Five lessons come to mind reflecting on the challenges of how labour abuse and exploitation, forced labour, modern slavery and human trafficking manifest in our world today - especially in global supply chains. This is also a moment to reflect on what can be done about them, writes our guest blogger Cindy Berman.
1. Sanctions can be effective
Sanctions by governmentin relation to companies can be powerful. For example, there was the recent trade enforcement action by the United States Customs and Border Protection Department (CBP) against a manufacturer of rubber gloves in Malaysia, a company making garments in China using state-sponsored forced labour, companies mining gold and diamonds in the Democratic Republic of Congo and Zimbabwe and a manufacturer of bone black in Brazil. Investigations carried out found that these products were made with the use of forced labour, and as such, are now prohibited from entering into the USA.
These actions by the US government mark an important shift from the words and agreements signed in law and policy to real action with tangible trade and commercial implications for companies and governments that exploit and abuse workers. This is a rare and important case of government acting against companies and holding them accountable when workers’ fundamental rights are violated. It goes much further than the transparency and reporting requirements in the UK and Australian Modern Slavery Acts, the EU non-financial reporting requirements, and some of the other international measures and commitments that still exist in policy rather than practice.
But legislation and sanctions applied as blunt instruments can be extremely harmful for workers if unintended consequences are not carefully considered. Companies that withdraw orders and cut off their suppliers can lead to workers losing their jobs. The most vulnerable workers, often with the lowest level of skill, on precarious contracts and informal immigration status, will seek jobs where they are likely to be even more abused and exploited. They will do so because they are desperate and lack other alternatives.
The governments that take action on companies need to get their own house in order. Where modern slavery exists, companies are operating in places where the government itself fails to enforce its own labour laws, fails to monitor the employment practices of companies, and relies on exporting to using cheap exploitable labour to generate its economic growth and attract investment.
Governments fail to use their leverage to drive their own private sector suppliers to manage the risks of modern slavery in their own supply chains. Governments procure goods and services worth billions of pounds each year, often from small, medium and unknown companies without public reputations to protect. Practices such as ‘reverse auctions’ (the bidding down of price on government contracts in the name of value for money for the taxpayer) are a guaranteed way of driving modern slavery practices. They must be stopped immediately. Governments and taxpayers will need to recognise that labour costs and social values must be paid for. Procurement practices must change.
Laws and regulations, if not applied, enforced and monitored carefully can lead to tick-box approaches. These suck up limited resources that focus on the wrong things. Knee-jerk responses to the most visible and ‘noisy’ problems identified in the media reports are not the solution. Well-known brands or companies that are subject to sanctions are rarely unique in their poor labour practices. More often than not this reflect the conditions in a country and industry. These include failures in governance to protect labour rights, as well as poverty, unemployment, discrimination and deregulated labour markets. It would a mistake to single out these companies as the ‘bad guys’ without recognising that the entire sector or industry needs to be cleaned up.
2. Transparency is a key driver for corporate action
Transparency in supply chain legislation in the UK, Australia, California and other jurisdictions has definitely made a difference. It places a legal requirement for each company to produce a Modern Slavery Statement that sets out what they are doing to deal with cases of modern slavery in their supply chains. Those companies can be held publicly accountable for the commitments they make. That has meant senior directors, legal counsel and other key parts of the business have had to get involved, and not only those charged with managing a CSR or ethical portfolio. It has also galvanised action by civil society organisations, investors, public procurement bodies and others to scrutinise the statements of companies and judge them on what they say publicly.
Human Rights Due Diligence requirementsof companies are gaining traction. The UN Guiding Principles on Business and Human Rights have been accepted on paper. They come into their own when governments use their Protect responsibilities to require companies to demonstrate their Respect responsibilities by showing what they know, and acting on what they find. The French Duty of Vigilance law is the clearest example, but there is growing momentum on this in Germany, Switzerland and other countries. We can expect a lot more in the coming years as the momentum to develop an internationally binding Treaty on Human Rights Due Diligence grows amongst some UN member States and companies, driven by civil society and trade union policy advocacy.
But there is a risk of generating responses that waste precious time and limited resources. Companies, rather than fixing the problem, are under pressure to show short-term visible actions. That’s where audits come in.
Despite all the evidence and some gradual recognition by companies that audits are flawed and are not the solution to addressing labour exploitation and abuse, companies continue to rely on them as the primary way to vet and monitor their suppliers. They seem to help companies feel that they know what’s going on and also cover their backs. The truth is, they do neither: most modern slavery practices are likely found in the less visible, informal parts of the supply chain, so won’t be picked up by audits. They also don’t help companies cover their backs. Cases continue to emerge, even where workplaces are audited. Audits don’t fix the problems they identify.
