Despite increased scrutiny and legislative efforts, why does unethical recruitment remain a pervasive issue in today's global economy? In the first of our three-part blog series on our Shaping the Future of Responsible Recruitment programme, Forum's Strategist Anjali Kannangath explores the complex underlying factors that fuel the continuation of unethical recruitment practices, and proposes our solution for creating meaningful change, focusing on Malaysia as a case study. 

Migrant workers play a crucial role in global supply chains, contributing across sectors and plugging in critical labour gaps. The rise in international migration, reaching 281 million in 2020 from 221 million in 2010, reflects a complex scenario where 3.6% of the world's population resides outside their home country.

Cut off from their support networks, facing language, social and legal barriers coupled with inadequate rights protection, migrant workers are deeply vulnerable across the migration cycle. From recruitment, employment to the return home, they are susceptible to various abuses such as debt bondage (caused by the ubiquitous practice of recruitment fees to secure a job), wage theft and human trafficking, among many others.

Example of a typical journey made by a migrant worker, starting in a ’sending’ country, and ending in the ’receiving’ country, Malaysia. Credit: Forum for the Future.

Rise in measures against unethical recruitment practices

The international community has taken significant steps to combat unethical recruitment and lay the foundation of what constitutes “responsible recruitment”, i.e. ethical hiring practices aimed at ensuring the fair treatment of workers during the recruitment process, with standards and principles dating back to the UN Guiding Principles on Business and Human Rights in 2011 and the release of the Dhaka Principles for Migration with Dignity in 2012. The Dhaka Principles serve as a human rights framework to ensure the protection and respect of migrant workers' rights throughout their entire journey, applicable across industries and countries involved in inbound and outbound migration flows.

Principle 1 of the Dhaka Principles embodies a fundamental cornerstone of responsible recruitment, the Employer Pays Principle, which pledges that no worker should bear the cost of securing employment. Following the establishment of these principles, several other interventions such as modern slavery laws, certification schemes, auditing tools, risk mapping tools, worker rights capacity-building, and toolkits have been developed over the years, largely in the Global North.

Source: Dhaka Principles for Migration with Dignity

Unfortunately, compliance to these standards has been inconsistent, with businesses by and large only adopting them voluntarily. Research by Verité, an NGO specialising in labour rights in supply chains, specifically Malaysia’s electronics industry, found that up to 90% of migrant workers continue to shoulder the burden of financing their recruitment.

Recently, however, there has been a shift toward mandatory human rights due diligence legislation, with Europe leading the way. These laws will mandate businesses to actively identify and address human rights issues in their international operations and value chains. In particular, the new EU Human Rights Due Diligence legislation and the German Supply Chain Act require companies to establish risk management systems, remedy human rights violations in their supply chain, establish grievance processes and report on their progress.

Progress made, but…

Despite this recent wave of mandatory legislation and the growing number of responsible recruitment-related services to support their implementation, unethical recruitment practices continue to persist. In fact, statistics reveal a concerning uptick in exploitation, with research from the International Labour Organization (ILO) revealing a growth in modern slavery. Forced labour has increased by 2.7 million people from 2017 to 2021 in Asia, where migrant workers are over three times more likely to be affected. This trend has intensified since the onset of the COVID-19 pandemic, with higher rates of poverty driving more migrant workers into poor working conditions.

Such statistics reveal that the outcomes of various interventions to eradicate irresponsible recruitment have fallen short of expectations, exposing a noticeable gap between the desired results and the stark reality on the ground.

Barriers impeding progress: Legislation lacks context

What then accounts for this gap between legislation and implementation?

For one, concerns loom large over the efficacy of the new Human Rights Due Diligence legislations, with several stakeholders stating that there are stark on-the-ground challenges that impede their implementation. The presence of entrenched practices and norms within the system adds complexity, rendering successful implementation challenging. For instance, small, medium sized businesses comprise a significant portion of employers and they lack the necessary resources and capacity for full compliance to the new legislation.

Diverse methods of hiring migrant workers, whether through local recruitment agencies in destination countries or direct hiring from agents in origin countries, also present distinct challenges. The involvement of sub-level recruitment agents, extending down to the village level, introduces informal networks and agents into the process which limits full transparency of the hiring process.

