Modern slavery is a multi-billion dollar industry that affects businesses and economies worldwide. According to the latest Global Estimates of Modern Slavery, it is estimated that 50 million people were living in modern slavery in 2021. This is 10 million more people living in modern slavery compared to the 40 million global estimate in 2016. Whilst the full extent of its effects on society and business is still unknown, there are specific implications that companies must be aware of to protect their workers from exploitation.
Modern slavery includes forced labour, debt bondage, trafficking for sexual exploitation and child labour. These practices are illegal under international law and profoundly damaging to individuals who become ensnared. They also have significant implications for businesses around the world.
By engaging with companies or suppliers which employ modern slavery practices, enterprises run the risk of damaging their reputation and losing customers due to unethical business practices. This can result in severe financial losses and damage a company’s brand reputation over the long term.
Companies engaging in modern slavery face additional legal risks. Businesses which do not comply with labour laws may be subject to fines or criminal prosecution; these include those found complicit in using forced labour or human trafficking as part of their operations and those found to have employed subcontractors that engage in these activities.
As such, companies worldwide need to ensure that their sourcing processes do not engage with suppliers or contractors who use any form of modern slavery, regardless of where they operate.
Which Industry Has the Most Modern Slavery Cases?
Fishing, construction and manufacturing are the three primary industries with the most prevalent cases of modern slavery.
Due to its high reliance on seasonal workers from outside the local populations, fishing is one sector particularly vulnerable to exploitation. Poor working conditions at sea can include long hours for minimal pay, little or no access to medical care, no access to communication with family or friends back home, inadequate living quarters and lack of food during trips away from shore. These issues can sometimes escalate into full-blown coercion tactics like physical abuse and threats against life.
Workers employed in this sector may not be paid on time or at all; they are often soft targets for traffickers who promise better pay but instead force them into hard manual labour, such as digging ditches or laying bricks with short rest periods and no breaks between shifts. In many cases, these labourers do not even have contracts for their work, so there is no legal recourse in cases of mistreatment or nonpayment.
The manufacturing sector is also heavily linked to modern slavery due to its globalised nature. Companies based abroad may benefit from cheaper input costs by taking advantage of poor wages and unsafe working conditions in other countries, creating incentives for unscrupulous employers to use forced or trafficked labour to reduce their expenses further. Moreover, there have been reports of sweatshops where workers are denied fundamental rights, such as healthcare benefits or even a livable wage whilst being subjected to excessive overtime hours with no compensation whatsoever.
Large multinationals are increasingly outsourcing production operations through subcontractors who may be more likely than their larger counterparts to engage in unethical practices, including child labour and employee mistreatment, without any severe consequences raised by enforcement agencies or public scrutiny for these activities.
Global Estimates of Modern Slavery
Global estimates of modern slavery in 2022 are expected to be far more widespread than in recent years. In 2021, 50 million people worldwide lived and worked in forced or involuntary labour conditions, with the majority being women and children. This number will increase by an alarming 25% by 2022 as businesses continue to exploit vulnerable populations and economies become increasingly interconnected.
The International Labour Organization (ILO) reports two primary forms of modern slavery: forced labour and human trafficking. Women and children are particularly vulnerable to exploitation as they often lack the education and resources to protect themselves from these abuses. The ILO also notes that trafficking networks typically operate across borders, making it difficult for governments to identify victims and bring perpetrators to justice.
The Global Slavery Index uses the Index of Proportionality measure to estimate the prevalence of modern slavery by country. The index consists of three sub-indices: prevalence, vulnerability and government response. This allows for a more nuanced understanding of modern slavery trends at national and global levels.
To generate reliable prevalence estimates, the Walk Free Foundation (WFF) combined data from several sources, including national surveys, household surveys, Demographic Health Surveys, World Health Surveys, Labour Force Surveys and other studies that provide robust population estimates.
What Can Businesses Do?
These global estimates have wide-ranging implications for businesses, especially those with complex supply chains. Companies need to be aware of the risks associated with modern slavery and take steps to address them. Some specific actions companies can take include:
- Assessing their exposure to modern slavery by mapping their supply chains and understanding where their products come from
- Adopting policies and procedures to prevent modern slavery in their operations and supply chains
- Conducting due diligence on suppliers
- Providing training on modern slavery risks for employees who are involved in procurement
- Cooperating with law enforcement to report instances of modern slavery
- Supporting efforts to eliminate modern slavery by collaborating with NGOs, civil society organisations, governments and international organisations.
The findings from multiple reports have implications for businesses whose supply chains span multiple countries. For example, if a company sources raw materials from numerous countries where forced labour is prevalent, it may inadvertently support modern slavery through its supply chain practices. Since an estimated US $190 billion in illegal profits are generated by forced labour each year, companies must implement robust supply chain due diligence processes to mitigate reputational, financial and legal risks associated with their involvement in modern slavery.
The Modern Slavery Act of Australia
The Modern Slavery Act 2018, also known as the ‘Modern Slavery Bill,’ is Australia’s response to addressing the global issue of modern slavery. The Act came into effect on 1 January 2019 and applied to companies operating in Australia with an annual consolidated revenue of at least $100 million. Under the Modern Slavery Act, these businesses must report their efforts to identify and address potential slavery risks in their supply chains.
The legislation encourages companies to be proactive in preventing, identifying, reporting and remedying modern slavery within their organisation and operations. The Act establishes a framework for this purpose, which includes providing annual statements outlining steps the company took to identify and mitigate any contemporary forms of slavery that might exist within its operations or supply chain.
Companies must also disclose details about their structure, operations and supply chain, as well as specific steps taken to assess and manage risk areas associated with modern slavery.
The penalties for non-compliant companies under the Modern Slavery Act are significant: those found guilty may face fines up to $1 million or more depending on the severity of offences committed by individuals or organisations involved in acts of modern slavery.
In recognition of this risk, many companies operating in Australia are taking proactive steps towards identifying risks associated with modern slavery within their operations and supply chains before they become subject to enforcement action by regulators or other third parties, such as consumers or investors seeking reputational protection through legal action.
How Madison Marcus Can Help You
To protect workers from exploitation and comply with international law, companies need to understand what modern slavery is and how it can manifest in their industry or supply chain.
Madison Marcus can help you develop a statement outlining your company’s stance on modern slavery and prevention measures. We take this issue seriously and are committed to helping our clients protect their workers from harm.
For all enquiries, contact us here.