Despite growing regulation and corporate commitments, forced labour continues to surface across global supply chains, and is often discovered only after harm has occurred.
If forced labour is a foreseeable outcome of how supply chains are designed, why does it continue to be framed as an isolated compliance failure?
Current forced labour assessments focus on identifying exploitation after harm has occurred, rather than addressing the structural conditions that enable it in the first place.
This blog draws on the second case study in The Remedy Project’s forced labour research series[1], which examines how forced labour risks are generated within Malaysia’s electronics sector. The study applies a prevention-oriented assessment framework that shifts the focus from detecting violations to identifying structural risk drivers early. Rather than concentrating solely on established indicators of coercion, the framework analyses how business practices (such as procurement pressures and production volatility), socio-economic conditions (such as recruitment debt and employer-dependent immigration status), decent work deficits (such as wages below living wage and excessive overtime), and governance gaps (such as weak labour inspection and limited access to remedy) interact to shape worker vulnerability. When assessed together, these structural indicators offer earlier and more reliable warning signals of forced labour risk than traditional indicator-based assessments alone.
Building on the white paper Are we fighting forced labour or just managing it?[2] the case study demonstrates the framework’s real-world relevance by applying it to a globally significant manufacturing hub where forced labour risk is persistent, well documented, and frequently missed by standard audit methodologies.
This analysis is particularly timely as regulatory expectations shift under instruments such as the EU Corporate Sustainability Due Diligence Directive, the EU Forced Labour Regulation, and provisions in the recent US-Malaysia Trade Agreement, all of which signal heightened expectations around risk-led due diligence, prevention, and accountability across value chains. Taken together, these instruments require companies to identify and address human rights risks across their operations and supply chains, demonstrate preventive action, and remove goods linked to forced labour from the market.
Beyond diagnosis, the case study advances the conversation by examining what businesses must change in practice if they are serious about reducing forced labour risk.
Spotlight: Malaysia’s electronics sector
Malaysia’s electronics sector is characterised by complex multi-tiered production structures, fast turnaround times, and intense price competition. Production relies heavily on migrant workers, many of whom arrive through debt-financed recruitment pathways and are tied to employers through work permit systems that restrict job mobility, creating economic and legal dependency from the outset.
In this context, business models, decent work deficits, and governance gaps intersect with migrant worker vulnerabilities to create conditions where coercive practices can emerge and persist. For example, when suppliers face compressed timelines under just-in-time production systems[3] and price suppression from buyers, they may rely on excessive overtime to meet targets. Where base wages are insufficient to meet living costs, workers depend on overtime to repay recruitment debts. Combined with weak enforcement and limited safe reporting channels, this creates a context in which overtime becomes economically coercive in practice.
The case study takes a mixed-methods qualitative approach, combining desk research and field-based interviews across major manufacturing hubs. The research draws on 37 informants, including migrant production-line workers, supervisors, managers, suppliers and worker representatives, to understand how structural risks operate in day-to-day operations.
Interviewees consistently described how audits fail to capture risks rooted in production pressures. Supervisors reported having little authority to refuse production demands driven by fluctuating orders, while workers described coercive overtime practices linked to insufficient base wages and penalties for refusal. Several interviewees highlighted fear of retaliation, including loss of overtime, punitive reassignment, wage deductions, or threats of deportation, as a barrier to raising grievances.
Key findings: Early warning indicators of forced labour risk
The case study demonstrates that forced labour risk is most accurately predicted when the below structural indicators are analysed together, and particularly where these factors intersect and reinforce one another. The research reveals that forced labour risk does not typically arise from a single point of failure, but it emerges from the cumulative effect of commercial pressures, labour vulnerability and weak accountability systems.
This matters for businesses because focusing on isolated indicators can obscure systemic risk. When structural drivers are visible early, companies can intervene before coercion becomes entrenched, reducing legal, operational and reputational exposure.
The following suggestions for improved indicators function as structural predictors of elevated forced labour risk:
- Business model indicators
Just-in-time models, compressed timelines, price suppression, and volatile order volumes create cascading operational pressures. In practice, these dynamics can result in last-minute production surges, excessive overtime, wage deductions, and increased reliance on temporary or outsourced labour. Without stabilising mechanisms, commercial volatility is frequently absorbed at the worker level.
- Socio-economic indicators
Debt-financed migration, employer-tied visas, document retention, limited social protections, and linguistic or cultural isolation create structural power imbalances. Workers with outstanding recruitment debt and restricted job mobility face heightened vulnerability, particularly where termination may trigger repatriation or loss of income needed to repay debts.
- Decent work indicators
Base wages below living wage compel workers to depend on overtime to meet basic needs. Weak worker voice, exclusion from union membership, and absence of effective grievance mechanisms reduce the likelihood that concerns are raised early. Where workers cannot refuse overtime without penalty or retaliation, the line between voluntary and forced labour becomes blurred.
