a process expected to be completed by July 2022

Compared to its industry peers, Supermax’s foreign worker policy is far-reaching and introduces an equal pay and benefit structure for foreign and local workers to further eliminate any discriminatory practices. It also raised workers’ basic wage 15 percent from the legal minimum wage and industry norm at 1,200 ringgit a month ($280) to 1,400 ringgit ($330).

Hartalega, another major glove maker covered by our 2019 investigation, has greatly expanded its public information about corporate ethics and sustainability in recent years. Contrary to most glove makers, Hartalega has put its code of conduct, whistleblowing policy, anti-bribery and anti-corruption policy, external audit policy, and more online

“Hartalega is conscious that social compliance is an ongoing journey and we continue to strive for improvement,” a Hartalega spokesperson told The Diplomat. “Following the completion of remediation of our current workers, we utilized various avenues to seek out eligible former workers, including via our website. The remediation exercise was concluded in February 2022.” 

Hartalega did not reply to specific questions about its basic wage level or potential raises, but said that “both our local and foreign employees are on the same salary scale” and gave examples of bonuses and allowances.

Progress Under the Public Radar

Most public attention in recent years focused on Malaysia’s Big 4 glove makers, especially Top Glove due to its  massive size and the U.S. import ban (revoked in 2021), but increasingly also Supermax, Hartalega, and Kossan. However, progress at other manufacturers is taking place, just below the public radar. Following our 2019 exposure of migrant workers’ conditions at YTY Industries and Central Medicare in Perak State, changes began there, too.

YTY, a longstanding supplier of American customers including Owens & Minor and its subsidiary OM Halyard, started issuing press releases about social compliance in late 2019. In 2020, it begun reimbursing recruitment fees, which it said was completed in mid-2021. 

Still, the U.S. government banned disposable glove imports from YTY in January 2022 because of forced labor concerns, including “abuse of vulnerability, deception, retention of identity documents, intimidation and threats, debt bondage, abusive working and living conditions, and excessive overtime,” to which YTY replied in a press release.

“We have routinely had our manufacturing facilities independently audited in the past against established social compliance standards, and are working with an experienced auditor to assist us in evaluating the current allegations,” Vice President Ravi Ragunathan told The Diplomat. “YTY looks forward to engaging with the CBP [U.S. Customs and Border Protection] in a forward-looking and transparent manner to address any concerns they may have.”

YTY pays foreign employees a base salary of 1,200 ringgit ($280) per month excluding overtime, per minimum wage requirements, and said it would conform to the government’s intended monthly increase to 1,500 ringgit ($355) by May, an unprecedented 25 percent hike, if it comes into effect.

Central Medicare, whose American Fortune 500 customers include Owens & Minor and Henry Schein, also increased social compliance efforts for its 1,500 Bangladeshi and Nepali employees. In 2021, its owner HARPS Holdings published its first environmental, social, and governance (ESG) statement and social commitment update. The company also said it had “refunded all our workers for all recruitment fees collected prior to 2019, amounting to a total of RM11.8 million [$2.8 million]” and that it provided workers with “sufficient workspaces and accommodations.”

In 2022, we reconnected with Central Medicare migrant workers, who told us another side of the story, which the company replied to in a subsequent two-hour long interview.

Reimbursing Fees, Take Two

Workers told us that by mid-2021, they had been partially reimbursed by Central Medicare for fees paid to local agents for jobs. Bangladeshi interviewees were reimbursed 10,000 ringgit ($2,350) of the 17,000 to 20,000 ringgit ($4,100-47,00) they had paid, which corresponds to one year’s pay including lots of overtime. Some former workers and current workers from Nepal said they hadn’t been reimbursed anything of the 4,000 to 5,000 ringgit ($950-1,200) they had paid.

“Managers did not explain why we did not get the full amount reimbursed. I did not dare to ask, I was afraid to anger supervisors,” said Tamin, a production line operator from Bangladesh. 

Central Medicare said it had recently committed an extra 10 million ringgit ($2.35 million) to reimburse workers completely for recruitment fees and that final repayments were due in March 2022. It gave details on how repayments were calculated and said Bangladeshi workers would receive 20,000 ringgit ($4,700) and Nepali workers 6,000 ringgit ($1,400) in total. 

Central Medicare also explained how it is currently identifying former workers, with the help of its recently contracted adviser, Andy Hall, to secure their reimbursements. It raised its basic wage to 1,300 ringgit from the country’s minimum wage, 1,200 ringgit, starting from January 2022, an 8 percent basic wage increase.

None of its foreign buyers had contributed to reimbursing workers, Central Medicare said.

Engaging Workers’ Concerns

Workers stay in dorms with up to 30 or more people per room. “It is chaos, lots of noise and heat, we have no privacy. It has always been like that,” said Binod from Nepal. Nepali and Bangladeshi workers shared pics and videos of crowded rooms and deteriorating bath facilities and told about bug-ridden food.

Central Medicare acknowledged the workers’ concerns and said that its new dorm would soon be constructed and ready to accommodate all its workers. To address workers’ complaints about low-quality food, it had formed a canteen committee in 2021 with senior management involved in the process.

For a period of over one and a half years, workers were not allowed to go outside due to the pandemic.

“Between early 2020 and late 2021, we were not allowed to go anywhere. Not even go for a walk. We just lived inside our dorm and factory,” said Abdul from Bangladeshi, confirming he was now free to move as he pleased. 

Central Medicare’s parent HARPS stated in July 2021 that “Our workers have freedom of movement outside of their working hours” although it was “subject to certain COVID-19 preventive measures.” During the interview, Central Medicare explained that Malaysia’s lockdowns significantly affected workers’ movement.

