Eradicating Forced Labour: The International Business Challenge by Roger Plant, London, 1 May 2008

Presentation to the Conference "Is there Forced Labour and Slavery in your Supply Chain?", Clifford Chance, London, 1 May 2008

Statement | Clifford Chance, London | 01 May 2008
Forced labour is now becoming a significant risk management concern for companies. But in today’s sophisticated business world, it can be very hard to monitor all aspects of production throughout the supply chains. Yet companies need to know when to disengage, and when to engage constructively by using their influence to achieve a gradual improvement in working conditions.


Roger Plant

Head, Special Action Programme to Combat Forced Labour

ILO, Geneva

Participants all,

First, I am very glad that this event is taking place in London, and on May day to boot. I thank Clifford Chance for hosting it, and Anti Slavery International for doing most of the work in putting the agenda and the list of participants together. We have had similar high profile events this February, with some of us here today participating, first at a large UN conference in Vienna, then at a smaller but very strategic meeting of US companies held at Coca Cola’s headquarters in Atlanta. As far as I know this is the first event of its particular kind in the UK, though there has been much attention to concerns including the gangmaster and abusive recruitment practices, involving significant food and retail companies through the Ethical Trading Initiative. I hope today’s initiative starts something rolling, because a coordinated business response to some of the systemic and underlying problems of forced labour is becoming an urgent need. Though the engagement remains sporadic, forced labour is gradually rising on the risk management priorities of individual companies, as well as ILO constituents, particularly the International Organization of Employers (IOE) and their worker counterparts. It was the Trade Union Congress (TUC) that published the first report on forced labour in the UK a few years back, with some assistance from our own programme, and put the issues squarely in newspaper headlines for a while. Today, I’ll aim to share:

First, definitions and concepts on the boundaries of forced labour, and its overlap with the offence of human trafficking that is now getting more attention in countries including the UK and the USA.

Second, a snapshot of the main problems around the world today, including in the industrialised countries

What the ILO is doing, and how companies together with other stakeholders can participate in our emerging Business Alliance against Forced Labour

Some of the main challenges are ahead.

Concepts, terminology and legal obligations for a company

It is important not to confuse forced labour or slavery-like practices with poor working or sanitary conditions. Watch the language, and this also goes for journalists and NGOs. I remember a headline in the Observer last year, denouncing Arcelor Mittal for slavery-like practices against Kazakhstan mine workers. While the narrative of the article described low wages, poor and even dangerous working conditions, there was no actual evidence that coercion had been used against the workers in question.

A similar article, the lead item in the Sunday Times on 12 August last year, had the headline “Topshop clothes made with slave labour”. This was an expose of the conditions endured by workers from Bangladesh, India and Sri Lanka in Mauritian factories providing clothes for the outlets of one of the UK’s wealthiest businessmen. Here the article went into far more detail. It wasn’t just the alleged low wages, as little as 22 pence per hour, with additional alleged discrimination between the workers of different national or ethnic origin. There were a whole range of further alleged abuses. Workers were recruited at home by self-employed agents who promised wages up to five times what they received. The migrants, lured by enticing advertisements offering generous three-year contracts, paid up to 725 UK pounds for a job offer and air ticket, many having to mortgage smallholdings to pay the agents’ fees.

A more recent investigation in Malaysia was published by the Daily Telegraph just a few weeks ago. It is a similar story of deception by dubious job brokers, leading to severe exploitation of Bangladeshi workers in UK-owned supermarket chains in Kuala Lumpur. Advance payments of over 1,500 UK pounds to the Bangladeshi job brokers, followed by 80 hour weeks, unexplained deductions that drive wages way below the legal minimum, confiscation of identity papers, all leading to the spiral of indebtedness that can leave migrants with no savings at all after sometimes months of back-breaking work.

A case closer to home in the UK was published by the Guardian also in late March this year. This concerned a gangmaster who had his licence revoked by the newish Gangmasters Licencing Authority, after supplying East European and Asian workers to some of the country’s biggest chocolate, bread and salad manufacturers under a range of coercive and deceptive conditions. Some 250 workers had money withheld from their wages, were threatened that they would receive no work if they did not sign certain standing orders, were paid less than the legal minimum after high charges for compulsory squalid accommodation (they had to pay a full years’ rent if they left their jobs before a 12-month tenancy agreement expired), and they had transport costs deducted from their wages without giving free consent.

These examples help focus on the ILO definition of forced labour. The term forced labour is defined by the ILO in its Forced Labour Convention (No. 29 of 1930). This has been ratified by 171 of the ILO’s 182 member States including of course the UK, meaning that it enjoys almost universal acceptance. In essence, persons are in a forced labour situation when they enter work or service against their freedom of choice, and cannot leave it without penalty or the threat of penalty. This does not have to be physical punishment or constraint. It can also take other forms, such as the loss of rights or privileges.

Forced labour however is a criminal act. The ILO’s Forced Labour Convention clarifies (Article 25) that “The illegal exaction of forced or compulsory labour shall be punished as a penal offence, and it shall be an obligation on any Member ratifying this Convention to ensure that the penalties imposed by law are really adequate and are strictly enforced”.

