Sky-high recruitment fees and debts for migrant workers lurk behind the Taiwanese firms supplying multinational satellite, electronic, and car companies.
You could have unknowingly contributed to forced labor risks several times over the past year. Maybe you accessed this very article through satellite internet provided by Starlink or HughesNet, or with computers made by ASUS subsidiaries. Maybe you enjoyed a bottle of water from Walmart or wore your favorite L’Oreal perfume. Maybe you drive (though hopefully not while reading) a car made by Ford, General Motors, Toyota, Honda, or a Nissan, or other car brands powered by Bosch, Hella, Magna, Visteon or Continental electronics.
“Made in Taiwan” is the common denominator. In Taiwan, workers from Vietnam, Thailand, Indonesia, and the Philippines are vulnerable to forced labor, as many incur exorbitant debts to pay recruiters for jobs at suppliers of some of the world’s biggest companies. Often, investors such as BlackRock, Vanguard, SSGA, and Norway’s State Pension Fund are top shareholders.
We exposed some of these exploitative conditions last year, leading some brands to join hands with Taiwanese suppliers to address debt bondage risks, while others didn’t. Some stopped sourcing from certain suppliers. We later reported on new developments, including over $2.5 million in compensation to workers (now around $3 million) and a further $1 million in fee exemptions.
Unfortunately, more forced labor risks have come to light in Taiwan’s electronics and car industries. And as workers express no hope for assistance by local authorities – how could they, when excessive fees to foreign recruiters, mandatory service fees to Taiwanese labor brokers, and even passport withholding are not illegal in Taiwan? – they must rely on multinational buyers’ social responsibility, again.
Satellite Internet: Starlink by SpaceX, HughesNet by Echostar
Space Exploration Technologies Corporation, commonly known as SpaceX, is an American spacecraft and satellite manufacturer, one of NASA’s biggest contractors, and a recent awardee of a $70 million contract by the Pentagon for satellite end-to-end services. On a clear evening sky, you might notice some of its over 5,000 Starlink satellites launched into orbit since 2019 to provide satellite-based internet globally, and especially to rural and underserved areas.
To receive internet signals from space, the currently 2 million Starlink subscribers need a satellite dish facing the sky. The dish is mounted on the roof or ground on a metal base. Over the past two years, hundreds of thousands of kilograms of X-shaped mounts have arrived at California ports after crossing the Pacific in dozens of container vessels departing from one of SpaceX’s biggest foreign suppliers, the Taiwan-based Lioho Machine Works, according to trade data from the supply chain research unit at S&P Global Market Intelligence, Panjiva.
Lioho Machine Works (LMW) is a major manufacturer of metal parts and employs hundreds of migrant workers from Vietnam, the Philippines, and Indonesia in its Taiwanese factories. We spoke with more than 10 workers.
“Back home, I paid recruiters for this job with borrowed money. I am still paying off my debt,” one migrant employee of LMW told us. “On top of that, labor brokers here in Taiwan charge me monthly fees. Everybody pays.”
Other interviewees concurred. Everybody recruited from abroad paid recruiters for jobs, they said. Vietnamese workers were charged over $5,000 – equal to 2.5 years of Vietnam’s minimum wage – while Filipino and Indonesian workers paid from $1,300 to $4,500. It’s been like that for years.
Migrant workers also spoke about intimidating fines and punitive management. Workers’ IDs are confiscated if they violate the nightly dorm curfew or break other rules. “We have to pay 500 NTD ($15) to get it back,” another interviewee said. Workers are also fined if they make mistakes at the production line.
“If we make mistakes of any kind, they call our labor broker and summon us to the office to account for our mistake in front of managers and the broker,” said a migrant worker.
Debt bondage, retention of identity documents, intimidation and threats, and abuse of vulnerability are indicators of forced labor according to the International Labor Organization (ILO).
A SpaceX competitor, HughesNet, also sources from a Taiwanese employer of debt-burdened migrants. HughesNet is the world’s largest provider of satellite internet and part of Echostar, according to its website. It has been around for decades in the satellite internet space.
The hundreds of workers at HughesNet’s supplier, the Taiwanese manufacturer U. D. Electronic Corp, include 25-30 Vietnamese migrants. Workers said they paid over $6,000 to Vietnamese recruiters for their jobs, besides the never-ending monthly fees to Taiwanese labor brokers. All had to borrow. Some family members mortgaged property to get bank loans. The company also withholds migrant workers’ passports.
U. D. Electronic Corp recently fired 10 of its Vietnamese workers, mid-contract; some hadn’t paid off their debts yet.
“I almost just arrived, and now they fired us. I haven’t even repaid my debt. It is inconsistent with reality to hire us on three-year contracts and fire us shortly after,” said a former worker.
SpaceX and Echostar did not reply to requests for comment. On the SpaceX and Starlink websites, we found no easily accessible human rights due diligence policies or supplier codes of conduct, contrary to what is available on most multi-billion-dollar company websites.