Addressing Punitive Work-floor Practices

Some interviewees said that work-floor practices were less punitive compared to a few years ago. Others spoke about fines, intimidation, verbal and physical abuse and gave examples of colleagues punished for breaking rules or angering supervisors including deportation, suspension, cash fines (one week’s basic pay), and floor cleaning.

“Supervisors made me clean the dorm floor as punishment for cooking rice in my room,” said Sandeep, a former employee. Cooking is not allowed in at least some of the current dorms, but kitchens are installed in the new dorm facility.

Central Medicare explained about its disciplinary procedures, which does not include fining workers, and its grievance procedures. The company also underscored its zero-tolerance on inhumane treatment. It acknowledged the importance of communicating to workers about its platforms to report incidents of intimidation and threats. 

How Deep Does This New Transparency Go?

Central Medicare provided detailed feedback, discussed recent developments, and shared audit reports. Such transparency is key to compare and clarify workers’ stories. To better address issues mentioned by workers, Central Medicare welcomed our elaborations.

Such transparency is also key to understand the potential shortcomings of auditors. So-called SMETA social audits were done at Supermax, Central Medicare, and YTY in late 2019. Supermax and Central Medicare shared 2019 audit reports, YTY declined, while Central Medicare also gave The Diplomat its 2022 audit report. 

We revealed previously how the Supermax SMETA audit missed many of the issues our interviewees spokes about. Like the Supermax audit by Accordia, the two Central Medicare audits by UL were announced beforehand and paid for by the glove maker. The two audits covered a total of 145 worker interviewees, who – contrary to our own interviewees – had no complaints, according to the reports. No grievances about reimbursements, punishments, dorms, food, anything. Instead, the audits concluded that workers found “management is positive towards them and the workers also satisfied with the management. The workers are able to go directly to the management for any kind of issue” (same conclusion in both the 2019 and 2022 reports).

Despite the persistent shortcomings of private audits, some Malaysian glove makers surpassed many Western medical firms in transparency in recent years. The global medical industry has never been a frontrunner in this regard, according to experts.

“We have very little transparency in medical supply chains,” said Professor Mahmood Bhutta, a surgeon of Brighton and Sussex Medical School who has led investigations into labor abuses at healthcare suppliers for years. “Our own investigations suggest that probably half of all medical products are made in countries at high risk of labor abuse. Until we mandate transparency on the origin of products, I have no idea if the health of other people was harmed in making the products I use.”

Owens & Minor did not reply to requests for comment, now or in 2019, even though it and its subsidiary OM Halyard received over 1,000 shipments of more than 20 million kg in recent two years from Central Medicare according to Panjiva, the supply-chain research unit at S&P Global Market Intelligence. 

Henry Schein did not reply about specifics, as in 2019, but its chairman of the board and chief executive officer, Stanley M. Bergman, said it “has a long-standing commitment to ethical behaviour and corporate citizenship.” He also told The Diplomat that “Henry Schein is a member of the Responsible Glove Alliance, along with other health care distributors, who commit to core principles that recognize the importance of promoting responsible recruitment and employment practices in the glove supply chain.”

How Deep Should Transparency Go?

The Responsible Glove Alliance (RGA) was launched in 2022 as an industry-led initiative “to prevent, identify and remedy forced labor in the medical supplies industry in Malaysia.” Its members at launch included Ansell, Cardinal Health, Henry Schein, Kimberly-Clark, Medline, and two of Malaysia’s Big 4 glove makers, Hartalega and Kossan.

Members of the RGA commit to transparency and “must disclose their owned and/or their suppliers’ rubber glove manufacturing facilities in Malaysia to the RGA staff. Supplier members must also publicly disclose their owned rubber glove manufacturing facilities in Malaysia,” said Bob Mitchell, the vice president of human rights and environment at the Responsible Business Alliance, which is the secretariat of the RGA. “In addition, the RGA will set and evolve public transparency requirements for all members related to the results of due diligence activity after private and public consultation with key stakeholders to ensure credibility of our efforts.”

No counterpart to RGA has yet emerged from local or international civil society. Migrants are forbidden by Malaysian law to create unions but allowed to join existing ones, which have little capacity to stand up against employers for migrant members and which risk harassment doing so. Local NGOs for migrant workers face similar challenges. International unions or NGOs are far from queueing up to engage the global medical industry on its persistent supply chain problems. Independent scrutiny of glove workplaces is left to the odd activist or journalist.

From the government side, Malaysia ratified in March the ILO’s Protocol of 2014 to the Forced Labor Convention. Minister of Human Resources Datuk Seri Saravanan said it “is a testament to our utmost commitment in addressing and eradicating forced labor.” Last year, assisted by ILO, Malaysia also adopted a National Action Plan on forced labor 2021-25.

Other Malaysian ministers continue to question forced labor findings. In February, former Prime Minister Mathahir Mohamad reportedly said that allegations of forced labor at glove makers were false. In March, Minister of Plantation Industries and Commodities Zuraida Kamaruddin said about forced labor in plantations that “the people who made such allegations did it after visiting a plantation and interviewing one worker.”

Zuraida did make an important point that the U.S. and EU “should go down to the ground and investigate these forced labor claims” to properly verify them. Easier said than done, of course, as foreign labor inspectorates have no authority in Malaysia, but such an invitation opens up potentially new ways to reliably monitor cross-border supply chains, which could replace or supplement the flawed private audit paradigm.

Until that happens, transparency efforts by the global medical industry and Malaysia’s glove makers should be welcomed and incentivized, and the fragmented monitory efforts by civil society should be respected and protected. 

The names of workers mentioned in this piece have been changed for their safety.