Because companies are under pressure from investors and their own customers, they continue to pile on the pressure with their suppliers. They threaten to go elsewhere if their suppliers can’t jump through the obstacle courses they set. The result is a disingenuous scenario where the maths simply doesn’t stack up. Companies will often move their orders elsewhere to other suppliers in other jurisdictions that aren’t devoid of the same conditions; they simply haven’t been exposed – yet.
Some suppliers have to deal with a different set of auditors almost every day of the week. But others (often in the same industry) get off scot-free because they are not a well-known brand name, haven’t been in the news and as such have not been flagged as high risk.
Media stories, NGO reports and sanctions rarely highlight the complex and contradictory factors that employers have to juggle. Manufacturers and producers that supply goods and services to named companies have to cope simultaneously with the squeeze on prices, higher demands for speed, volume, quality and choice. They also face a growing set of expectations for meeting ethical and sustainability standards to manage modern slavery and environmental risks.
3. Some company initiatives to tackle modern slavery are effective
Tackling Recruitment Fees for Migrant Workers
Many of the companies that have become aware of the risks of modern slavery among migrant workers in their supply chains have focused on recruitment fees. They see these as the clearest and strongest indicator of forced labour. They have adopted the Employer Pays Principle and have engaged with their suppliers to ensure that migrant workers are not paying exorbitant fees to secure their jobs. Importantly, some workers have had their recruitment fees repaid through a remediation process, which frees them from their crippling debt burdens.
Helplines and 'worker voice' initiatives
Some companies have set up helplines and ‘worker voice’ initiatives. They have developed apps and tools to tell workers about their rights. Some have focused on workers pre-departure - to help them become more informed about the risks as well as sources of support when they arrive in host countries. Migrant workers themselves have sought the support of migrant worker organisations for advice and support. Some have reached out to their embassies to help them out of abusive situations. There have been a handful of cases taken to court. But conviction rates are extremely low. Penalties are rarely imposed on companies, with an even lower likelihood of workers receiving any compensation for lost earnings or harm caused by companies committing modern slavery, forced labour or human trafficking offences.
Tech solutions are emerging - some with promise, and some with risks
Automation and Artificial Intelligence are emerging to replace jobs with machines. That is likely to generate problems and opportunities for workers. On the one hand, there will be fewer back-breaking, mind-numbing low skilled manual labour jobs. But on the other, there is the potential for better jobs with skills and opportunities. Increased transparency for provenance of products using blockchain and other tools that can help with visibility in the supply chain, but doesn’t necessarily help deal with the bigger factors highlighted earlier of business models, commercial and labour market dynamics.
But many of these are single issue responses.
Recruitment fees are only one element of the problem. Even if it was the main driver of modern slavery, no fee charging will not solve the problem. Because a migrant worker’s visa and right to stay and work in the host country is restricted in most countries. Even if they do not pay recruitment fees, they will not have the right to leave their job nor the freedom to choose another employer. Even when recruitment fees are paid back to the worker and they are no longer subject to debt bondage, they will not necessarily be protected from further abuse and exploitation. They may be desperate to keep their job or leave as undocumented workers.
It remains important to tackle the problems of other labour rights deficits. Vulnerable workers at risk or subject to conditions of modern slavery have extremely low wages, long working hours, are subject to physical, mental and emotional abuse and risks, are victims of threat, deception, coercion, discriminatory attitudes and behaviours, and face many other personal challenges. If they are migrants (even within countries), their living conditions are poor, many don’t speak the local language and cannot communicate with their supervisors or other workers. Many don’t know their rights, they are fearful of losing their jobs, their immigration status is precarious, and they are far away from home and feel isolated. They don’t know who they can trust to share their grievances and seek advice to solve problems.
Companies are often several steps removed from workers in these situations. Some rely on third parties to act in good faith on their behalf to deal with these problems at local level. In the best cases, these are helpful and help to trouble-shoot, mediate and resolve grievances and provide remedy.
There is not a great deal of transparency nor independent scrutiny in some of these initiatives that would enable us to assess their effectiveness or medium-term impact on workers. Confidentiality and non-disclosure agreements are prioritised to alleviate concerns that information could create reputational risks for the company, or be used by commercial competitors or other stakeholders to their own advantage. But in the worst cases, they create a false sense of security for companies who think that these initiatives will take care of their problems for them. They take their eye off the ball in high risk situations and fail to invest adequately in the internal system changes that will prevent these risks from arising.
