Close

Are you in compliance?

Don't miss out! Sign up today for our weekly newsletters and stay abreast of important GRC-related information and news.

Some practical solutions to the problem of modern slavery

Paul Hodgson | June 13, 2017

Modern slavery is with us, but it is often so far removed from the products of labour held under these conditions that consumers are unaware of its scale. A series of cases studies in shareholder activist Interfaith Center on Corporate Responsibility’s (ICCR) report, Best Practice Guidance on Ethical Recruitment of Migrant Workers, provide some solutions to addressing the problem. But some statistics that open the report are indicative of the scale of the problem. The report says that there is a conservatively estimated 21 million people trapped in conditions of forced labour. (Editor's note: This is a conservative estimate, compared to those by other anti-slavery groups, which estimate that as many as 40+ million people are modern slaves.) The reason is clear; this abuse generates over $150 billion in profits for exploiters. More than three-quarters of these modern slaves work in private sector industries such as agriculture, apparel, construction, electronics, and manufacturing.

But where do these profits come from? Unfortunately they arise from a wide range of services, including work placement, orientation, transportation to the country, daily transportation to the worksite, housing, and other services. Further exploitation takes a number of forms: “including debt bondage, collateral, illegal deductions from wages, and confiscated or restricted access to travel documents like passports, permits and visas that limit workers’ freedom of movement.”

Fortunately, for companies with both deep and shallow supply chains, the ICCR and Social Accountability International (SAI) have put together a set of case studies of companies that have begun to develop solutions to this massive problem. There are eight company case studies, covering a range of industries from food and beverage to apparel, electronics, and agriculture, located in the Asia Pacific region (India, Thailand, Malaysia, Taiwan), Africa, and the United States. The companies are: Coca-Cola, an unnamed agricultural products company, HP, Patagonia, CP Foods, leading seafood company Thai Union, Princess Tuna, and Penguin Apparel. Below are summaries of three of the case studies.

Case Study 1: Thai Union

ICCR’s No Fees Principles

  1. No Fees: Ensure that workers do not pay any fees (in whole or in part) for recruitment, job placement or other parts of the employment process. If fees were charged to gain employment, the workers must be reimbursed for such fees.
  2. Written Contract: All workers must be given a written contract in their own languages at the point of recruitment, that outlines their rights and responsibilities.
  3. No Retention of Documents or Deposits: Do not keep or withhold any documents (e.g. original identification papers or passports), monetary deposits or other collateral as a condition of workers’ employment.

ICCR’s No Fees Project

Thai Union, which was engaged by the ICCR in 2015, employs workers from Myanmar, Laos, and Cambodia in its seafood processing and distribution business. At a recent UNPRI (United Nations Principles for Responsible Investment) conference, the company admitted that its problems lay in an established hiring process where workers did not have contracts and were paid a piece rate. After investigation, the company made the following improvements to the company’s recruitment policies: a focus on safe and legal migration, a total ban on recruitment fees, and changing the existing system to formalised recruitment that includes contracts and pay slips. Now the company pays agencies directly for all recruitment costs including:

  • Pre-departure training in the countries of origin,
  • Food and accommodation costs for the duration of the training, and
  • Transportation fees from the recruitment agent in the sending country to the company’s facilities in Thailand.

Thai Union has also joined the Seafood Task Force, which promotes a sustainable supply chain in the industry and which requires task force members to undergo external verifications and audits to promote standard labour practices. The company has also worked with NGOs in the country to “establish worker welfare committees; develop materials; conduct a series of workshops for migrant workers to educate them on their rights and entitlements under Thai labor law; and conduct social dialogue exercises by engaging with workers in their own languages.”

Case Study 2: Patagonia

Best practices for companies and suppliers to eliminate forced labor from global supply chains

