Global glove makers compensate Nepali workers

As the COVID-19 pandemic increases demand for latex gloves worldwide, Malaysian glove makers accused of exploitation of migrant workers, including thousands from Nepal, are trying to clean up their act.

Malaysia makes 65% of the world’s rubber gloves, and demand has surged 45% since the novel coronavirus outbreak. Every month, hospitals, airlines and the service industry worldwide use up 80 million pairs of gloves.

However, in July the US Customs and Border Protection (CBP) banned imports of gloves from two subsidiaries of Malaysia-based Top Glove, the world’s largest glove producer, accusing it of using forced migrant labour. 

That came as a surprise given the critical shortage of disposable gloves amid the pandemic, but as per the US law, importing products of forced labour is illegal even if there is unmet domestic demand for the product. 

Now, Top Glove has agreed to refund $12 million in recruitment fees that foreigners had to pay recruiters to get them the jobs at the glove factories. They hope this will get the US authorities to withdraw the Withhold Release Order (WRO) immediately, and have already made the first $1 million tranche of remediation payments in addition to upgrading worker accommodation.

A Nepali worker at Top Glove who paid Rs150,000 to a recruiting agent just to arrange him the job says he had never expected to be reiumbursed.

“It has already been years since I came here, so I did not have any hope of receiving that money back,” said the worker who did not want to be identified. “I have filled out the reimbursement request form and have been told that all workers will receive an equal amount regardless of how much we paid originally.” 

The surging global demand for gloves has driven up Top Glove’s share price by over 400% since the pandemic started. The American sanction had impacted profits because the US is such a large importer of gloves made in Malaysia, and it had unleashed reverberations worldwide. 

For example, soon after the spotlight was put on Top Gloves after the US ban, Foodstuffs, New Zealand’s largest grocery supplier, pulled Top Gloves products off its shelf until the Malaysian company satisfied ethical standards. 

Hartalega, the second largest glove manufacturer in Malaysia, has also committed to reimburse almost $10 million in recruitment fees to its workers. Implementation of these commitments will be closely watched, but there is precedence of workers getting compensated in similar instances. 

In October 2019, the US CBP suspended exports from the Malaysia-based WRP Asia-Pacific, another glove manufacturer that also employs Nepali workers for using forced labour. This sanction was later lifted in March 2020 after the company had cleaned up its act.

One Nepali employee of WRP told this paper then that 544 Nepali workers received compensation of Rs130,000. Many Nepali workers paid between Rs80,000 to Rs150,000 to recruitment agents for those jobs -- equivalent to between 4 and 7 months of salary.

“We are working 11 hours a day, six days a week through the pandemic,” said the worker. “Initially we were nervous, but precautions are being taken and they are very strict about outsiders’ access to the plant.”

Recruitment fees that agents charge workers is seen as one of the major challenges in Nepal’s migration governance, blamed for making workers more vulnerable, recruiters more powerful, and reform efforts difficult.

It was high migration costs that made overseas jobs hard to get for the poorest Nepalis. Earlier policies tried to focus on making migration accessible to all by providing workers low-interest loans. More recent policies focus on an employer-pays principle, including the ‘free-visa-free-ticket’ policy announced in 2015. However, that policy faced resistance from recruitment agencies and has been difficult to implement.

Ethical recruiters who have adopted the employer pays model have struggled to mobilise even a single worker. Many workers desperate for overseas jobs are willing to pay the fees, and recruiters end up channeling job offers to those with the greatest willingness to pay. 

An MOU was signed between Nepal and Malaysia and a few other destination countries, that include provisions on employer pay principle, but implementation has been weak. Given this reality, the British aid agency DFID has partnered with private banks to give collateral-free loans to outgoing migrants from Province 2 to free them from loan sharks. 

Top Glove, for instance, had adopted zero-cost recruitment in January 2019, but it took a sanction by the US amidst the pandemic to push them to action. Employers reimbursing costs is good news for Nepali workers at least in Malaysia, where the manufacturing sector alone hires over three quarters of the Nepali migrant workers in that country.

The Malaysia glove maker example shows that actions that cause a dent on employer profits and reputation seem to invoke the right responses and spread caution among others who hire foreign workers.

Similarly, negative international publicity about exploitation of migrant workers in the construction of FIFA World Cup stadiums also forced Qatar to adopt worker-friendly laws and policies, although problems persist.