The Truth About the Migrant Worker Recruitment Process

Authors

• Guy Morgan

  Former Director, Advisory Services, BSR

Last week, Laura Ediger and I were in Semarang, Central Java, Indonesia, to study the recruitment process of semi-skilled workers who migrate to Malaysia each year to work in the ICT and apparel sectors. As part of our Migration Linkages initiative which seeks to uphold the rights of migrant workers in global supply chains, we are looking at countries of origin to understand the process by which workers find jobs, sign contracts, and leave their villages on extended work visas abroad.

During this trip we interviewed government officials, recruitment agents, teenage vocational students weighing their options, a village head, and a returned migrant worker. We came away with a fascinating picture of the recruitment system—both how it should work in theory and how it works in practice.

In theory the system is robust. A set number of recruitment agencies are officially licensed by the government, and they use a formal system with processes and controls to recruit young adults from various vocational schools based on job orders placed by large suppliers in destination countries like Malaysia.

In practice, there is significant variability in the process which can contribute to less-than-ideal outcomes for workers:

• Fees: There are no standards for how much workers are charged for or how they can repay recruitment fees—which include pre-departure medical exams, a passport processing fee, repatriation insurance, travel costs, and other “administrative” costs. In some instances, a fee is deducted from the worker’s paycheck for the first six months of work at a variable rate of interest (we heard as little as 7 percent and as much as 50 percent). In some cases the repayment period is longer, and in some cases the final employer actually pays the fees themselves. This variability has a significant impact on a worker’s take-home pay.
• Contracts:  Not all workers sign contracts with their end employer. Sometimes the contract is with the hiring recruitment agency or a middleman. Often there is no transparency around contract terms and clauses, which can lead to contract substitution, pay discrepancies, and fraud.
• Grievance mechanisms:  If a problem arises in the destination country (for example, a pay dispute), the manner in which a grievance is raised and managed varies considerably. Sometimes the worker raises the issue with their employer, who can resolve it, inform the agency, or choose to ignore it. In other cases, the Indonesian embassies follow up with the recruiting agency or employer directly. The mechanisms available to workers to raise concerns and address issues appear to be opaque and somewhat ad hoc.

When we shared our findings with some of the stakeholders in the recruitment system, there was consensus that variability exists but also a recognition that some of the issues are a “necessary evil” and a normal part of going abroad for work. For employers, reducing the variability in the recruitment system and using clear standards can help to minimize opacity and fraud and provide support for workers’ rights.