What is Forced Labour?
Forced or compulsory labour is any work or service that is exacted from a person under the threat of penalty, and for which that person has not offered himself or herself voluntarily, according to the International Labour Organization (ILO). The notion of “threat of penalty” should be understood broadly. Penalties may comprise sanctions, including imprisonment, the threat or use of physical violence, psychological coercion, restrictions on the freedom of a worker, including preventing them from moving freely outside the work site. There may also be threats to harm a victim’s family, threats to denounce an illegal worker to the authorities, withholding identity documents, or withholding wages to compel a worker to stay in hopes of eventually being paid.
The terms “forced labour” and “modern slavery” are often used interchangeably as they have significant overlap. The key distinction is that modern slavery is generally defined as including forced marriage, which is not addressed in this issue.
What is the Dilemma?
The dilemma for business is how to address the presence of forced labour within its operations and supply chains as it can be difficult to detect. Forced labour less often occurs in relation to multinational companies’ (MNCs) own employees, as stringent procedures tend to be in place to ensure good working practices. However, forced labour can be found even just one step removed, as contractors (especially those hired by or working for labour agencies) and employees of service suppliers (e.g. cleaning, logistics, construction) are at risk of exploitation even in OECD countries. The risk increases further down the supply chain, especially when companies source from countries with high poverty, inequality rates, a large informal economy, corruption, a lack of legal protection, poor law enforcement and/or where it is common practice to use recruitment agencies and labour providers that may not be registered or are poorly regulated.
Prevalence of Forced Labour
Forced labour is a truly global problem, also present in developed countries where it affects mainly trafficked migrant workers. While global companies operating legally do not normally directly employ forced labour, they may be linked to such practices through their business relationships, including leased workers, contractors or suppliers.
Key figures from the ILO include:
- At any given time in 2016, an estimated 40.3 million people are in modern slavery, including 24.9 million in forced labour and 15.4 million in forced marriage.
- 16 million people around the world are victims of forced labour in the private sector (not including sexual exploitation).
- Exploitation is most prevalent in domestic work, construction and manufacturing.
- 5 million people are currently victims of forced commercial sexual exploitation. Over 99% are female and more than 20% are children.
- Over 4 million people are victims of forced labour imposed by State authorities.
- It means there are 5.4 victims of modern slavery for every 1,000 people in the world.
- 1 in 4 victims of modern slavery are children.
Key trends include:
- The Global Slavery Index developed by human rights organization Walk Free provides a country-by-country ranking of the number of people in modern slavery. A key finding from their latest 2018 data suggests that the prevalence of modern slavery in high-GDP countries is higher than previously understood. This underscores that even in countries with seemingly strong legislation against modern slavery, there continue to be critical gaps in the protection of vulnerable groups.
- There has been an increase in the severity and frequency of labour rights violations in key Asian manufacturing hubs over the last few years (Verisk Maplecroft).
- Forced labour risks have increased as a result of the COVID-19 pandemic. As millions of workers have been left without an income due to the pandemic, and without any savings or social protection to fall back on, this increases the pool of workers vulnerable to debt bondage and other forms of forced labour (ILO).
- Reports of forced labour in the Xinjiang region of China have resulted in multiple countries escalating pressure against the Chinese Government. The US, UK, the European Union and Canada have imposed sanctions on officials in China over human rights abuses against Uyghur and other Muslim minorities. The ramped-up measures by multiple Governments are likely to have wide-ranging implications for companies across sectors, with the cotton and tomato sectors facing the greatest disruption risks. (Also see paragraph 78 of the ILO’s Application of International Labour Standards 2021 report.)
- In March 2021, fifty countries have shown their commitment to eradicate modern slavery by ratifying the ILO Forced Labour Protocol (P29). The ratifications have met an initial target set by the 50 for Freedom campaign, led by the ILO, International Trade Union Confederation (ITUC) and the International Organisation of Employers (IOE), which urges Governments to take action on forced labour.
- Target 8.7 of the Sustainable Development Goals sets out the ambition to end all forms of forced labour by 2030. Alliance 8.7, a multi-stakeholder partnership created in 2016, seeks to support the achievement of Target 8.7 through encouraging the alignment of global, regional and national efforts, and through sharing knowledge and driving innovation.
