Shaping Policy Advancing Practice Strengthening Accountability

IHRB Briefing

Forced Labour May 2016

What is forced labour? The term ‘forced labour’ means any situation in which persons are coerced to work through the use of violence, intimidation or threat of penalty.

ILO Indicators of Forced Labour Many of the products we buy were made Why should companies address using forced labour at some stage of their forced labour in production. This might be in production of the • Physical or sexual violence (threat of their supply chains? raw materials, in the processing of component and/or actual harm) parts, or the manufacture of the final product. • Restriction on movement Customers and Long and many-tiered supply chains mean • Bonded labour consumers are undertaking checks on all stages of production Increasingly asking • Withholding of wages is very difficult. These products of forced questions about company commitments labour can therefore be found even in the • Retention of passports and identity documents to forced labour in goods sold by leading companies and well- their operations. known brands. • Threat of denunciation to the authorities Governments are adopting regulations to try to combat forced labour. These typically “Forced labour” or “modern slavery”? take the form of reporting requirements Modern slavery is a term increasingly used to that modern slavery seldom resembles this. Instead for companies to outline describe forced labour and trafficking. The use of the it involves the exploitation of vulnerabilities, is often the steps they have taken word slavery, which is loaded with connotations, has financial in nature, and is an integral part of many to prevent it occurring. advantages and disadvantages. supply chains. Investors are reviewing It helps to galvanize governments, business, and The extreme vision of slavery can therefore serve companies’ ethical civil society to demand change, to amend laws, and to divert attention from the reality and from the practices to filter their to prosecute those involved. But this same rhetoric business models that make exploitation a systemic investments. Activist conjures images of the worst visions of slavery, of issue in a range of sectors. shareholders are imprisonment, of padlocks and chains. The reality is targeting companies over poor business practices.

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How do company practices increase the likelihood of forced labour in some supply chains? ILO Facts and Figures (2015) Companies typically use large number of suppliers who compete with each other to supply them with goods and services. Buying teams from companies seek to secure the products they want at a particular quality and price to a given timescale. Buying practices and operating procedures however can increase the likelihood of Nearly 21 million people – three out of their goods being produced in ways which may make exploitation, including forced labour, more likely. every 1,000 people worldwide – are victims Price Subcontracting of forced labour across the world, trapped in jobs which they were All companies are seeking to source their Some suppliers will subcontract the production coerced or deceived products at a price which, when sold, deliver of goods to other facilities where standards into and which they cannot leave. value to their customers and profits to their cannot be effectively monitored and shareholders. However, when suppliers to those exploitation including forced labour may be Of those, 11.4 million companies compete on price it can mean that present. Rush orders and late changes to are women and girls and their margins are squeezed so tightly that they specifications can make such subcontracting 9.5 million men and are unable to compete without exploiting either more likely and oversight of production less boys. their own workers or those at another company. effective or impossible. Almost 19 million victims are exploited by private individuals or enterprises. Lack of Long-Term Contracts Payment of Recruitment Fees by Migrant Workers Over 2 million are exploited by the state or Lack of longer term partnerships and rebel groups. commitments to supplier factories make Many migrant workers will pay large recruitment it harder for them to develop effective fees to agencies and other intermediaries Forced labour in the management processes, invest in modern to secure employment abroad. This can private economy generates equipment and employ and train staff on leave them in situations of debt bondage, US $150 billion in illegal profits per year. decent terms and conditions. an indicator of forced labour, whatever the subsequent conditions of employment. Migrant workers and indigenous people are Outsourced Labour Arrangements particularly vulnerable to forced labour.

Some industries, particularly seasonal ones such as agriculture, have traditionally used “It is up to each and labour supplied, managed and paid by labour every one of us to raise brokers or gangmasters. The increased use our voice against crimes of employment agencies in many sectors has that deprive countless seen these arrangements spread to other victims of their liberty, industries. Outsourced labour arrangements dignity and human can distance a company from its workforce, rights. We have to work add pressure on their terms and conditions of together to realize the work and can lead to situations of exploitation equal rights promised and forced labour. to all by the United Nations Charter. And we must collectively give meaning to the Lack of Trade Unions words of the Universal Declaration of Human Rights that “no one The absence of effective trade unions at shall be held in slavery supplier companies means that exploitative or servitude” practices and situations of forced labour are far less likely to be noticed, prevented, Ban Ki-moon, Secretary-General of challenged and remedied. the United Nations

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The Dhaka Principles are a set of rights- based principles to enhance respect for the rights of migrant workers from the moment of recruitment, during overseas employment, through to safe return to their home countries.