Additionally, inconsistencies in standards among governments in source and destination countries create loopholes that allow unethical practices to persist. At a deeper level, entrenched perceptions of migrant workers contribute to justifying certain practices.

Lastly, the evolving landscape, marked by new environmental and social disruptions in labour and migration, is not adequately addressed by current services and tools designed for responsible recruitment in value chains. These are some of the key challenges that underscore the inadequacy of existing approaches, which explains why they contribute to shallow improvements rather than a deep, systemic eradication of irresponsible recruitment practices.

Our intervention: Shaping the Future of Responsible Recruitment in Malaysia

In 2022, Forum for the Future conducted a comprehensive scoping study on modern slavery in Southeast Asia, uncovering critical challenges in achieving responsible recruitment. The study highlighted three major challenges in achieving responsible recruitment that have received less attention to date:

  • Current services and tools as a set, are leading to shallow improvements rather than systemic eradication of irresponsible recruitment practices.
  • Manufacturers and recruitment agents need to be involved as ‘makers’ of the solutions but are usually designated as ‘takers’.
  • Current services and tools are not accounting for future environmental and social disruptions and may lack adaptive and resilient capacity to respond to changes in migrant recruitment.

In response to these challenges, we introduced the Shaping the Future of Responsible Recruitment programme in Malaysia, which ran its first phase from Jan 2023 – Jan 2024.

The programme adopts a collaborative and participatory action-inquiry approach, bringing together stakeholders involved in the entire recruitment process. It aims to facilitate a collective diagnosis of barriers within the sector, leveraging futures thinking to explore innovative approaches and solutions that drive systemic impact.

Participants engage in prototyping concepts for systemic intervention, fostering a proactive and inclusive approach to responsible recruitment practices.

Why Malaysia?

Through our scoping study, Malaysia emerged as a focal point in this region due to its strategic position as a prominent manufacturing hub in Southeast Asia and its designation as a high-risk country for forced labour. Migrant workers constitute a significant portion of Malaysia's labour force at 15% (2.2 million out of the total 14.4 million in 2022), particularly in sectors such as manufacturing, construction, plantation and agriculture.

This labour ecosystem has been marred by allegations of collusion among political entities, enforcement agencies, recruitment companies, labour brokers, and exploitative employers often resulting in instances of forced labour and deplorable living conditions. Heightened international scrutiny has brought to light systemic issues within Malaysia's recruitment system, leading to export bans through Withhold Release Orders for numerous top companies, underscoring the pressing need for ethical hiring practices.

Against this dynamic backdrop, we discerned a unique opportunity to instigate meaningful change in the landscape of responsible recruitment. Malaysia, at this critical juncture, provides an opportune platform to empower manufacturers and recruitment agents.

Transforming the responsible recruitment system

To truly achieve a transformative shift in responsible recruitment, it is critical to look beyond individual interventions and understand the dynamics of the system as a whole.

Our Shaping the Future of Responsible Recruitment programme in Malaysia is built on this understanding, with our approach centring on unravelling the intricate web of relationships within the recruitment ecosystem to identify key barriers deeply and comprehensively.

By delving into the system’s dynamics, we aim to uncover the root causes that perpetuate irresponsible practices, while also considering how future disruptors may pose new barriers and opportunities. For stakeholders across industries, governments and civil society, doing so together can enable them to make deeper progress in safeguarding the rights of migrant workers and fostering a fairer labour ecosystem.

After all, meaningful change requires collaboration, where stakeholders actively engage in the process of creating change and rethink the roles they play in the current system.

This blog is the first in a three-part series on our work on modern slavery and our programme, Shaping the Future of Responsible Recruitment, Purpose of Business - Reconfiguring Value Chains work, which addresses the deep relational shifts required for just and regenerative value chains.

Our next two blogs will delve into the nuances of what it means to take a systems-change approach and our learnings from the programme.

Stay tuned as we explore the considerations around which we designed our programme, the barriers we overcame, and our program's impact toward meaningful, systemic change.

Interested in collaborating with us? Get in touch with LiLin Loh, Forum's Senior Strategist.