There is a clear, compelling, and urgent need to find solutions to the many complex factors that enable modern slavery to persist. To date, most research on modern slavery has focused on the countries where the exploitation is taking place, which typically are the world’s least developed countries and particularly those that are heavily impacted by known risk factors, such as conflict, failure of rule of law, mass displacement, and endemic discrimination. While this focus is important, the realities of global trade and commerce make it inevitable that products generated by modern slavery will travel across borders and into higher income countries where the prevalence of modern slavery is low.
Accordingly, in this chapter we examine the issue of modern slavery not from the perspective of where the crime is perpetrated, but rather from where the products of the crime are sold and consumed, with a specific focus on G20 countries. The resulting analysis presents a stark contrast in terms of both risk and responsibility. As the research in this Index confirms, citizens in G20 countries enjoy relatively low levels of vulnerability to this crime within their borders and many aspects of their government responses to preventing this crime are comparatively strong. Nonetheless, businesses and governments in G20 countries are importing products that are at risk of modern slavery, with hardly any effort being applied by governments to regulate the labour conditions involved in their production.
This chapter draws on research to identify and validate a short list of products at risk of modern slavery, and then maps out the extent to which these products are imported by G20 countries1. It is important to note that no single product is completely the result of forced labour. However, in the absence of information on the proportion that is tainted, our analysis shows the potential reach of modern slavery into countries considered to have low levels of vulnerability and comparatively strong responses. The methodology behind this research can be found in Appendix 3.
Why focus on the G20?
The UN Guiding Principles on Business and Human Rights (UNGPs) were the first international reference framework on human rights in the context of business. Adopted by the UN Human Rights Council in 2011, the UNGPs placed on the international agenda the issue of identifying potential adverse impacts on human rights by business activity.2 The UN Sustainable Development Goals (SDGs) and in particular Target 8.7, which calls for effective measures to end forced labour, modern slavery, and human trafficking, as well as child labour in all its forms,3 has further contributed to the push within the international community to eradicate modern slavery, including through initiatives and policies to ensure public and private supply chains are free from this crime.
While initiatives like the SDGs apply to all countries, individual countries have different levels of impact and influence on the global economy. The G20 countries collectively account for nearly 80 percent of world trade and about 85 percent of the world’s GDP.4 Two of the G20’s member countries, China5 and the United States (US),6 are the world’s largest exporting and importing economies respectively. While some G20 countries have a focus on modern slavery abroad through their aid programs, it is critical to examine their efforts to address modern slavery through economic and trade measures.
In 2017, G20 leaders committed to fostering human rights due diligence in corporate operations and supply chains in line with internationally recognised standards such as the UNGPs.7 This includes working toward establishing policy frameworks and National Action Plans on business and human rights to effectively eliminate forced labour, human trafficking, and modern slavery.8 Given the economic power and influence of the G20, this represents a massive step forward on this issue.
Understanding the risk imported by G20 countries
There are two important factors to understanding the transfer of risk from source countries to consumer countries. The first is to identify which globally-traded products are likely to be at risk of being produced using modern slavery, and the second is to match them with their trade value. In this analysis, we focus on the at-risk products that are imported into G20 countries and their value.
We created a shortlist of 15 products that appeared most frequently in the 2016 US Department of Labor list of goods produced by forced labour.9 To ensure we were using the most up to date information, we validated every product on our initial shortlist through our own research (which resulted in some additions and deletions), and supplemented it with our own data on cocoa and fishing (see Appendix 3). This resulted in the products and source countries listed in Figure 1. It is important to note that the quality and level of available information about both the nature of modern slavery and scale of the problem in these sectors varies widely. In some cases, it is heavily affected by the ability of researchers to validate information. For example, the information on modern slavery in cocoa production is based on random sample surveys undertaken in Ghana and Côte d’Ivoire in 2017, so the information is recent. This reflects the fact that the governments of these countries enable and facilitate research. In contrast, the information on the situation in the North Korean coal mines can be obtained only from defectors from that country, which remains entirely shut off from independent research scrutiny. Equally, some of the research points to widescale problems (such as the research on the Thai fishing industry), whereas in other cases it is less clear if problems are widescale or isolated, as there is less information available. For example, information on forced labour in Chinese electronics manufacturing is based mostly on isolated reports of labour abuses in specific companies, as academic and other independent research on forced labour in China is very scarce. The process used to develop the list contained in Figure 1 is written up in Appendix 3, along with the references which identify the products as being at-risk.