- Governance and enforcement gaps
Weak labour inspection systems, fragmented oversight of recruitment intermediaries, and barriers to justice, particularly for migrant workers, reduce accountability. Where enforcement is inconsistent or penalties are minimal, coercive dynamics can persist with limited consequences.
What prevention requires in practice
Drawing on empirical findings, the case study outlines practical measures businesses can adopt to move from reactive detection towards operational prevention:
- Overhaul risk monitoring
Embed structural indicators, including recruitment systems, purchasing practices, wage sufficiency, and production volatility, into due diligence processes. This means going beyond audit checklists to analyse overtime patterns, turnover rates, recruitment fee pathways, and order fluctuation data. Integrating commercial and labour data can reveal risk before harm becomes entrenched.
- Align purchasing practices with decent work
Recalibrate purchasing and sourcing practices to reflect the true cost of labour. This includes integrating labour-cost benchmarks into pricing decisions, improving forecasting accuracy, and stabilising order volumes to reduce last-minute production surges. When purchasing teams internalise labour cost implications, pressure is less likely to cascade onto workers.
- Strengthen ethical recruitment systems
Move towards direct recruitment models where feasible, maintain approved recruiter lists, monitor recruitment corridors[4], and co-finance or reimburse recruitment fees. Pre-departure briefings reduce information asymmetry and dependency. Ethical recruitment reduces vulnerability at the point of entry into employment.
- Make remediation possible
Adopt shared remediation funds (e.g. between multiple brands sourcing from the same supplier) or cost-sharing mechanisms that support holistic worker-centred remedies, including recruitment fee repayment, wage restitution, and safe job transfer where necessary. Timely remediation and post-remedy monitoring are critical to ensure that workers do not remain trapped in exploitative conditions during recovery.
- Build worker voice as continuous risk monitoring
Partner with trusted local civil society organisations, strengthen grievance mechanisms, protect against retaliation, and promote freedom of association. Worker voice should function not as a crisis response tool but as an ongoing risk intelligence system that provides early warning signals.
Conclusion
Forced labour in electronics supply chains is not an anomaly or the result of isolated supplier misconduct. It is a predictable outcome of how business models, recruitment systems, decent work deficits, and governance gaps interact. Prevention requires identifying early warning signals of risk by assessing the intersecting structural conditions that allow forced labour to take hold and persist.
Preventing forced labour requires a shift from reactive compliance to systemic prevention; and shared responsibility among brands, suppliers, workers, and regulators.
Call to action:
Companies and industry actors: shift from reactive management to proactive prevention of forced labour, reform risk identification to expose root causes, and recalibrate business practices that exacerbate exploitative conditions.
Policymakers and regulators: implementation guidelines provide an opportunity to institutionalise the shift away from checklist-style compliance towards meaningful, structural prevention. By encouraging businesses to examine the structural conditions in which risk arises and the role their own practices play, regulators can help embed shared responsibility across supply chains and reshape how businesses understand and address forced labour risk.
Civil society, worker representatives and trade unions: continue to document and raise concerns, facilitate worker voice and provide a platform for worker participation in dialogue with business and regulators.
What’s next: The Remedy Project will continue to test and refine this prevention-based framework across different sectors and regions. Readers are encouraged to explore the white paper and both case studies, available on The Remedy Project website and engage with the growing discourse on systemic prevention. To stay updated as new case studies and related research are released, follow The Remedy Project on LinkedIn.
Footnotes:
[1] The Remedy Project, Breaking the Circuit: Why Malaysia’s Electronics Sector Shows the Limits of Forced Labour Compliance, December 2025, available at: https://www.evidensia.eco/resources/breaking-the-circuit-why-malaysias-electronics-supply-chains-must-shift-from-reactive-compliance-to-proactive-prevention/
[2] See Evidensia, Are We Fighting Forced Labour or Just Managing It?, September 2025, available at: https://www.evidensia.eco/resources/are-we-fighting-forced-labour-or-just-managing-it-white-paper/; Case Study 1: The bitter price of sweetness: why traditional approaches fail to address forced labour in India’s sugarcane fields, June 2025, available at: https://www.evidensia.eco/resources/the-bitter-price-of-sweetness-why-traditional-approaches-fail-to-address-forced-labour-in-indias-sugarcane-fields/
[3] Just-in-time models refer to production systems designed to minimise inventory and storage costs by requiring suppliers to deliver goods exactly when they are needed, transferring tight timelines onto suppliers.
[4] Recruitment corridors refer to specific migration routes through which migrant workers are recruited for jobs abroad.
Curious about what the evidence says on the forced labour of different supply chain sustainability initiatives?
Explore the Evidensia Library to find credible studies, or use the Geographic Map to see where credible studies have been conducted and identify regional hotspots, the Knowledge Matrix to gain an overview of research across sectors, issues, outcomes, and approaches and spot evidence gaps, and the Visual Summaries to explore the findings of systematic reviews, where individual results from impact evaluation studies are plotted to show clearly what the evidence says on specific research questions.