  • POLICY DEVELOPMENT: Adopt a forward-facing (public) policy and a guidance document that addresses the recruitment of migrant workers, including the prohibition of worker-paid fees, passport/personal paper confiscation and a written contract with the terms of employment in the language of the worker (3-pillar model). Map the entire supply chain including products, services and labor to identify the risks and, with the support of top management, start implementing the policy across these entities.
  • DIRECT RECRUITMENT: Where feasible for a company, establish a direct recruitment mechanism with dedicated staff in sending and receiving countries. If a company must use broker services, work only with authorized brokers securing direct hiring of workers immediately after placement.
  • WORK WITH SUPPLIERS: Establish an understanding with suppliers vis-à-vis recruitment through direct communication, contracts and other tools. Conduct trainings on ethical recruitment, assist suppliers with reimbursement of fees and verify that only authorized brokers are used.
  • AUDITING TOOLS: Ensure that the recruitment system is included in the scope of a 3rd party audit and that recruitment agencies are included in the scope of the audit.
  • COMPLIANCE WITH LOCAL LAW: Migrant workers are covered under local labor law for wages, overtime, leave, holidays, health insurance and social security benefits. No illegal deductions from wages are withheld without a worker’s explicit consent. Workers have freedom of association and collective bargaining rights. Company investigates any allegations of worker abuse.
  • RECRUITMENT FEES REIMBURSEMENT: Company defines recruitment fees, adopts a fee-free model and verifies reimbursement of fees to workers.
  • BEYOND COMPLIANCE: Company assists suppliers with covering recruitment costs; company/suppliers ensure that workers have access to grievance mechanisms. Accommodation, food and transportation allowances, transportation to/from home countries, and supplemental accident insurance are covered in company’s direct operations and by suppliers.
  • LEADERSHIP: Company participates in industry initiatives like the Leadership Group for Responsible Recruitment, EICC, AIAG, FLPG and others. Company collaborates with local governments through MOUs or taskforces and civil society on worker’s rights issues.

Best Practice Guidance on Ethical Recruitment of Migrant Workers

Patagonia has apparel manufacturing sites in Taiwan with workers coming from across South-Pacific Asia. Long known for its sustainability commitment, Patagonia incorporated a review of working conditions into its vetting of new suppliers in 1990. And 20 years later, the company was auditing almost 100 percent of its factories. With the first tier of its supply chain under control, in 2011, it began auditing the second tier, material suppliers—an audit that produced alarming results. Patagonia partnered with fair labour NGO Verité to help develop a Migrant Worker Employment Standard that looks at conditions before, during, and after employment. Crucially, once the standard was developed, “Patagonia also made it clear to its suppliers that it would work with them to implement improvements, not just leave them alone to change the way things have been done for decades on their own.” A “no fees” policy, originally developed by the ICCR, was implemented in stages to ease the burden on labour suppliers, and the company worked with suppliers to—and this would seem to be a key consideration—lower costs and discuss how these costs can be shared. The company is customising its approach for each supplier and incentivising those making the most progress. It has also engaged labour brokers to help suppliers find ethical brokers and end relationships with those unwilling to change practices. As with many other clothing manufacturers, Patagonia “typically utilizes only a small fraction of any given supplier’s capacity.” Thus the company is partnering with other buyers and stakeholders to help make changes at the supplier level across all companies.

Case Study 3: HP

HP has a supply chain that covers six continents and 45 countries. The case study covers its electronic manufacturing facilities in Malaysia, with migrant workers coming from the Philippines, Indonesia, and Vietnam, among others. HP’s high standards are demonstrated by the fact that it was the first IT company to publish a supplier list in response to ICCR’s engagement and recently ranked first in a KnowTheChain study on eradicating forced labour from companies’ supply chains. Like Patagonia, HP partnered with Verité to develop a migrant worker standard after it discovered that workers in Malaysia were being charged excessive recruitment fees. It also implemented the ICCR’s no fees policy, then went further by insisting on direct employment of foreign migrant workers, as it felt that hiring workers through agencies or brokers was both too risky and non-transparent.

As the report says, and the statement does not only apply to HP: “HP recognizes that creating a standard and actually implementing its requirements are two different things.” In order to implement these standards over time, HP developed with Verité a guidance document to help transition to direct employment, the no fees model, and how to “identify, screen, and select ethical recruitment agents.” Alongside this, HP also developed a supplier self-assessment questionnaire and a focused assessment that is now a part of HP’s onsite audit. “HP auditors help suppliers understand where their implementation of the standard is weak and provide some coaching onsite on how to make system changes.”

Drawing on the findings of its case studies, the ICCR recommends the following steps to address these supply chain problems.

  1. Map the supply chain
  2. Identify and prioritise risks
  3. Build support of top management
  4. Policy development including 3-pillar implementation
  5. Buyer-supplier relationship building
  6. Appropriate supplier support
  7. Transparent communication
  8. Stakeholder collaboration

While not explicitly recommended, one of the common findings in the case studies was that workshops, where suppliers can share their experiences, share the difficulties they have encountered, and suggest and brainstorm potential solutions, seemed to be of particular use. Perhaps a more permanent solution to the problems of modern slavery are to be found in the self-education of the recruitment agencies and employment brokers who used to be part of the problem.