We then examined trade data for imports11 into the G20 countries to identify the top five products imported by each country according to US$ value. The resulting list of top five products across all G20 states includes the following:
- Apparel and clothing accessories
- Laptops, computers and mobile phones
The results of this research are set out in Methodology (and visually presented on the Data import risk page).
As the 2017 Global Estimates of Modern Slavery have shown, most forced labour exploitation occurs in domestic work, construction, manufacturing, as well as agriculture, forestry, and fishing.12 The products identified on our list (see Figure 1) overlap with the sectors that the Global Estimates have identified as where most forced labour can be found. The Global Estimates also illustrated that female and male victims of labour exploitation are distributed differently across the various sectors. Whereas male victims were mostly found in the mining, manufacturing, construction, and agriculture sectors, female victims of forced labour exploitation were more likely to be in the accommodation and food services industry, and in domestic work.
What does the analysis tell us?
G20 countries are importing risk of modern slavery on a massive scale. Collectively, G20 countries are importing US$354 billion worth of at-risk products annually. This ranges from a minimum of US$739 million for Argentina, to a maximum of US$144 billion for the United States. While the strength of the supporting evidence of modern slavery in various products certainly varies, for most products the evidence is clear and compelling. In these cases, it is almost certain that governments and businesses are effectively importing and trading the proceeds of crime. The most clear-cut example of this is the import of coal by China from the Democratic People’s Republic of Korea (North Korea). China imports nearly a billion US dollars’ worth of coal from North Korea, amounting to around 98 percent of North Korea’s total exports of coal.13 The process of digging coal is considered a “3D” or dirty, dangerous, and degrading job in North Korea, and the status of being a coal miner is inherited rather than being a choice. In recent interviews conducted with a sample of North Korean defectors,14 one interviewee noted that "in North Korea, if your parents work in the coal mines, so will you.” He reported he was not paid for this work and he was not free to leave or quit. He had also never seen or even heard about an employment contract for the work he was doing at the coal mine. This defector also noted that “if you’re found unemployed you’ll be punished at the labour training camp.”
The evidence of widescale abuses in the fishing industry is also mounting. Our analysis of risk in global fisheries suggests that of the top 20 fishing countries (by volume of catch) fish imported from China, Japan, Russia, Spain, South Korea, Taiwan, and Thailand are at risk of modern slavery.15 Our literature review found firm evidence of reported cases of labour abuse or trafficking in the last five years for all these countries except Spain, and for Indonesia as well. Inland fisheries in Ghana, primarily in the Lake Volta region, were found to have a high prevalence of children that were trafficked into forced labour.16 Import data confirm wider-scale imports of fish from the at-risk source countries of China, Ghana, Indonesia, Japan, Russia, South Korea, Taiwan, and Thailand into a range of G20 countries, including Argentina, Australia, Brazil, Canada, China, France, Germany, Indonesia, Italy, Japan, Mexico, Saudi Arabia, South Korea, Russia, the UK, and the US (see Table 3 in G20 Analysis Methodology).
Cocoa from Côte d’Ivoire and Ghana is another product that may be tainted by modern slavery. Our own random sample surveys conducted in Côte d’Ivoire and Ghana in 2017 identified cases of modern slavery in the cocoa sector in both countries. Ghana and Côte d’Ivoire are the world’s two largest cocoa producers and their cocoa is widely traded.17 Cocoa was identified to be within the top five products by US$ value for 12 of the 18 G20 countries represented in this chapter.
The government of Brazil has recently been ordered by the Inter-American Court of Human Rights to pay US$5 million to 128 former farm workers who were enslaved on a Brazilian cattle farm between 1988 and 2000.18 This is only one prominent case among many others in recent years that support the widescale existence of modern slavery in the cattle industry in Brazil. Cattle from Brazil is one of the top five imports of at-risk products in Italy and Russia.
