IKEA in Malaysia cuts ties with security services supplier over labor policy breach

IKEA stores in Malaysia have cut ties with the company’s labor provider. This happens after an internal investigation found, that there had been a breach of the Swedish company’s policies.

According to the retailer’s investigations, many security guards in IKEA’s Malaysian stores had paid fees to secure their jobs.

IKEA’s investigation was launched after an activist reported that workers had paid fees up to $1,000 to obtain jobs as security guards in Malaysia.

The examination was led by Inter Ikea, which oversees the brand’s franchise stores, and Ikano Retail, which runs IKEA stores in Malaysia, Singapore, Thailand, the Philippines and Mexico.

Ikano has stated, that the inquiry confirmed, that many of the security guards working in IKEA stores in Malaysia has paid recruitment fees, which is against the company’s code of conduct. The group said the investigation revealed multiple layers of subagents involved in the process.

A widespread problem

Brokers and recruiters charging fees from workers looking for jobs is a widespread problem in many developing countries. Workers often take out loans to cover the cost. For multinational brands that rely on local agents, such problems in the supply chain are often a blind spot. Ikea is just the latest brand to be caught up in a controversy over recruitment fees.

The findings come as leading western brands face growing scrutiny over labor issues in their international operations. UN’s International Labor Organizations guidelines state, that workers should not be charged any fees or related costs for their recruitment.

“After many weeks of negotiation with our supplier, we were unable to resolve our concerns. We have therefore subsequently terminated our relationship,” Ikano has commented on the case.

Ikano says the incident has been reported to local authorities and the Nepalese embassy. The company adds, that they have secured a new supplier that will recruit workers directly rather than using subcontractors.

Source: Financial Times

About Miabell Mallikka

Miabell Mallikka is a journalist working with ScandAsia at the headquarters in Bangkok.

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