Modern slavery: the global construction industry’s open secret

The most high-risk sectors for modern slavery and forced labour are those sectors that typically use temporary and irregular workers in low-skilled and low-waged jobs. The construction sector fits this description for work in the industry itself and in the procurement of building materials. So says a new report from LexisNexis – Hidden in Plain Site: Modern Slavery in the Construction Industry, by Jantine Werdmuller von Elgg.

Modern slavery is defined as:

Human trafficking

Forced labour

Bonded labour/debt bondage

Child labour

According to the International Labor Organization (ILO), of the US$150 billion profit generated annually by forced economic exploitation around the world, US$34 billion (23 percent) is made in the construction, manufacturing, mining and utilities industries. Construction has been identified as one of the sectors most prone to labour exploitation; indeed it is number two on the EU list. Figures are rarely broken down by specific sector, but the report cites large numbers of modern slavery workers working in the U.K. in the construction industry, not just for U.K. construction firms operating in other countries. Specific case studies of labour abuse in the U.K. are enumerated from other reports to drive the point home.

CW spoke to the author and Sam Hemmant, of LexisNexis, about the report. In particular, we asked if there were any hard and fast figures on forced labour in the construction industry in the U.K. “The short answer is no,” they replied. “There is little information available on this. One of the reasons is that there is an overlap in how people are being exploited, i.e., traffickers often exploit people in more than one way (for example for forced labour as well as benefit fraud, or for sexual exploitation as well as labour exploitation, or for forced labour in a range of sectors), which means they are not noted as being victim of modern slavery in a particular sector. In the U.K., the Gangmasters Licensing Authority (GLA),” they continued, “issues licenses and investigates possible violations of the Employment Agencies Act, to protect vulnerable workers in U.K. food and drink processing and packaging, agriculture and shellfish gathering. They will soon (expected spring 2017) become the Gangmasters and Labour Abuse Authority and their powers and remit will be extended- including to the construction industry, which might mean more victims of modern slavery will be identified in this sector in the future. In the U.K., individuals who are identified as potential victims of human trafficking go through the National Referral Mechanism (NRM). The National Crime Agency publishes an annual report about the statistics each year, but the agency stopped providing a sector breakdown in 2014.”

PROTECT, RESPECT, REMEDY

Below is an excerpt from the United Nations’ ‘Protect, Respect and Remedy’ framework
State Duty to Protect human rights: Governments need to put in place regulation and legislation as a legal framework for accountability and prosecution. The United Kingdom and United States have introduced laws in the last few years that are viewed as game changers. Some other countries are in the process of passing laws on transparency in supply chains and modern slavery.
Corporate Responsibility to Respect human rights: Construction companies can play a key role by identifying, mitigating and preventing modern slavery in their operations and supply chains. This report points out key steps businesses can take to tackle the issue, across a range of roles and departments within businesses. Taking these steps is an opportunity as well as a need for businesses.
Access to Remedy for victims: Construction companies and governments should put in place effective remediation measures.
Source: United Nations Guiding Principles on Business and Human Rights




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The use of migrant workers in the industry is seen as essential, even by industry bodies like the U.K.’s Chartered Institute of Building, for both employers and employees to take account of volatile demand at the local level. And the report cites subcontracting and sub-subcontracting and long and complex supply chains as circumstances that increase the risk of forced labour. In addition, the use of recruitment agents can increase the risk of exploitation due to the practice of charging fees to workers, among other exploitative practices, such as agents acting as landlords, retaining passports and other papers and being solely responsible for renewing work permits.

CW spoke to David Camp, programme manager at Stronger Together, about how companies can best deal with this economic situation: “Trade unions can play an important role in addressing the risks of modern slavery,” he said, but “with regard to fair recruitment, the ALP [Association of Labour Providers] has partnered with NSF International to develop and operate Clearview, a global certification scheme for labour providers.  Development is well underway and launch is planned for mid-2017. Part of a company’s human rights due diligence obligation means that it understands the circumstances under which its migrant worker employees or migrant workers in its supply chain could become a victim of forced labour. A fundamental step,” he continued, “that companies can take to reduce this risk is eliminating the charging of recruitment fees to workers and obligating the employer of the migrant labour to pay the costs of recruitment instead—the ‘Employer Pays Principle.’  The founding member companies of the IHRB [Institute for Human Rights and Business] convened Leadership Group for Responsible Recruitment—IKEA, The Coca-Cola Company, HP Inc., Hewlett Packard Enterprise and Unilever—are committed to the elimination of workers fees.”