Otherwise put, forced labour goes beyond a corporate social responsibility (CSR) issue, in the sense of a voluntary commitment by companies to improve business practices. It is a binding legal obligation, failing which a company can be liable to criminal prosecutions and sanctions.

Working in poor or unhealthy working conditions is also considered a form of exploitation. Accordingly, certain countries have indeed passed legislation providing penalties for companies that subject workers to conditions that are “degrading” or “incompatible with human dignity” The purpose of labour law and its enforcement, guided by the international labour standards developed by the ILO itself, is to achieve the improvement of working conditions everywhere.

Then there is the related offence of human trafficking or trafficking in persons, for either sexual or labour exploitation. This has received huge media attention, and growing attention from criminal law enforcement. Not surprisingly, given that the ILO itself estimates that the profits generated by trafficking are now so vast, USD 32 billion per year of which some 28 billion is from sex trafficking and almost half of all profits are realised in the wealthier destination countries. The only conceptual point I would make here is that what sets the criminal offence of smuggling apart from that of trafficking is the coercion involved throughout the cycle, and the exploitation at the end of it. The new international instruments on trafficking have also introduced in their definition the concept of the deliberate “abuse of vulnerability. This is of importance for understanding the purpose of trafficking, as well as the mechanisms used. So many of the problems of forced labour abuse in the modern global economy, or of trafficking for labour exploitation, derive from the following:

Unscrupulous agents or companies may have deliberate recourse to crime, in order to derive unfair profits from the severe exploitation of the weak and the vulnerable. But they can also be looking endlessly for loopholes and weak points in finance and labour regulations and markets, in order to make these unfair profits without necessarily falling foul of the law and risking criminal sanctions. This is why it is so important to have clear laws and regulations, set out in language that business leaders can understand; and why it is important to bring governments, business and workers’ organizations to the table, to seek consensus as to which of the dubious practices must be prohibited by law, and on the means to monitor law and regulations.

Forced labour: recent trends and their implications for business

Forced labour has not often been seen as a problem likely to affect private enterprise. Rather, it as been associated with human rights abuse by repressive regimes, with gulags and concentration camps.

But ILO assessments help show why it should figure higher on the risk management concerns of business. Our 2005 report, A Global Alliance against Forced Labour estimates some 12.3 million victims of forced labour worldwide (some 9.5 million in Asia, 1.3 million in Latin America, 660,000 in sub-Saharan Africa), but no less than 360,000 in the industrialized countries including Europe and the North Americas. Perhaps more importantly, the findings are that four out of every five cases involve forced labour exploitation by private agents.

What does this consist of? Apart from state imposed forced labour, it distinguishes between two main forms. One is the widespread forced labour in the poorer developing countries, linked to longstanding patterns of poverty and discrimination. The second form arises from migration and trafficking of workers across the world. This affects mainly those persons working at the margins of the formal economy, with an irregular employment or migration status. Sectors where problems have often been identified include agriculture or horticulture, construction, garments and textiles under sweatshop conditions, catering and restaurants, domestic work, entertainment, and in particular the sex industry, The more research that is carried out, however, the more evidence is produced that coercive recruitment and employment practices can affect migrant workers in other quite mainstream economic sectors, including food processing, health care and contract cleaning, and also in some public sector employment such as the provision of health-care services.

The trend towards subcontracting, with often complex and unregulated chains, and towards the greater use of recruiting intermediaries, can be important factors behind abusive practices. While recruitment for employment abroad is a legitimate and much needed business, in the worst cases it can provide a cover for trafficking activities. When monitoring is weak and business standards are lacking, unscrupulous recruitment agencies can make high profits by charging migrant workers excessive fees, deceiving them about the nature of their work and paying wages far less than those promised at the time of recruitment.

What can employers’ organizations and business leaders do?

Forced labour is now becoming a significant risk management concern for companies. But in today’s sophisticated business world, it can be very hard to monitor all aspects of production throughout the supply chains. Senior boardroom members may simply not know what are the recruitment practices in an outsourced operation, and procedures may not be in place to ensure that such information is available. Moreover, officials at different levels of a company’s operations may not have the tools to identify a forced labour risk, or prepare the appropriate response.

Auditors, human resource officers, field managers and supply chain managers can have different responsibilities. Some have the job of training key personnel, to ensure that all employees know what forced labour is, and when some unsatisfactory employment practices can spill over to the criminal offence of forced labour. Others have to deal with outsourcers and supply chains. They need to know when to disengage, and when to engage constructively by using their influence to achieve a gradual improvement in working conditions.

Business also needs to be involved in broader policy debates – involving legislators, government officials and also the representatives of workers’ organizations – on the labour market and other factors that can breed forced labour conditions, and on the means to address them. A good example is the charging of fees by labour brokers and recruitment agents. some workers being driven into high indebtedness through excessive transaction charges than can amount to the debt bondage prohibited by international human rights instruments. Yet where to draw the line? What charges are legitimate? An ILO Convention on private employment agencies (No. 181 of 1997) establishes the general principle that private employment agencies should not charge, directly or indirectly, any fees or costs to workers. To ensure that debatable practices do not degenerate into forced labour, it is essential that business actors get together to agree on at least minimum standards of behaviour.