Companies need proactive strategies based on continuous improvement, involving regular reviews of their policies, systems and partnerships. They also need to commission robust, independent evaluations of their initiatives and partnerships to ensure they are addressing root causes and contributing to long-term sustainable change.
4 International organisations and partnerships are critical
At this time, clarity, coordination and coherence of effort are more important than ever. There is a growing acceptance that the complex phenomenon of modern slavery, forced labour and human trafficking will require mammoth collective efforts to end it.
Sustainable Goal 8.7 is extremely important as it galvanises international bodies, national governments, parliamentarians, civil society organisations, trade unions, the private sector, researchers, the media and other actors.
There is a welcome focus on better evidence. This means understanding the scope, nature and size of the problem - by country, sector, risk types, the profile of people that are the subjects of gross exploitation and abuse, the nature of modern slavery crimes being committed, the quality of support and care for victims; understanding root causes, tackling ‘hot spots’, and more. There is also a welcome focus on strengthening legislation and regulation, policy engagement and influencing, holding forums for sharing knowledge, lessons and examples of good practice.
There is a new recognition of the importance of collaboration. Companies coming together in new initiatives to tackle specific issues internationally and specific risks in their supply chains. There is a greater willingness and interest by companies, international bodies and other stakeholders to engage with policy makers in government calling on them to help create a more level playing field for responsible businesses and their commercial partners.
There is also a recognition of the need for partnerships with organisations that represent the interests of workers, and with civil society organisations that advocate for the rights of vulnerable workers.
But collaboration could be better and more meaningful. With the considerable resources that are now available by donors to tackle modern slavery, there has been a frenzy of initiatives. This is giving rise to ruthless competition and an unforgivable amount of duplication and confusion generated. There is no end of services being offered for due diligence analysis, training and awareness raising or specific projects to tackle specific issues. Some see this as another lucrative source of revenue generated by companies' fear of being caught off guard and exposed. Everyone feels they need to be part of the effort or they will miss out on the opportunity to share their own brand of advice and support. ETI is not exempt from this, and will need to constantly challenge itself to ensure it adds value and raises the bar of expectation on what responsible companies should do.
There is also very little evidence of what actually works to tackle complex, endemic problems of modern slavery in global supply chains. The problems of the global economy and the political factors underpinning it are at the heart of this. We must be ready to challenge the entire business model - from procurement and sourcing practices to the relationships of companies with their suppliers, outsourcing, and subcontracting. That model is reliant on cheap, exploitable labour that preys on the vulnerability, exclusion and desperation of people all the way up and down the supply chain to earn an income, almost at any cost.
5. Workers as rights holders are the most important agents of change
Workers are not only victims of modern slavery, they are also agents with fundamental rights at work. They have the right to freedom of association, decent work, should not face physical threats and coercion, nor be discriminated against. They have the right to remediation when their rights are violated. Worker organisation and collective representation through an independent, representative, free and democratic trade union is the best means to secure all the other rights at work, and to prevent forced labour, modern slavery and human trafficking.
In some places, trade unions are stepping up to organise workers on precarious contracts, working in the informal economy in temporary or restricted jobs. Migrant worker organisations and some inform al worker unions are springing up to represent these workers, many of them women or men from communities where they have been denied a decent education or access to skilled, better paid jobs.
Some multinationals are developing Global Framework Agreements with trade union federations that establish the terms for mature industrial relations, in which negotiation is the basis for resolving issues. These agreements include provisions for remediation and compensation when workers are treated unfairly. Some countries have established tripartite national forums involving governments, employers and workers representatives to agree labour legislation, review and revise regulations as needed.
But the workers that are most vulnerable to or are subjects of exploitation and abuse are the least likely to belong to a trade union, and as such are denied the opportunity to collectively negotiate the terms and conditions of their work.
Despite their universally agreed basic rights at work, they generally don’t raise complaints or use a grievance mechanism - either because it doesn’t exist, or because they don’t understand or trust the system. They will do anything they can to avoid losing their jobs or being deported. They do this because they have no other way to pay back their debts and send money back to families, who depend on their wages.
Modern slavery is a complex problem. There are no simple solutions. But we can learn some important lessons from studying what works and what doesn’t.
What works? Sanctions, for one. And we know that transparency is a key driver for corporate action. Some company initiatives to tackle modern slavery have been proven to be effective. And international organisations and partnerships are critical components of any strategy to combat modern slavery. Finally, we know that workers are not just victims, but can themselves be the most important agents of change.
Cindy Berman is Head of Modern Slavery Strategy in Ethical Trading Initiative