“Supply chains in the construction sector can be fragmented and complex. Therefore, knowledge sharing and cross-sector collaboration are vital for helping us move towards greater transparency.”

Eddie Tuttle, Principal Policy and Public Affairs Manager, The Chartered Institute of Building (CIOB)



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The report has a lengthy section on Qatar, the site of the 2022 World Cup. Due to the immense amount of construction in the country, there have been a string of investigations and reforms and further investigations. Something like 90 percent of the country’s workforce is migrant labour. Despite an independent investigation followed by government reforms, practices that are all illegal under Qatari law—passport retention, deceptive recruitment, recruitment fees—were all found to be common by a more recent Amnesty International investigation. The Qatari government is working to rectify the situation, trying to enforce rules and blacklisting some companies and recruitment agencies. And, of course, FIFA’s lack of due diligence is implicated. Most recently, a visit from the ILO led to a warning to end migrant worker slavery in 12 months or face a possible UN/ILO investigation.

Further examples are given of US companies hiring Indian workers, Brazilian companies luring workers to jobs in African, and North Korean workers being enslaved in China and Russia, primarily, though also Europe. The North Korean government is the recruitment agent in this instance, as it uses its citizens for slave labour to earn foreign currency.

As well as actual construction projects, building supplies are very often produced under conditions of modern slavery. Clients and contractors must know where their materials come from, says the report, whether purchased directly or via a subcontractor. The risks extend all the way back to the harvesting or production of the raw materials. Brick production in India, for example, is largely based on bonded labour and debt bondage. Timber from Brazil, Peru and North Korea are linked to forced labour.

EXPLOITATION PRACTICES

Abuse of vulnerability.
Confiscation of workers’ passports and identity papers.
Control of workers’ freedom of movement.
Isolation – limited or no communication with relatives or other people outside the workplace.
Debt bondage.
No payment of salary, or salary considerably below legal minimum wage. Sometimes requiring labourers to work unpaid until a project is completed.
Withholding unreasonable fees for housing, transportation, food and other services.
Lack of social security payments.
Excessive overtime i.e. extremely long work hours for six or seven days a week.
Very limited or no days of leave.
Deception i.e. significantly different working conditions from what was agreed prior to employment. For example, in the case of migrant workers, not honouring contracts in the country of destination that were signed in the country of origin.
Worker lives at the workplace or in accommodation chosen by the exploiter, sometimes in abusive conditions.
Intimidation and threat of or actual harm by physical, psychological and sexual violence.
Threats against workers’ relatives.
Hidden in Plain Site

The report enumerates principle after principle that hold all stakeholders accountable for identifying and stamping out modern slavery, but all the principles in the world are not going to succeed unless they are put into practice. There is Principle 4 of the UN Global Compact: “Businesses should uphold the elimination of all forms of forced and compulsory labour.” There is Sustainable Development Goals 8.7: “Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking…” And there is Section 54 of the U.K.’s Modern Slavery Act 2015, the transparency in supply chains provision. The section requires commercial U.K. companies with an annual turnover of £36 million or more to prepare an “annual statement on the steps the company has taken, if any, to ensure slavery and human trafficking is not happening in its own business and supply chains.” This must be approved by the board of directors, signed by a director and published on the homepage of the company. he Business & Human Rights Resource Centre registry of slavery and human trafficking statements under the U.K. Modern Slavery Act is collating statements in a free searchable dynamic database. To date there are 423 statements.

CW asked von Elgg and Hemmant how they thought this issue of principle to practice could be addressed: “There’s an opportunity to use information, technology and data analytics to support advancement in these principles,” they answered. “Though due diligence of suppliers and production chains is not a new concept, the past five years has seen a rapid growth in the proliferation of technology tools that provide insight into human trafficking and forced labour specifically. For example, solutions such as Lexis Diligence, provide access to millions of public and private company profiles, in-depth country risk analysis reports, biographical sources, plus other open sources such as global, national and regional newspapers to blogs.”