Research into the cotton industry has provided evidence that forced labour is a common phenomenon in some Central Asian countries. In Kazakhstan, migrant workers have been found to be affected by modern slavery during the cotton harvest,19 whereas in Turkmenistan adults from the public and private sectors are forced to pick cotton during the annual harvest and farmers are forced to fulfil state-established cotton production quotas.20 In Tajikistan, forced labour of adults and children has allegedly decreased over the last few years21 but may still be an issue.22 For Uzbekistan, the use of state imposed forced labour in the cotton industry, among other industries, remains a serious problem. Reports strongly link the Uzbek cotton industry to forced labour,23 while the results of the ILO monitoring of the 2017 cotton harvest suggest that as many as 336,000 people were forced to work in the 2017 harvest alone.24 Turkey is the one G20 country that imports significant amounts of cotton from those countries. Cotton imports by Turkey total more than US$200 million from Turkmenistan, more than US$30 million from Tajikistan, and nearly US$11 million from Uzbekistan.
Another widely imported product across all G20 states is timber from Brazil. Investigations by Repórter Brasil, one of the largest Brazilian NGOs operating in the modern slavery space, has revealed that workers are widely exploited across the Brazilian timber industry. The investigations also link two US-based companies to timber bought from Brazilian traders that sourced their products from Brazilian sawmills that allegedly used modern slavery.25 Large quantities of Brazilian timber are imported by Argentina, France, Germany, Japan, Mexico, South Korea, and the US.
The garment and textile industry in India, particularly in Southern India states such as Tamil Nadu, is also grappling with extensive labour exploitation. Garments are one of the most widely traded and most “valuable” product categories identified on our list and are represented in the top five products of every one of the G20 countries. The three countries with the highest-value garment imports from India are the US (US$3.9 billion), UK (US$1.9 billion) and Germany (US$1.4 billion).
Electronic goods from Malaysia are also implicated in modern slavery. Research in 2012 and 2014 into the electronics sector in Malaysia by the US-based NGO Verité revealed widespread forced labour in the industry.26 All G20 countries imported electronic goods (laptops, computers, and mobile phones) from Malaysia on an enormous scale, led by China (US$1.6 billion) and the US (US$1.5 billion).
By unravelling the trade flows and focusing on products at risk of modern slavery that are imported by the top economies, it becomes clear that even the wealthiest countries have a clear and immediate responsibility for responding to modern slavery both domestically and beyond their borders. Developed economies are exposed to the risk of modern slavery not only when this crime is perpetrated within their national borders but also when that risk is effectively transferred to them via the products they import. Policymakers, businesses, and consumers must become aware of this risk and take responsibility for it.
What are G20 governments doing?
The Global Slavery Index assesses governments on a range of indicators of good practices, including what they are doing to stop the sourcing of goods or services linked to modern slavery (Milestone 5). In terms of results for this milestone in the Government Response Index, G20 countries achieve an average score of 11 percent, reflecting a range of zero (Argentina, Australia, Canada, India, Indonesia, Japan, Mexico, Russia, South Africa, Saudi Arabia, South Korea and Turkey) to 65 percent (United States) (Figure 2). Australia has announced it will introduce supply chain transparency laws in the second half of 2018.
Figure 2Results from Government Response Index to indicators measuring government efforts to stop sourcing goods and services produced by forced labour (Milestone 5, %)
Table 1 presents at a glance what governments could or should be doing alongside which policies G20 governments have so far implemented.
Table 1Summary of government responses to prevent the sourcing of goods or services linked to modern slavery (Milestone 5)
|Policies that governments should be implementing||G20 governments which have implemented such policies|
|Policies that prevent the import of goods and services made with forced labour.||United States: Section 307 of the US Tariff Act of 1930.|
|Guidelines for public procurement officials to prevent use of modern slavery in public goods.||Germany: Guidelines for procurement officials are provided through the “Municipality Compass.”
United States: Guidelines are available under Executive Order 13627 (2012).
|Public procurement policies that explicitly prohibit using businesses suspected of using forced labour / purchasing products that were made using forced labour.||Brazil: “Slave Labour Dirty List” prevents those businesses listed on it from tendering for public contracts.
