Forced Labour Across Emerging Economies Places Corporate Reputations at Risk

An annual report assessing the risks to business from complicity in the violation of human rights worldwide has revealed a continuing global trend in the use of forced labour, particularly across the most economically important emerging markets.

The Forced and Involuntary Labour Index, released by risk analysis and mapping firm Maplecroft, is one of 23 violations evaluated in the Human Rights Risk Atlas 2012. It assesses the potential risk of business complicity in the use of forced labour in international operations or by supply chain partners. Maplecroft calculates the index by analysing the frequency, duration, coverage and severity of reported forced labour violations in 196 countries.

Pariah States Top Ranking, While Emerging Economies at ‘Extreme Risk’

The widespread use of forced labour in Myanmar, North Korea, Somalia and Sudan means they top the ranking. However, the volatile nature of the business environment in these countries and internationally imposed sanctions, have marginalised investment.

More importantly, for the fifth consecutive year, countries vital to the supply chains of multinational companies are featuring in the ‘extreme risk’ category of the index. These include: China (10), India (15), Mexico (21), Indonesia (23), Malaysia (27), Viet Nam (37), Bangladesh (43) and the Philippines (44).

“The ongoing use of forced labour in emerging economies indicates an unwillingness or a critical lack of capacity to address both the symptoms and causes, leaving business to police the problem itself,” said Professor Alyson Warhurst, chief executive officer (CEO) of Maplecroft. “Responsible organisations must ensure that they and their business partners are fully compliant with international labour standards or they risk damaged reputations, litigation, investor alienation and reduced profits from consumer backlash and hidden costs relating to reduced productivity linked to adverse working conditions.”

According to Maplecroft, forced labour is rooted in poverty, discrimination and cultural acceptance of the bonded status of social groups. Women and children are particularly vulnerable, as are migrant workers that have crossed borders in search of opportunity or who have been displaced by conflict or natural hazards. The trafficking in human beings for forced labour also remains a key concern in all countries, especially in respect of sexual exploitation and particularly of girls.

Prevalence of Forced and Child Labour in the Global South

The International Labour Organisation (ILO) estimates 12.3 million people are victims of forced labour worldwide, with children being disproportionately affected, particularly in the global south.

This is especially true of India. Despite substantial economic growth, NGOs place the number of bonded labour victims in India in the millions, with children worst affected. Most forced labour in India occurs within agriculture, but also affected are the garment industry, the construction sector, rice mills, brick kilns and quarries. According to a 2009 UNICEF report, more than 200,000 children were working in hybrid seed production alone.

Considerable numbers are also reported working under coercion as servants and beggars, in the production of leather goods and in gemstone cutting. Definitive child labour figures for India do not exist, but the US Department of State estimate that there are 10 million to 11.5 million child labourers in neighbouring Pakistan, which ranks one place higher than India in the index at 14th.

Women and Girls at Particular Risk

Women and girls constitute a large number of forced labour victims, with a significant proportion suffering sexual exploitation and domestic servitude. According to the ILO, women and girls constitute 98% of all victims of commercial sexual exploitation, and 56% of victims of forced economic exploitation. Forced labour in domestic service continues to be a problem in Afghanistan (7), Indonesia (23), Malaysia (27) and Nepal (32), whereas forced labour in the sex industry is prevalent in the Bangladesh (43) and the Philippines (44).

Risks of Complicity

In the economic powerhouse of China, forced labour continues to be used in factories, brick kilns, coal mines and the agricultural sector. Migrant workers continue to face slave-like conditions in many industries in China and there are credible reports of China using prison labour for private production facilities that operate under a prison and commercial name.

For instance, in January 2011, a Canadian company was found to have imported goods produced within the Laogai, China’s extensive system of forced-labour prison camps. Authorities have also reportedly imposed mandatory labour of children for cotton-picking.

Complicity with labour violations can easily occur if companies do not undertake thorough human rights due diligence. A vivid example of this is the October 2011 discovery that garments sold by Scottish company, Edinburgh Woollen Mill (EWM) were produced in Mongolia with the use of labour from North Korea, with wages being paid to the government of North Korea, suggesting state complicity in workers’ rights violations. This remains subject to investigation, albeit the reputational damage is already done.

Arab Spring and the Effect on Migrant Workers

The global economic recession has compounded weak protection of migrant workers’ labour rights, as have the recent conflicts in Arab countries. Following the outbreak of civil war in Libya, Human Rights Watch reported that soldiers blocked about 30,000 migrant workers from fleeing into Tunisia, forcing many to return to work in Tripoli.

Victims of trafficking for forced labour are particularly vulnerable to being trapped in Libya due to the confiscation of identification documents. The Arab Spring has also seen migration to Europe increase considerably, where migrants are again vulnerable to trafficking and forced labour.

Western Nations Also Exposed

The problem of forced labour is not confined to emerging or developing economies. The issue was recently highlighted in the UK (154), which is rated ‘medium risk.’ In September 2011, a major police raid’ resulted in the release of 24 men (mainly Poles, Romanians and Russians) from a caravan site in Leighton Buzzard, some of whom were held in virtual captivity for up to 15 years. They were believed to have been coerced into forced labour in a range of gruelling manual jobs, including asphalting.


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