We put the same question to Camp, who replied: “Stronger Together has developed a successful modern slavery risk mitigation programme model in the consumer goods industry, which will be rolled out in the construction industry in 2017. We work with a group of leading companies in the industry to implement policies and practices to tackle modern slavery in their own operations. Also, they invite their suppliers and labour providers to interactive workshops on tackling modern slavery, where they get guidance from experts and have the opportunity to discuss good practice and challenges with the experts as well as peers.”

The reputational risk due to negative attention from a wide array of stakeholders, such as customers, activists, shareholders, investors and trade unions, is expected be the most effective incentive for compliance. But there is also reputational risk to investors if they are found to have non-compliant companies in their portfolio, as well as loss of profits.

The report also cites Camp’s organisation: Stronger Together, as a multi-stakeholder initiative to combat modern slavery, which has six steps to help companies implement the UN Guiding Principles on Business and Human rights:

Commit

Assess

Act

Remedy

Monitor

Communicate

Camp added: “Through its website, Stronger Together provides clear guidance and pragmatic resources and training to support employers and labour providers in at risk sectors to deter, detect and deal appropriately with forced labour, labour trafficking and other hidden labour exploitation. Resources, including an awareness raising video and training specifically for the construction industry will be published in the beginning of 2017.  There are a wide range of risk mitigating and due diligence practices detailed in the Stronger Toolkit that employers and labour providers may take.

“With regard to tackling modern slavery in global supply chains,” he continued, “we currently offer training and a pragmatic toolkit on how to spot it, how to prevent it or how to deal with it when it is uncovered. The good practice covered in the workshop and toolkit includes guidance on due diligence and corporate social responsibility; on proactive measures to take to manage risk and business reputation to clients, investors, shareholders and other stakeholders; and addresses the steps to take which are required under the U.K.’s Modern Slavery Act 2015, not just regarding the statements but also regarding the robust action plans which are needed.”

The report also describes another public-private sector initiative, the International Recruitment Integrity System (IRIS), developed by the International Organisation for Migration (IOM) and the International Organisation. The initiative is intended to be a multi-stakeholder certification system so that companies can make better decisions about procurement and recruitment and reduce the risks of exposure to modern slavery.

“Only through auditing the supply chain thoroughly and rigorously checking supplier details through every tier will construction companies be truly confident of ethically sourced materials or not falling foul of legislation. When it comes to ethically sourced timber, each log is coded so buyers know they have sourced their materials from a legal and well-managed forest.”

Lee Brunsden, Building Confidence Community Manager, Achilles

The overlapping nature of construction supply chains, explains the report, creates an opportunity for construction companies to collaborate with each other in eradicating modern slavery; both across the business and in the supply chains. Individual companies should update existing policies to include anti-slavery commitments, subcontractors and suppliers of labour and materials should be trained in implementing anti-slavery policies and compliance must be continually monitored, by independent parties as well as internally. Whistleblowing policies should also be in place. If modern slavery is identified, most companies feel that terminating a contract with the offender does not solve the problem, since the labour will be sold elsewhere. Again here collaboration is key, as well as education. On this issue, von Elgg said: “My recommendation to businesses would be to put an action plan in place to prevent this from happening. But in line with the UN Guiding Principles on Business and Human Rights, businesses should put a victim-centered remediation plan in place in case of suspected incidents as well. This means providing support such as safe housing, counselling and legal support. Also part of the remedial action plan should be to identify the appropriate national or local law enforcement or other investigating body to report the incident to.”

Camp added: “Forced labour and human trafficking are crimes under international law. A suspected case of forced labour should be dealt with immediately, effectively and comprehensively. Suspicions/violations should be reported to the relevant authorities, where they are trusted, or you should work with other identified, trusted stakeholders where relevant. Collaboration with others who have the same interests may be required to resolve the issue and prevent the issue from re-occurring. Businesses should develop appropriate methods of remediation for victims of slavery and human trafficking. Remedial measures should include restitution, compensation, rehabilitation and guarantee of non-repetition.”

Clearly there are many tools out there to help companies combat this issue, but even with the right policies in place, if compliance with those policies is not monitored at every level they will continue to be just policies and not practices.