Other customers of U. D. Electronic Corp include the American electronics giant Flex and the two Taiwanese multinationals, Wistron and Pegatron. None of them tolerate forced labor in supply chains, and as regular members of the Responsible Business Alliance (RBA), all three are required to eradicate recruitment fees at suppliers. Flex name-drops the RBA 46 times in its recent sustainability report, but told The Diplomat that it currently had no comments. Pegatron said that it has “been requesting our suppliers to strictly comply with the Code of Conduct and the latest RBA regulations.” Wistron did not reply to a request for comment.
Fortunately for workers, other multinational buyer replies held more promise, and the RBA is now aware of the two supplier cases.
Car Parts: Ford, General Motors, Toyota, Mitsubishi, Honda, Nissan
Although Taiwan’s biggest industry is electronics, its automotive industry is also significant and accounts for 3 percent of Taiwan’s GDP with its around 3,000 car-related companies. Most of the car parts and components constructed in Taiwan are exported.
LMW, mentioned above, has been an integrated part of the car industry for decades, and its migrant employees currently make car parts for Ford, Toyota, Mitsubishi, Honda, and Nissan vehicles. LMW is also a direct supplier of General Motors (GM).
Ford and GM promised action when informed about LMW’s labor practices. The two companies are publicly committed to no-fee recruitment and worker reimbursements and are members of the RBA. Ford said that it “is investigating this matter and have also requested an independent review by a third party.”
A GM spokesperson said: “Upon learning of these allegations, we immediately contacted the supplier, and we intend to work with them until a resolution is achieved and to require independent verification and transparency. In addition to our engagement with the supplier, we have taken proactive steps to highlight these risks with other Taiwanese suppliers. We have also requested our suppliers complete the training provided by the Responsible Business Alliance (RBA), specifically focused on recruitment fees.”
Toyota, Honda, Mitsubishi, and Nissan are some of Japan’s biggest firms. Japan is the only Asian country that has released (voluntary, non-binding) Guidelines on Respecting Human Rights in Responsible Supply Chains for its companies. However, none of the car firms committed to address the forced labor risks, except Honda, which promised to investigate further with its supplier. Toyota justified its inaction by explaining that LMW does not make car parts for the Toyota Motor Corporation directly, but for its Taiwanese affiliate, Kuozui Motors. Toyota is majority owner of Kuozui Motors with 65 percent of shares.
Other Taiwanese car companies – Ford Lioho Motor, Honda Taiwan, Yulon Nissan Motor – are wholly or partially owned by foreign car brands such as Ford, Honda, and Nissan, respectively. Others are separate business partners, such as Sanyang Motor, which makes Hyundai vehicles and also sources from LMW.
Do these Taiwanese car makers practice no-fee recruitment at their own factories, if not at suppliers? Kuozui, the Toyota maker, confirmed recruiting foreigners but said that “we will refrain from providing detailed responses regarding recruitment fees at this time.” Sanyang, the Hyundai maker, employs almost 300 migrants according to its website, but did not reply about its internal recruitment practices. Yulon Nissan also skipped this question. Ford Lioho employs no migrants.
Computers and Car Electronics: ASUS, Verizon, Bosch, Continental, Hella, Magna
Another case of debt bondage risks, and other issues, recently came to light just not far from the LMW and UDE factories. Here, 300 migrant workers make computers and other electronics for worldwide export by the ASUS subsidiary Askey.
ASUS is the world’s fifth biggest personal computer vendor and has held top membership levels at the RBA for a decade, which requires adopting the RBA’s code of conduct and no-fee recruitment standard. But migrant workers claimed to have paid high fees to recruiters for jobs financed by loans with exorbitant interest rates. Several Filipinos said they paid $1,400 to recruiters and repaid lenders $2,100.
For years, ASUS’ sustainability reports have addressed forced labor risks in its supply chains, though not within its corporate group. According to its latest report, ASUS has up to 100 suppliers in Taiwan, but the report does not address migrant workers, recruitment fees, and debt bondage risks there.
“To address any possible issues, on September 22 our parent company ASUS met with RBA to discuss the next steps. ASUS has agreed to engage an independent RBA-accredited third party to conduct an audit of Askey in the coming months, and ASUS will urge Askey to make any necessary improvements to meet RBA standards,” said a spokesperson of Askey, ASUS’ wholly-owned subsidiary.
The general secretary of the two migrant worker unions, ASUS Group Labor Union and Askey Labor Union, Lennon Wong, addressed the lack of proper inclusion of worker representatives in such company-led audits: “These private audits do not involve unions or other civil society groups at all. We hear of lots of audit cheating. What is needed is a kind of public audit, where all relevant stakeholders are participants, including local unions and other civil society groups.”
Verizon and Nokia, direct customers of Askey, did not comment.
Nearby, still in the industrial city of Taoyuan, another electronics maker has made progress addressing debt bondage risks. Chin Poon Industrial (CPI) is one of the world’s biggest manufacturers of motherboards for the global car industry and for thousands and thousands of consumers worldwide, as it directly supplies Bosch, Continental, Hella, Magna, Visteon – and SpaceX, too – and indirectly GM. Several are members of the RBA.