France: Ordinance no. 2015-899 of 23 July 2015 relating to public procurement contracts and its implementing Decree no. 2016-360 of 25 March 2016 (transposition of EU Procurement Directive 2014/24/EU).
Germany: Part IV of the Restraints of Competition Act (transposition of EU Procurement Directive 2014/24/EU).
Italy: Legislative Decree no. 50/2016 (transposition of EU Procurement Directive 2014/24/EU).
United Kingdom: Public Contracts Regulations 2015 (England and Wales); Public Contracts (Scotland) Regulations 2015 (transposition of EU Procurement Directive 2014/24/EU).
United States: Executive Order 13627 (2012) and Executive Order 13126 (1999).
|Annual reports on government action to prevent use of forced labour in public procurement are produced and publicly available.||None|
|Government provides training to public procurement officials on modern slavery.||United States: Training for officials is available under the Executive Order 13627.|
|Government takes remedial action where forced labour has been discovered.||United States: The government is fully implementing Section 307 of the US Tariff Act of 1930 which allows the seizure of goods believed to be produced with forced labour.
China: The government took remedial action when cases of unpaid wages were discovered in public contracts.
Business supply chains
|Policies require businesses to report on their actions to minimise risk of forced labour in their supply chain.||Brazil: National Pact for Eradication of Slave Labour (voluntary initiative); ”Slave Labour Dirty List” (List Suja do Trabalho Escravo).
France: Corporate Duty of Vigilance law; Amendments to the Law on Accounting PZE No. 51 (transposition of EU Directive 2014/95/EU).
Germany: CSR Directive Implementation Act (transposition of EU Directive 2014/95/EU).
Italy: Legislative Decree no. 254, 30 December 2016, (transposition of EU Directive 2014/95/EU).
United Kingdom: Section 54, UK Modern Slavery Act 2015.
United States: California Transparency in Supply Chains Act 2010.
|Government creates a public list of businesses that have been found to tolerate modern slavery in their supply chains.||Brazil: “Slave Labour Dirty List” (List Suja do Trabalho Escravo).
China: Measures for Publicising Material Violations of Labour Security; Measures for the Credit Rating Evaluation of Enterprises in Labour Security Compliance (not specific to modern slavery).
|Company directors who fail to prevent modern slavery and fail to undertake reasonable due diligence in first tier supply chain can be criminally prosecuted.||None|
|Government identifies risk sectors and takes action to work with these sectors to eradicate modern slavery.||Italy: "To work above board" (Campagna informativa "Lavorare alla luce del sole") (agriculture).
Germany: Textiles Partnership (textiles).
United Kingdom: Gangmasters and Labour Abuse Authority (agriculture, horticulture, shellfish gathering and associated packaging).
United States: Section 1502 of the Dodd-Frank Act (conflict minerals: gold, tin, tungsten, and tantalum).
|Responsible investment reporting requirement for investment funds and banks headquartered in the country to ensure that investments do not support modern slavery.||None|
As Figure 2 and Table 1 show, G20 governments are taking steps in the right direction, but there is still much more work to be done. Among the various potential policy responses to reduce the risk of modern slavery in product supply chains and industries, the following sections will focus on three areas of government responses: (1) imports, (2) procurement: government and business, and (3) ethical recruitment.
In the US, Section 307 of the Tariff Act of 1930 prohibits the import of goods produced or manufactured, wholly or in part, by forced or child labour.27These goods can be prevented from entering the US and can be seized by the federal government. The importing entities can also face criminal investigation.28 As of November 2017, the US Customs and Border Protection list of Withhold Release Orders, which essentially blocks goods from entering the country under suspicion that they were made with forced labour, contained 42 entries.29 The US is the only country in the world that has such legislation in place.
