The Oil Palm

Briefing: Palm Oil and Labour Rights

The Malaysian Palm Oil sector has been subjected to a number of claims by NGOs and governments in relation to labour practices in the palm oil sector.

Labour and the TPPA

Many of these claims around labour practices in Malaysia have emerged from the United States. Over the past few years there has been a push by a number of US-based labour groups and private interests to damage public perceptions of labour and environmental practices of countries participating in the Trans-Pacific Partnership Agreement (TPPA), including Malaysia.

The TPPA is a broad, multilateral trade agreement comprising 12 nations including the United States, Malaysia and Vietnam. The agreement will most likely result in higher levels of exports of products such as vegetable oil-derived products, electronics and garments from these countries to the US.

The TPPA has also promised to exclude countries that don’t meet certain standards on labour and human trafficking set by the US Department of Labor. It is therefore not surprising that there has been a push to heighten negative perceptions of labour practices in Malaysia.

In October 2015 it was announced by TPPA participants that an agreement had been reached. The final treaty will still require congressional approval. It is more than likely that claims against Malaysian industries will increase throughout this process.

Migrant labour and forced labour

Malaysia has a high number of migrant workers, mostly from the Southeast and South Asian regions.  This is not unlike the U.S., which has a high degree of migrant farm workers from Latin America. They are drawn to Malaysia because of relatively better economic opportunities compared to elsewhere in the region. This is similar to why Latino’s migrate to the U.S. Roughly a quarter work in mining, fishing, forestry and agriculture, which includes palm oil.1

Up until 2005, broad allegations of human trafficking or forced labour in Malaysia were generally concerned primarily with sexual exploitation and prostitution among criminal networks, as is the case in many countries in Southeast and East Asia. There have been a number of reports since then of the use of forced labour in Malaysia. These reports have come from: the US State Department2, UNIAP3, International NGOs (Amnesty International4, Verite).5.

Palm oil and labour allegations by the US government

There has been a relatively recent, small and ad hoc collection of NGO campaign materials that have accumulated over the past five years and for the most part appear to be based on desk research.

These NGO reports have subsequently been utilised by the United States Department of Labor (DOL) as part of its assessment of materials or goods that are, in its view, produced using forced labour or child labour. The DOL has made three assessments in relation to labour rights.6 7  Malaysian palm oil features in only one of these, which has the weakest threshold for including a commodity, product or sector.

Malaysian palm oil is included in a ‘list of goods’ that the USDOL “has reason to believe” might be produced with either child labour or forced labour.8  The methodology for the list is considerably weaker than its other assessments and generates results based on media materials and advocacy campaigns.

This should not come as a surprise. The USDOL is highly political and subject to significant influence over it from protectionist unions like the AFL-CIO and SEIU.

An assessment of the bibliography used by the DOL leads to two conclusions:

1. The public claims around child labour and the industry are for the most part anecdotal and cannot be considered systemic.

There are a number of claims that children of (generally Indonesian) migrant workers are supporting their parents in their work on plantations, with their parents’ consent.9 This would appear to be more common among smaller, more remote and independent oil palm estates. However, given the consent involved or implied, no widespread or systematic child labour has been found among studies undertaken by independent researchers or the Malaysian government.10

2. The claims of the systematic use by the industry of forced or indentured labour is also unjustified.  

A significant regulatory change has been the introduction of licensing for outsourcing companies in 2006, and ending the requirement that outsourcing companies attach a migrant to a particular employer in 2007.  In other words, migrant labourers are no longer employed by the company using their labour; they are employees of the outsourcing company that would provide labour to the company. The establishment of this licensing system has led to claims from NGOs of predatory behaviour in this area.

However, these relatively recent changes have meant that all legal responsibility is held by the outsourcing companies. There have been claims by NGOs about predatory behaviour on the part of those responsible – the outsourcing companies. The palm oil industry, as a responsible stakeholder, has been and should continue to work with the government’s inter-ministerial task force  to assess the nature of these claims, and how any problems can be resolved as part of its investigation.11  This includes the implementation of the Malaysian Sustainable Palm Oil standard, which includes adherence to labour laws and minimum wage structures, which were revised in January 2015.

