One-third of migrant workers in the Malaysian electronics industry, which produces goods for some of the world’s best-known brands, are trapped in forced labour, a form of modern-day slavery, according to new research.

A report by Verité, an NGO working on supply chain accountability, found that forced labour is present in the supply chains of a wide cross-section of household electronics brands, which use Malaysian factories to produce billions of pounds worth of goods every year.

The NGO interviewed more than 500 workers and concluded that debt bondage and the illegal confiscation of passports and documents were the main drivers of this “systemic” forced labour, which traps workers in low-paid jobs and prevents them from returning home.

Once in the workplace, migrant workers face further exploitation and abuse due to their inability to leave. Verité’s investigations found that workers were forced to live in cramped and dangerous accommodation, that female workers experienced sexual abuse by their supervisors, and migrants were forced to work excessive overtime under the threat of losing their jobs, which would leave them saddled with large debts they couldn’t pay off.

A large number of multinational companies from the US, Europe, Japan, Taiwan and South Korea use Malaysia as their manufacturing base. In 2013, more than $2.6bn (£1.6bn) of investment originated from overseas.

“What was most shocking to us was that this was happening in modern facilities, some of which were owned and operated by major international brands,” said Dan Viederman, chief executive of Verité. “This work has led us to conclude that forced labour in this industry is systemic and that every company operating in this sector in Malaysia faces a high risk of forced labour in their operations.”

Thousands of people from Bangladesh, India, Indonesia, Nepal, Vietnam and other countries travel to Malaysia every year for work. According to a 2010 Amnesty International report, many enter the workplace at least $1,000 in debt, after being charged high fees by recruitment agents. The vast majority of workers interviewed by Verité were found to have been charged excessive fees by recruitment agencies, both in their home countries and in Malaysia.

Verité’s investigation revealed that 77% of migrant workers had to borrow money for recruitment fees. Some 95% of those interviewed said they didn’t feel they could leave their jobs until they had paid off their debts. Their situation was made worse after a 2013 change in Malaysian law made it possible for employers to pass on the cost of a per-capita levy the government charges on the use of foreign labour to the workers themselves, increasing their debt by almost $400.

The interviews revealed that although it is illegal under Malaysian law, more than 90% of workers had their passports taken by managers at their place of work or by recruitment agents, with most saying they were unable to get them back.

This year the US state department downgraded Malaysia to the lowest tier of its Trafficking in Persons report, which ranks countries on efforts to end modern-day slavery.

In the report, the state department criticised Malaysia for widespread abuse of its 4 million migrant workforce. Most of the electronics workers interviewed by Verité said they had been detained, harassed, blackmailed or threatened by immigration officials, police or the much-feared Rela, Malaysia’s voluntary citizen security corps, which is charged with rooting out illegal migrants.

Verité refuses to name brands it found to be using forced labour to produce goods, because it fears that would be counterproductive to its mission to create greater accountability in supply chains.

“We didn’t go into this research looking to name and shame,” Viederman said. “What we are concerned about is that the use of forced labour is absolutely systemic and that any company that produces or sources electronics from Malaysia must work to ensure that they are proactively taking actions to eliminate that risk.”