While not a government response per se, it is relevant to consider the role of sanctions in proscribing certain products for import. In the international arena, the United Nations (UN) has been imposing sanctions on North Korea for several years, with three rounds of sanctions adopted in 2017 by the UN Security Council directed at cutting off revenue to North Korea’s military program.30 The latest UN sanctions passed under Resolution 2397 (2017) imposed restrictions on North Korea’s oil, machinery, industrial equipment, and metals imports as well as on its metal, agricultural, and labour exports.31 The US government imposed its own sanctions against seven North Korean individuals and three entities over human rights abuses, including forced labour, in October 2017.32
The impact of sanctions is often controversial, because even though sanctions are applied to discourage human rights abuses, an unintended side effect can include exacerbating suffering among vulnerable populations.33 In line with this, it has been noted that the international sanctions imposed on North Korea are further exacerbating the human rights situation in North Korea by impeding the delivery of humanitarian aid to North Koreans in need.34
Public spending significantly contributes to the global economy and the G20 governments can thereby exercise substantial influence over their suppliers and, in turn, over global supply chains. Across OECD countries, public procurement accounts for about 12 percent of GDP on average.35Public procurement commitments under the World Trade Organization’s Agreement on Public Procurement (GPA) have been estimated at around €1.3 trillion (US$1.6 trillion).36 Table 2 details which G20 governments have implemented policies to minimise the risk of governments purchasing products tainted by forced labour.
Table 2G20 government responses on public procurement: Status of laws to minimise the risk of modern slavery in public supply chains
|Korea, Republic of (South Korea)|
The US, spending around US$500 billion in government contracts annually,37 is leading the field in working toward slavery-free public supply chains. Executive Order 13627 (2012) and Executive Order 13126 (1999) require US government contractors to certify that they and their subcontractors are taking specific preventive measures to detect and eliminate trafficking and forced labour in their supply chains. High-value suppliers are also obliged to create a compliance plan detailing how the supplier proposes to prevent modern slavery and to certify that no “prohibited” goods or services (including goods produced through modern slavery) are being supplied in order to access government markets.38 These laws aim to ensure all US government contracts are performed free of human trafficking and forced labour.
In Brazil, the “Dirty List,” which publicises companies found to be using modern slavery, is also used by public sector companies and those listed are prevented from tendering for public contracts.39
The European Union (EU) has begun moving toward more sustainable and socially responsible public procurement. In 2014, the EU Parliament passed Directive 2014/24/EU to encourage European countries to “buy social” by taking into account social considerations in their public procurement processes, albeit not particularly targeting supply chains.40 Article 57 of Directive 2014/24/EU requires that public authorities exclude a business from the procurement or award procedure if it has been convicted by final judgment for child labour or human trafficking. The Directive also recommends integrating social considerations as part of the contract performance conditions, including asking businesses to comply with the ILO core conventions, such as Convention 29 on forced labour and Convention 182 on worst forms of child labour.41 The requirement of a conviction under these new EU rules sets a high bar, given that human rights abuses in supply chains rarely lead to criminal prosecutions, or are never even reported in the first place.42 Although the requirements of the public procurement directive are not as far-reaching as legislation in the US, for instance, they nevertheless put pressure on European governments to move toward more ethical and sustainable public procurement. European countries were required to transpose the Directives into national law by 18 April 2016.43 The names of the domestic legislation and transposition dates by the European members of the G20 are summarised in Table 3.44
Table 3National transposition of EU public procurement Directive 2014/24/EU in European G20 countries
|Name of national legislation||Ordinance no. 2015-899 of 23 July 2015 relating to public procurement contracts and its implementing Decree no. 2016-360 of 25 March 2016||Part IV of the Restraints of Competition Act||Legislative Decree no. 50/2016||Public Contracts Regulations 2015 (England and Wales)
Public Contracts (Scotland) Regulations 2015
|Transposition date||March 2016||April 2016||April 2016||February 2015 (England and Wales)
December 2015 (Scotland)
In 2016, a private members’ bill was introduced, among other amendments, into the UK House of Lords by Baroness Young that attempted to extend the reporting requirement in Section 54 of the 2015 Modern Slavery Act to include all public authorities, among other amendments. After this bill was unsuccessful, a similar, second private members’ bill was introduced by Baroness Young in mid-2017, however, at the time of writing it has not progressed to a second reading.45 While these amendments were not passed it clearly shows there is a desire in the UK to hold government bodies to the same reporting requirements as business.46
