Forced labor and slavery remain prevalent worldwide; the 2017 Global Estimates of Modern Slavery notes that on any given day, 40 million people were victims of modern slavery, including 25 million people in forced labor. Forced labor is immensely profitable, with the illicit profit estimated by the ILO in 2014 at $150 billion a year. Although some may consider it a developing phenomenon, it is a universal problem, including in countries with modern legislation designed to tackle the problem.
Businesses often face the challenges with forced labor within their supply chains, especially when multinational companies source from countries with high levels of poverty and a lack of legal protection where it is common practice to use recruitment agencies and labor providers, and where there is no legal requirement for such businesses to be registered or meet certain standards. Forced labor can take different forms: workers may be paid but are bonded to debts that they cannot repay; some are trafficked for forced labor abroad without any means of returning home; and some are forced by the local government to undertake labor.
Investors engaging companies to address forced labor should among other things call on them to conduct human rights risk assessments and reporting throughout their supply chain; provide enterprise-level training for managers, supervisors and workers on forced labor; and ensure that it (or its recruitment agencies) does not withhold wages or bonuses and that it pays them in a timely and regular manner. In addition, investors should recommend that companies participate in sector and/or multi-sector collective action initiatives to change the recruitment system from ‘worker-pays’ to ‘employer pays’, eliminating a key mechanism for debt bondage.
- Alliance 8.7, International Labour Organization.
- Best Practice Guidance on Ethical Recruitment of Migrant Workers, ICCR, 2017.
- Consumer Goods Forum’s Forced Labor initiative
- Know the Chain benchmarks
- Leadership Group for Responsible Recruitment
- Prison Labor in the United States: An Investor Perspective, Northstar Asset Management, 2018.