Basic principles

To set the ball rolling, the ILO’s Special Action Programme to Combat Forced Labour has proposed a set of 10 principles to guide business action against forced labour. They are, respectively, to:

Have a clear and transparent company policy, setting out the measures taken to prevent forced labour and trafficking. Clarify that the policy applies to all enterprises involved in a company’s product and supply chains;

Train auditors, human resource and compliance officers in means to identify forced labour in practice, and seek appropriate remedies;

Provide regular information to shareholders and potential investors, attracting them to products and services where there is a clear and sustainable commitment to ethical business practice including prevention of forced labour;

Promote agreements and codes of conduct by industrial sector (as in agriculture, construction and textiles), identifying the areas where there is risk of forced labour, and take appropriate remedial measures;

Treat migrant workers fairly. Monitor carefully the agencies that provide contract labour, especially across borders, blacklisting those known to have used abusive practices and forced labour;

Ensure that all workers have written contracts, in language that they can easily understand, specifying their rights with regard to payment of wages, forced overtime, retention of identity documents, and other issues related to preventing forced labour;

Encourage national and international events among business actors, identifying potential problem areas and sharing good practice;

Contribute to programmes and projects to assist, through vocational training and other appropriate measures, the victims of forced labour and trafficking;

Build bridges between governments, workers, law enforcement agencies and labour inspectorates, promoting cooperation in action against forced labour and trafficking;

Find innovative means to reward good practice, in conjunction with the media.

Guidance and training materials: the SAP-FL approach

It has become clear that companies would now welcome a more intensive learning process on forced labour, together with guidance tools and materials developed in consultation with key business actors. Over the past couple of years, we have gone through a thorough period of preparation with international and national employers’ organizations, select companies, and engaging with employers through project activities in countries including Brazil, China, Jordan and Russia. The “brainstormings” and dialogue, like the one hosted by Coca Cola in Atlanta in February, and by Clifford Chance in London today, are part of this process.

Essentially, the SAP-FL team is now preparing a series of checklists, training and remediation tools which will jointly comprise an ILO Handbook for Employers in Combating Forced Labour and Trafficking. This is “work intensively in progress”. We are actively seeking, through some strategic partnerships now under negotiation, the means to develop these tools together with different kinds of business actor, involving different parts of their company operations, different sectors and different regions. They are planned to cover:

Basic Policy. This is a set of compliance principles, drawn from ILO standards and jurisprudence, on key issues such as debt bondage, recruitment fees, wage payment and deductions from wages. We are encouraging business input to a set of Frequently Asked Questions from employers, hoping that concise answers can be provided in a familiar and easy-to-use format.

Assessment and Compliance. A compliance checklist is being developed for company and third party social auditors, both clarifying what is and is not forced labour according to the ILO, and seeking to provide methodological assistance as to how best to identify and audit compliance.

Remediation and Corrective Action. This is designed as a good practice booklet, identifying corrective measures by business to combat forced labour, including measures to promoter co-operation between buyers, suppliers and other stakeholders; to engage actors in the informal economy; to co-operate with public authorities; and to involve business in action to rehabilitate the victims of forced labour through vocational training and skills development.

Booklets by Industry. A set of booklets seeks to address the particular issues faced by companies operating in different economic sectors, including construction, transport, garments and textiles, hospitality and tourism, and global food chains.

As we move forward at this level, the ILO is determined to motivate employers and business to take the most active possible role in promoting a Global Alliance against Forced Labour. Later today, the Deputy Secretary General of the IOE will explain the important steps being taken by this organization. We are happy to support these, through forthcoming events with European and Asian employers respectively in Kiev and Bangkok.

I want to end by sharing some of the basic dilemmas ahead. The business agenda on core labour standards including forced labour cannot be driven only by the wealthier and more powerful buyer companies, with billions of dollars at their disposal, protecting their own image and products through zealous auditing requirements. There is a growing fatigue with expensive auditing. There are many complaints by the less well endowed supplier factories that the demands on them are huge, that the approach is stick without carrot, and they get no reward for their efforts through guarantees of secure or longer term contracts. Their own business case for cooperating on this front becomes weaker.

That’s why we have to get the forced labour issue straight, and separate it from the different debate as to how business in the richer world can engage with its suppliers in the poorer world to help improve gradual improvement in working conditions. When buyer-instigated audits find forced labour in the strict legal sense, the buyers may have no option but to disengage completely. There can be at least some risk of criminal prosecution if they don’t. The next debate is how to generate and support a shared commitment between suppliers and buyers, backed by consumers everywhere, to uplift conditions and tackle the other forms of labour exploitation. I’ll leave it to others, such as business and human rights specialist John Morrison, to pick up on this issue if they have time and interest today.

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