Germany has also implemented several other measures designed to promote sustainable public procurement. Since 2010, the Alliance for Sustainable Procurement has brought together federal, state, and local authorities to increase the percentage of sustainable goods and services among purchases by public authorities.47 The Sustainability Compass (Kompass Nachhaltigkeit) is an information platform launched by the federal government to provide information and guidance for German public authorities on how to incorporate social and environmental sustainability criteria into their tendering procedures.48 Public authorities can exclude economic operators from participating in a tendering process at any time if they are aware of any mandatory grounds for exclusion which include human trafficking as defined in Article 2 of EU Directive 2011/36/EU.49
In 2013, Australian Prime Minister Julia Gillard announced a new government strategy to revise federal procurement arrangements and guidelines to ensure they assist in identifying and addressing slavery in supply chains.50 The subsequent Abbott government expressed support for this idea but to date it is unclear what action was taken to implement it.51 In March 2017, the Australian government published the new Commonwealth Procurement Rules (CPRs), which replaced the 2014 version.52 One of the new amendments to the 2017 CPRs is Clause 10.18, which requires that officials must make reasonable enquiries to consider the tenderer’s practices regarding labour regulations and ethical employment practices.53 However, the new clause does not specifically mention modern slavery or human trafficking. The final report on Establishing an Australian Modern Slavery Act by the Joint Standing Committee on Foreign Affairs, Defence and Trade recommended introducing a new requirement to ensure the Australian government act as a model leader and procure goods and services only from businesses that comply with the modern slavery reporting requirement.54
Business supply chains
In the past two decades there has been a rapid growth in the number of voluntary initiatives focusing on basic human rights standards and decent working conditions. Typically, they are sector or regionally based and driven by a variety of stakeholders – governments, civil society, and businesses themselves – and sometimes include certification schemes. However, over the past couple of years there has been a move away from voluntary initiatives toward mandatory reporting laws, such as Section 54 of the UK Modern Slavery Act, which help to create a level playing field for business and ensure that large enterprises are focused on addressing the complex issue of modern slavery in their global supply chains. Table 4 shows which G20 countries have implemented legislation requiring businesses to report on actions they take to eliminate modern slavery from their supply chains.
Table 4G20 government responses on business supply chain transparency: Status of laws requiring business to report on actions taken to minimise modern slavery risk in supply chains
|Korea, Republic of (South Korea)|
The UK Modern Slavery Act (MSA) has been described as a “game changer” for tackling modern slavery and requiring transparency on modern slavery in supply chains. Section 54 of the MSA requires large businesses to publish an annual statement outlining what they do to ensure there is no slavery within their own organisation or anywhere in their supply chains. While the content of the statement is not mandated, the UK Home Office provides guidance for businesses on the reporting requirement of the MSA, which was updated in October 201755 and applies to every British or foreign organisation that does business in the UK and has an annual turnover of more than £36 million (US$50.3 million56). Failure to disclose a statement could result in injunctive proceedings against the organisation and continued resistance could result in unlimited civil fines. Although the UK is celebrated for its genuine leadership on modern slavery globally, the MSA has also drawn criticism, such as from those who point out that the government has failed to produce a central list of companies that are required to report. This, together with the rather minimal reporting requirements (it is possible to release a statement simply reporting that no action has been taken), makes it difficult to hold companies to account.57
The California Transparency in Supply Chains Act (2010), the world’s first mandatory reporting law, became effective on 1 January 2012.58 While California remains the only state in the US to have enacted supply chain transparency legislation, it is itself the world’s sixth largest economy, home to influential industries located in Silicon Valley and Hollywood, and accordingly has enormous impact in the US and globally.59 Businesses covered by the Act must publish on their websites information about the efforts they make to eradicate modern slavery from their direct supply chains for any tangible goods they offer for sale. However, the law applies only to retail sellers and manufacturers (wherever incorporated) that do business in California and have global annual revenues of more than US$100 million.60