Impacts on Businesses
Businesses can be impacted by forced labour risks in their operations and supply chains in multiple ways:
- Reputational and brand risk: Campaigns by non-governmental organizations (NGOs), trade unions, consumers and other stakeholders against MNCs can result in reduced sales and brand erosion. This can also hurt employee retention and make a company less attractive to potential employees.
- Financial risk: Consumer boycotts against companies that are alleged or found to have forced labour in their supply chain can result in reduced sales. Divestment, avoidance or increased costs of finance by investors and finance providers (many of which are increasingly applying environmental, social and governance (ESG) criteria to their decision-making) can result in reduced or more expensive access to capital and reduced shareholder value.
- Legal risk: Modern slavery legislation, which may include mandatory reporting, increases compliance risks as it may carry criminal penalties in the event of failure to meet such reporting obligations. Emerging global legislation targeting forced labour in value chains increases legal risks for offending companies. Legal action, either civil or criminal, may result in high legal costs as well as fines or compensation.
- Operational risk: Changes to companies’ supply chains made in response to the discovery of forced labour may result in disruption. For example, companies may feel the need to terminate supplier contracts (resulting in potentially higher costs and/or disruption) and direct sourcing activities to lower-risk locations. Additionally, internal resources will need to be dedicated to address any allegations, requiring commitment across the management and relevant teams. This is particularly the case if the company has not established proper due diligence procedures and systems.
Impacts on Human Rights
Forced labour has the potential to impact a range of human rights, including but not limited to:
- Right to freedom from forced labour (UDHR, Article 4; ICCPR, Article 8): Freedom from forced labour is a human right in and of itself. Freedom from forced or compulsory labour is a cornerstone of the ILO’s “decent work” concept and one of the most basic human rights. The prohibition of the use of forced or compulsory labour in all its forms is considered now as a peremptory norm of international law on human rights; this means that it is of an absolutely binding nature from which no exception is permitted.
- Right to work (UDHR, Article 23; ICESCR, Article 6): The right to work is considered a fundamental right. One of its essential components is the right to free choice of employment. This implies the right of everyone not to be forced in any way whatsoever to exercise or engage in employment.
- Right not to be subjected to torture, cruel, inhuman and/or degrading treatment or punishment (ICCPR, Article 7): By its very nature, forced labour often involves the use of degrading treatment and the “menace of penalty” forcing people to work. For example, security forces may be employed to use abusive practices or threats to coerce people into undertaking forced labour.
- Rights of protection of the child (ICCPR, Article 24): Forced labour may involve entire families working to pay off a debt. Children may also be trafficked for the purpose of forced labour.
- Right to enjoy just and favourable conditions of work (UDHR, Article 23; ICESCR, Article 7): People working under conditions of forced labour regularly work excessive hours, often for little or no pay. They are also often forced to work under dangerous and unsafe conditions. Due to the very circumstances in which they are employed, their working conditions are unlikely to be just or favourable.
- Right to an adequate standard of living (including access to adequate food, clothing, housing and water) (ICESCR, Article 11): Workers who are victims of forced labour often encounter limited access to adequate food, clothing, housing and living conditions (including water and sanitation). This is particularly the case as workers are often kept in closed facilities subject to the control of the owners of the facility who may show little regard for their well-being.
- Right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay (UDHR, Article 24): Given the nature of forced labour, workers who are coerced into employment are often denied access to rest and leisure.
Sustainable Development Goals (SDGs)
- Goal 5 (“Achieve gender equality and empower all women and girls”), Target 5.2: Eliminate all forms of violence against all women and girls in public and private spheres, including trafficking and sexual and other types of exploitation
- Goal 8 (“Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”), Target 8.7: Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms
The following resources provide further information on how businesses can address forced labour responsibly in their operations and supply chains:
- ILO, Combating Forced Labour: A Handbook For Employers and Business: This guidance provides materials and tools for employers and business to strengthen their capacity to address the risk of forced labour and human trafficking in their own operations and in global supply chains.
- UN.GIFT, Human Trafficking and Business: Good Practices to Prevent and Combat Human Trafficking: A resource developed by the UN Global Initiative to Fight Human Trafficking and other stakeholders that explains what companies can do to take action against human trafficking. The guide provides a series of case studies that highlight the practical actions companies are taking to fight human trafficking.
- Ethical Trading Initiative, Base Code Guidance: Modern Slavery: A step-by-step guide for businesses on eliminating forced labour in global supply chains.