The global reach of modern supply chains means that slave labour is often a hidden crime that is difficult to detect. But there are steps that companies can take to avoid penalties and shipment seizures.
While there has been progress in addressing slave labour over the last two decades, with there being an estimated 94 million fewer child labourers today than there were in 2000, there is still a long way to go to end child labour, forced labour, human trafficking and modern slavery in global supply chains.
This is according to the biannual List of Goods Produced by Child Labour or Forced Labour, published by the US department of labour last month.
The list covers 148 goods produced in 76 countries, and finds that there are 152 million child labourers and 25 million forced labourers worldwide.
The department’s research helps “shine a light on these conditions overseas, and offers concrete actions US trading partners can take to accelerate efforts to eliminate child labour and forced labour”, reads the publication’s foreword, written by US secretary of labour Alexander Acosta.
On the back of the release of the report, GTR speaks to Ritika Burman, corporate responsibility associate of supply chain assessment and solutions at SGS, a testing and certification company, about what businesses can do to protect themselves and ensure they don’t fall foul.
GTR: What is modern slavery and forced labour, and how prolific are these violations?
Burman: Modern slavery, human trafficking and trafficking in persons are umbrella terms describing exploitation where a person cannot leave or refuse to work due to threats, violence, coercion, deception and/or abuses of power.
The International Labour Organisation (ILO) estimates this illicit industry to be worth around US$150bn, with about 40.3 million people across the world being victims of modern slavery in 2016.
Around 25 million of these are categorised as being trapped in forced labour, which ILO defines as “all work or service that is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily”.
- 2% are in the private sector – for example, domestic work, construction or agriculture
- 2% are victims of forced sexual exploitation
- and 16% are in forced labour imposed by state authorities
71% are women and girls, with one in four being children.
Industries such as textiles, food and agriculture, electronics, sports, construction, hospitality and housekeeping have been connected to modern slavery.
It can be tough for brands and retailers to fully monitor working practices of all players in their complex global supply chains. This is made more difficult by a lack of appropriate local legislation, low enforcement, reduced border controls and the increased vulnerability of migrants due to social and cultural factors. Therefore, it is entirely possible that legitimate organisations may be contributing to this billion-dollar illegal economy without being cognisant of it.
GTR: What legislation do US businesses in particular need to be aware of?
Burman: US regulations call for complete supply chain transparency, making brands, retailers and federal contractors liable for the actions of all business partners in the supply chain. This is an approach many other countries are also adopting.
Stakeholders should be aware of three pieces of US legislation:
- The Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) – section 909 prohibits the importation of products made using child, forced or indentured labour, with US customs being given the power to seize suspect merchandise.
- Federal Acquisition Requirements (FAR) – clause 52.222-50 effectively bans ‘trafficking in person’ in all companies and their complete supply chains if they are servicing US federal contracts. The recent strengthening of these rules means there is a chance any vendor or sub-contractor may find themselves indirectly affected by FAR.
- Countering America’s Adversaries Through Sanction Act (CAATSA) – signed into law in August 2017 by President Donald Trump, this covers sanctions for Russia, Iran and North Korea. Section 321 of the act amends the North Korea Sanctions and Policy Enhancement Act of 2016, creating the presumption that any item made using the labour of a North Korean citizen or national will automatically be categorised as being made using forced labour.
The rules relating to modern slavery mean US customs can automatically seize a shipment if they suspect forced labour has been involved in its manufacture; the onus will be on the importer to prove otherwise. In addition, US customs will inform Immigration and Customs Enforcement (ICE) and Homeland Security Investigations (HSI), with a request to initiate a criminal investigation for violation of US law.
The difficulty importers can face in ensuring their supply chains are free from any form of forced labour was recently highlighted by the discovery of North Korean workers at factories in Eastern Europe and Asia. A 2015 report to the UN concluded that at least 50,000 North Korean workers were forced to work in foreign countries, with the number rising. North Korean defector groups claim the figure is around 100,000, of which 40,000 are believed to be in Russia and China, 30,000 in the Middle East and Southeast Asia, and the rest in Eastern Europe and Mongolia.
With US laws making businesses responsible for human rights protection throughout the supply chain, it is important that companies fully understand their responsibilities and liabilities – ignorance is no longer a justifiable defence.
GTR: How do countries across the globe differ in their approach to addressing the issue?
Burman: In the UK, the UK Modern Slavery Act 2015 requires brands and retailers with £36mn global turnover to disclose the steps taken to identify and address slavery and human trafficking in their supply chains.
In France, parliament has adopted a law establishing a duty of vigilance obligation for companies and sub-contractors that requires them to publish annual plans to tackle risks in environmental, human rights and health and safety in the supply chain. This is applicable to French companies with a staff of more than 500 in France or 10,000 in French and foreign offices combined.
In Australia, too, laws criminalise human trafficking and slavery and are contained within divisions 270 and 271 of its Commonwealth Criminal Code Act 1995. A Modern Slavery Bill 2018, similar to the UK, has currently almost completed its journey through the Australian parliament and will require companies of a certain size to report annually on their actions to address modern slavery risks in their supply chain operations.
Similar efforts are also being made in Hong Kong and other countries.
GTR: What can companies across the globe do to ensure they’re not engaging in modern slavery?
Burman: The advice to all businesses must be to perform appropriate due diligence on their supply chains. This will help companies identify issues that may initially be hidden and afford them the opportunity to take practical steps to remove modern slavery from their supply chains.
There are four basic steps:
- Ensure policies and codes of conduct conform to required regulations. Transmit this information along the supply chain.
- Map the complete supply chain for transparency purposes.
- Identify areas in the supply chain where the highest risks exist. All areas of the supply chain should be monitored but certain areas will present a higher risk and should be addressed first.
- Instigate a review process to drive continuous improvements and ensure continued compliance as regulations change.
These pragmatic solutions will reinforce a business’ commitment to its human rights obligations. In addition, it will provide assurance that the business is complying with all regulations relating to modern slavery. By implementing the right checks and balances in the supply chain to address modern slavery and forced labour violations, companies can secure further contracts and avoid penalties and shipment seizures.