In 2017, France adopted the Corporate Duty of Vigilance law requiring mandatory due diligence for large businesses.61 The law establishes an obligation for parent companies to prepare a “vigilance” or due diligence plan that directly and practically addresses impacts on environment, health and security, and human rights (including modern slavery). The scope of the new law extends to all French companies that have more than 5,000 employees domestically or employ 10,000 employees worldwide.62 The content of the plan as defined by the law requires detailed mapping of risks, details of procedures used to assess risks with suppliers, alert mechanisms to collect risk information, and a monitoring scheme. Non-compliance with this law may result in court action requiring compliance and/or requiring a business to compensate victims who have suffered as a result of its non-compliance. Initial drafts of the law had proposed civil fines for failure to comply but these were contested and the fines were not included in the final version of the law, as passed. The law will affect about 150 French businesses.63
In February 2017, the Australian Joint Standing Committee on Foreign Affairs, Defence and Trade conducted an inquiry into establishing a Modern Slavery Act in Australia comparable to the UK MSA 2015.64 In August 2017, the Australian government announced it will introduce legislation that will require large businesses to report annually on their actions taken to address modern slavery.65 Four months later, the committee released its final report, which recommended legislation that incorporates mandatory supply chain reporting for business as well as a domestic response to modern slavery in Australia, led by an Australian Anti-Slavery Commissioner. Other recommendations included greater regulation of labour hire companies, measures to tackle orphanage tourism,66 and modern slavery reporting by the government on its own supply chains.67 The Australian government has committed to introducing a bill to Parliament by mid-2018 with the aim to pass legislation by end of 2018.68 Details of the precise content of the bill are not yet known.
In Brazil, the 2005 National Pact for the Eradication of Slave Labour saw signatory companies voluntarily agreeing to actively promote decent work practices and to cut commercial ties with those businesses that are on the government’s “Slave Labour Dirty List” because they use forced labour in their supply chains.69 The response to the Pact was positive, with more than 450 companies, representing almost 30 percent70 of Brazil’s GDP, signing onto the Pact by 2014.71 The “Slave Labour Dirty List” was introduced by the Ministry of Labour and Employment in 2004 to publicly “name and shame” companies that have been found to be profiting from slave labour.72 Companies can also be penalised through criminal and commercial sanctions, such as the freezing of assets or denial of government subsidies.73 In 2014, the Supreme Court of Brazil suspended the disclosure of the Dirty List following a lawsuit filed by the Associação Brasileira de Incorporadoras Imobiliárias (Abrainc), a real estate developer’s association representing many organisations on the list. Abrainc argued the list was unconstitutional as it disrespected the fundamental right to a defence.74 The court allowed the government to resume publication of the list in March 2017, but since then there has been criticism about the updating of the list,75as the new version identified only 68 businesses in contrast to the 609 names listed in 2014 before it was enjoined by the court.76
In 2014, the European Union introduced the EU Directive 2014/95/EU on disclosure of non-financial and diversity information, which requires large businesses to include in management reports a non-financial statement containing information relating to social, environmental, and human rights matters.77 While modern slavery is not expressly mentioned, it is effectively captured under the category of human rights. Broadly speaking, businesses are required to disclose if they have more than 500 employees or are a public interest entity.78 Twenty-seven EU countries, excluding Spain, have fully transposed the Directive into domestic legislation. It is estimated that the legislation will cover around 6,000 large companies across the EU.79 Generally, all national laws require that company reports cover the following topics: environmental performance, social and employee matters, human rights, and corruption and anti-bribery. EU Directives give, however, significant flexibility to member countries when transposing them domestically. Because of this, the requirements included in national legislation vary widely across the EU countries. As is described in Table 5, EU member countries differ in the ways in which they define an organisation, the type of reporting mechanism, and the penalty which will be imposed upon organisations that fail to report.80
|Name of national legislation||Amendments to the Law on Accounting PZE No. 51||CSR Directive Implementation Act||Legislative Decree no. 254, 30 December 2016||Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016|
Business with more than 500 employees
net turnover over €40 million or a balance sheet total over €20 million
public interest entities