Claims of labour allegations: the 3rd iteration of the anti-palm oil campaign

The global campaign against palm oil has gone through a number of phases over the past two decades. A campaign against palm oil on health grounds was launched in the USA the 1990s and 2000s; then an environmental campaign, spearheaded by producers of competing  oils in Europe. The labour campaign appears to be the third iteration of the anti-palm oil campaign.

The labour campaign has spread in the media12, and through organisations such as the Pulitzer Centre, which had received funding from centre-left organizations to cover labour issues.13 Accenture, an international consultancy also took part – again, receiving funding to do so.14  Finally, Rainforest Action Network undertook coalition building and campaign activity in 2014 and 2015 that called for palm oil companies to adhere to labour standards in palm oil production.

The most comprehensive report was published by Humanity United and Accenture,15 which is critical of labour standards in the palm oil industry but has significant problems with the claims that it makes. In particular –

  • sources are not given in a number of cases. In a series of three claims about the industry’s treatment of workers on plantations, no sources are given;
  • the report at various points conflates Indonesia and Malaysia, specifically in relation to the arrangements between plantation companies and smallholders;
  • some of the source evidence on child labour used is more than 30 years old, meaning that it is significantly out of date not just in terms of quantified data, but also qualified data;
  • some of the numerical estimates cited by advocacy groups appear to greatly overstate published academic estimates in relation to stateless children.

The campaign has also resulted in increased funding to traditionally environmental NGOs to advocate for labour rights in relation to palm oil. Rainforest Action Network, for example, received USD160,000 from the Omidyar Group to undertake labour campaigns in relation to palm oil.16

It is thus being used as an opportunity by other interest groups – the labour and union movements, the environmental movement, competing industries and the compliance industry (they make money from more US regulations) – to further their own political and economic interests, much to the detriment of the palm oil industry.



1Evelyn S Devadason and Chan Wai Meng (2013). A Critical Appraisal of Policies and Laws Regulating Migrant Workers in Malaysia. Journal of Contemporary Asia 44(1).

2For a full list of the annual reports, visit:

3United Nations Inter-Agency Project on Human Trafficking (2011). Recruitment Agencies and the Employment of Cambodian Domestic Workers in Malaysia UNIAP. Cambodia.

4Amnesty International (2010). Trapped: The Exploitation of Migrant Workers in Malaysia. Amnesty International, London.

5Verite (2014). Forced Labor in the Production of Electronic Goods in Malaysia: A Comprehensive Study of Scope and Characteristics. Verite, Amherst.

6United States Department of Labor International Labor Division (2013). Findings on the Worst Forms of Child Labor. US DOL, Washington DC.

7United States Department of Labor International Labor Division (2014).List of Products Produced with Forced or Indentured Child Labor. US DOL, Washington DC.

8United States Department of Labor International Labor Division (2014).List of Goods Produced With Child Labor or Forced Labor. US DOL, Washington DC

9See PBS Newshour (2013). Growing Demand for Palm Oil Drives Malaysia to Employ Child Migrant Workers.

10See Center for Anthropological Research (PUSKA). Assessment on Human Trafficking/Debt-Bondage in Sabah. Depok, Indonesia, University of Indonesia; 2010 and also preliminary reports by the Ministry of Plantations:

11See The inter-ministerial task force, comprised the International Trade and Industry Ministry (Miti), Home Affairs Ministry (MoHA), Human Resources Ministry (MoHR) and Plantation Industries and Commodities Ministry (MPIC) to investigate allegations.

12For example, Sapienza, S. Growing Demand for Palm Oil Drives Malaysia to Employ Child Migrant Workers: Public Broadcasting Service and Pulitzer Center on Crisis Reporting; 2013,


14Accenture (2013). Exploitative Labor Practices in the Global Palm Oil Industry. 2013; available from