The Diplomat reported earlier this year that CPI failed to properly remedy workers, as Vietnamese interviewees were reimbursed between 20 and 60 percent of their recruitment costs, which is far below the RBA’s standards. RBA audits were conducted at the factory, but CPI and its corporate customers – as well as the auditor TÜV Rheinland – rejected disclosing what workers had told the auditors they paid for jobs. The Diplomat recently learned that workers in 2023 were approached by other external consultancies – on behalf of corporate clients – and said that they had paid up to or beyond $6,500 to Vietnamese recruiters for jobs, equal to three to four years of wages at home, and that some paid multiple times. Vietnamese workers were reimbursed a flat rate of $2,100, said CPI and workers.
Why aren’t workers reimbursed properly, even when multinational buyers commit to doing so? Bosch and Opel, a customer of Bosch, said that migrant workers were reimbursed in full, contrary to what CPI itself – and every interviewee – told The Diplomat.
Opel stressed that “the CEO of CPI confirmed that all recruitment fees were reimbursed.” Bosch said that “the employer confirms to bear all recruitment fees of migrant workers.” Several Vietnamese employees said that “it is a lie,” when asked to comment on the German companies’ claims. Bosch and Opel rejected an opportunity to elaborate on their claims.
Hella said that “recruitment fees for which there is written evidence … were reimbursed,” contrasting with the fact that many workers have signed multiple contracts and were charged for each one, but received what workers with just one contract received.
In response to The Diplomat’s earlier reporting, CPI questioned why we “only focused on Vietnamese migrant workers. The share of migrant workers [who] came from Vietnam only accounts for about 20% of our migrant workers, and migrant workers from Thailand and the Philippines in CPI are not mentioned in your report at all.”
To clarify: None of the Thai workers we have spoken to were reimbursed in full either, as they paid between $1,800 and $4,100 but were reimbursed at a flat rate of $1,250. CPI said that it employed 577 Thai, 267 Vietnamese, and 49 Filipino workers when we revealed conditions last year.
Next, we turn to legal developments by Taiwan’s and Western governments.
Taiwan’s Government on Debt Bondage
Does “Made in Taiwan” equal “Made by forced labor”? Of course not, but forced labor has flourished at migrant workplaces in Taiwan for decades, and more and more cases are coming to light. Exploitative practices remain largely unaddressed by the authorities, as many of the ingredients potentially accumulating to forced labor – fees charged by foreign recruiters, service fees charged by Taiwanese brokers, exorbitant interest rates, passport withholding, work visas bound to specific employers, restrictions on changing workplaces, and all the inherent vulnerabilities to further abuse – are not illegal in Taiwan.
Civil society groups have called for legal reforms for years, addressing the lack of freedom to change employers, the never-ending fees to Taiwanese labor brokers, and the need for an ethical recruitment framework, but these calls have largely fallen on deaf ears. Scholars have “translated” or analyzed ILO’s forced labor indicators in a Taiwanese context.
Taiwan is one of the remaining places in the world that legally allows labor brokers to charge migrant workers fees for services that elsewhere are borne by employers as human resource costs. These migrant-born worker costs correspond to two months of pay per three-year contract and amount to $484 million per year. Add to this what workers annually pay home-country recruiters for jobs abroad in the first place, which in Vietnam alone totals $880 million or 420,000 years of the country’s minimum wage.
Taiwan’s government has recently adopted a national action plan to address forced labor at sea and implement the ILO’s “Work in Fishing Convention.” This development came about after a decade of campaigning by Greenpeace and others on migrant exploitation at distant-water fishing vessels, including a few import bans by U. S. authorities, and has yet to be implemented.
Is the government planning to similarly address forced labor on land? While the sea-focused action plan falls under the Ministry of Agriculture’s Fisheries Agency, most migrant workplaces on land falls under the Ministry of Labor, which did not reply our requests for comment.
The United States and Taiwan signed a trade agreement in June 2023. As part of the deal, both parties committed “to eliminate the charging of recruitment fees and related costs to migrant workers.”
A few months earlier, as part of an investigation into auto supply chain links to forced labor in the Xinjiang region of China, the U.S. Senate Finance Committee Chair Ron Wyden sent letters to Bosch, Continental, Denso, Ford, General Motors, Honda, Magna, Mercedes-Benz, Stellantis (owner of Opel), Tesla, Toyota, and Volkswagen requesting information on how they oversee supply chains. It is unclear if the committee is also attentive to forced labor in auto supply chains originating from other parts of the world, such as Taiwan.
New legislation in countries such as the United States and Germany might sensitize multinational companies to debt bondage risks in Taiwan, as companies are increasingly, albeit slowly, held legally to account. Due to their American exports, the three Taiwanese companies ASUS/Askey, Lioho Machine Works, and U. D. Electronics could have products banned from entering the United States because of the Tariff Act’s focus on forced labor concerns. Germany’s new Supply Chain Act makes it possible to address workplace conditions at Lioho Machine Works because of Ford’s significant presence in Germany and its purchases from the Taiwanese manufacturer.
Until such laws are properly implemented, migrants’ best option may be that progressive multinationals will voluntarily remedy workers according to their policy commitments.
〔Written by Peter Bengtsen 〕2023-10-31
〔photo from Unsplash,NASA〕