Core Principle A All workers are treated equally and without discrimination

Who are the most likely to be subjected Core Principle B Which industries are affected? All workers enjoy the to forcedlabour? protection of Workers performing low skilled, low waged tasks are Forced labour is usually found in labour employment law the most likey to be subjected to forced labour. These intensive industries where regulation or legal enforcement is often weak, such as: Principle 1 No fees are workers are often poorly educated and often lack charged to workers decent work options. • Agriculture • Mining These workers are often subject to discrimination • Fishing • Quarrying Principle 2 All worker contracts are clear and based on class, caste, religion, nationality or gender. • Hospitality • Brick Kilns transparent This can make them more likely to be exploited and • Construction • Manufacturing less able to access remedy. Principle 3 Policies and procedures are inclusive

Principle 4 No workers’ passports or identity Key Resources on Forced Labour and Human Trafficking documents are retained

Staff Wanted Initiative Verite International Organisation of Principle 5 Wages are SEE Formula E-learning Modules on Forced Employers (IOE) paid regularly, directly http://www.staff-­wanted.org/ Labour and Human Trafficking Forced Labour – Why it is an issue and on time http://verite.org/research/elearning for employers Principle 6 The right to ILO Special Action Programme http://www.ioe-emp.org/fileadmin/ worker representation is to Combat Forced Labour International Labour ioe_documents/publications/ respected Indicators of Forced Labour Organisation (ILO) Policy%20Areas/forced_labour/ EN/%282010%29_IOE_ http://www.ilo.org/global/topics/ Combating forced labour: A Principle 7 Working Guide%20_Why_Force%20Labour_ forced-labour/publications/ handbook for employers and conditions are safe is_an_issue_for_employers.pdf and decent WCMS_101171/lang--en/index.htm business http://www.ilo.org/global/topics/ Principle 8 Living Flex – Labour Exploitation Stronger Together forced-labour/publications/ conditions are safe WCMS_101171/lang--en/index.htm Accountability Hub and decent http://stronger2gether.org/ A database of legal mechanisms Principle 9 Access to for individual and corporate Trafficking In Persons Report remedy is provided Verite & US State Dept accountability for human trafficking (TIP) Strengthening Protections Against and forced labour around the world Principle 10 Freedom Every year the US Government Trafficking in Persons in Federal www.accountabilityhub.org to change employment and Corporate Supply Chains produces an annual report ranking is respected, and countries on efforts to combat http://www.state.gov/documents/ safe, timely return is forced labour and trafficking organization/237137.pdf guaranteed http://www.state.gov/j/tip/rls/tiprpt/ www.dhakaprinciples.org

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Top 10 Business & Human Rights Issues for 2016

Forced labour was one of IHRB’s Top 10 Issues for 2016, the other nine were:

Battling Discrimination: Sustained Business Action Key to Valuing Diverse Societies Embracing Remedy: From ‘Forgotten Pillar’ to Key Tool in Identifying, Monitoring and Preventing Impacts Key Standards on Business, Human Rights and Forced Labour Big Data, Big Business: Raising The UN Guiding Principles on Business Protections Against Trafficking in Awareness of Rights and Human Rights Persons in Federal Contracts Implications and Ensuring Protections The UN Guiding Principles on Business and Human The executive order improves safeguards for Leading by Example: Rights (UNGP) provide an authoritative framework workers and places clear prohibitions on business Aligning States’ for companies to operationalise and embed policies practices likely to include forced labour and Policies and and practice to prevent forced labour consistent trafficking in US Government supply chains. Implementing Due with international human rights standards. Diligence as Economic Actors The UNGP expectation for companies to undertake ongoing human rights due diligence The UK Modern Slavery Act 2015 Righting Climate Wrongs: Business, requires far more than social auditing. Human Rights and Consultation with trade unions or other worker The UK Modern Slavery Act was adopted in Climate Justice representatives, as well as ensuring access to 2015 to clarify and consolidate offences related effective grievance mechanisms are critical. to modern slavery. Mind the Gap: Implementing the Companies can work with business partners to It places anti-slavery reporting requirements on UN Sustainable Development Goals integrate responsible business practices through all companies with UK operations with turnover the inclusion of policy commitments or codes of in excess of £36 million. Defending Defenders: conduct within contractural arrangements. A Role for Business in Companies can increase the effectiveness of Championing Civil Society their own actions to prevent forced labour by The ILO Protocol on Forced Labour 2014 collaborating with their peer companies within From Theory to trade bodies, other partnerships or in broader Practice: New Levels of multi-stakeholder initiatives. This can also increase In June 2014 the International Labour Human Rights their leverage with government to help ensure Organisation (ILO) adopted a new legally Transparency and Measuring Corporate effective regulation and enforcement activity. binding protocol to eliminate forced labour. Performance The protocol clearly lays out the expectations Rising to the on governments to tackle modern slavery in Occasion: Making 2016 The California Transparency Act 2010 all its forms through developing and enforcing an Olympic Year for effective legislation. Human Rights and The California Transparency Act places anti- The protocol specifically notes the importance Mega-Sporting Events slavery reporting requirements on all companies of governments working with the private www.ihrb.org/ operating in the state with a turnover in excess of business to eradicate forced labour. top10/ $100 million to report on their prevention efforts. 2016.html

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