non-listed sociétés anonymes and non-listed investment funds if they have a net turnover over €100 million
Business with more than 500 employees
net turnover over €40 million or a balance sheet total over €20 million
public interest entities
Business with more than 500 employees
net turnover over €40 million or a balance sheet total over €20 million
public interest entities
Business with more than 500 employees
public interest entities
|Type of reporting mechanism||Annual report, within 8 months of the end of financial year, made available on website for 5 years||
Management report, or
separate non-financial report,
within 4 months after the balance
Management report, or
separate report within deadline of financial statements, published on company register alongside management report
|Penalties||No fine is imposed unless an interested party asks for the disclosure of the non-financial information, if it is not available, financial penalties can be imposed by a judge.||Up to the amount which is
the highest of the following: €10 million or five% of the total annual
turnover of the company or twice
the amount of the profits gained
or losses avoided because of the
|Between €20,000 and €150,000||None|
It should be noted that several other European countries are developing due diligence regulations. This includes the upcoming Dutch Child Labour Due Diligence Law82 and the latest developments in Switzerland sparked by the Swiss Responsible Business Initiative (RBI), which is seeking an amendment to the Swiss Federal Constitution that would require companies to conduct mandatory human rights diligence in line with the UN Guiding Principles. In response to the RBI, the Legal Affairs Committee of the Swiss Parliament’s Council of States announced in late 2017 that a new bill would be drafted that would make human rights due diligence mandatory for all large companies and also for small and medium-sized enterprises operating in high-risk areas. It is expected that the public referendum on this proposed legislative amendment will take place towards the end of 2018 or the beginning of 2019. 83
In a major step forward, the Canadian government announced on 17 January 2018 that it will create an independent Canadian Ombudsman for Responsible Enterprise (CORE). The CORE will be mandated to investigate allegations of human rights abuses linked to Canadian corporate activity abroad and will have the power to independently investigate, report, recommend, and remediate, as well as to monitor implementation of the remedies it imposes. The position’s scope will be multi-sectoral, initially focusing on the mining, oil and gas, and garment sectors, but it is expected that it will be extended to other business sectors. The Canadian government also announced plans to establish an Advisory Board on Responsible Business Conduct to advise the government and the CORE on responsible business conduct abroad.84
Global supply chains entail the buying of goods but also the purchase of labour. In our globalised world, millions of so-called economic migrants are leaving their countries to seek work elsewhere. Remittances from migrant labour contribute strongly to the GDP of many developing countries. For the purpose of preventing and eliminating modern slavery, there needs to be a particular focus of attention on migrant workers, especially those working in the low-skilled, informal, or seasonal sectors as they are generally more vulnerable due to a combination of factors, including linguistic barriers, financial pressure, or limited knowledge of their local rights.85 Their situation is often exacerbated by the available migration frameworks that may offer only limited options for safe migration. Many of the issues connected to exploitation of migrant workers are rooted in practices that trap workers in bonded labour-type situations that they are unable to leave. Some of the most fundamental practices increasing the vulnerability of workers assessed under the Global Slavery Index’s Government Responses Index include the charging of recruitment fees to workers and the lack of labour law protection for migrant workers and those working in vulnerable sectors. Accordingly, while businesses have a role to play, it is essential that governments take action to improve conditions for migrant workers by enforcing ethical recruitment and labour protections.86
Table 6G20 government responses concerning recruitment fees
|Laws implemented to prevent fees charged to the employee||No federal legislation, individual state laws enacted||Fees capped at certain amounts or according to certain conditions||No laws implemented|
|Korea, Republic of (South Korea)|
Table 6 groups the various policy responses of G20 countries on charging of recruitment fees to workers87 into four different categories. Some countries have legislation prohibiting recruitment fees that are charged to the employee. For example, the UK’s Employment Agencies Act 1973, Section 6, prohibits employment agencies from charging recruitment fees to the workers for finding or trying to find them employment.88 Since 2005, the UK has also had a licensing scheme to regulate businesses that provide workers to the agriculture, horticulture, shellfish gathering, and processing and packaging sectors.89 The Gangmasters and Labour Abuse Authority (GLAA, formerly known as the Gangmasters Licensing Authority) is a non-departmental public body that assesses third-party employment agencies to ensure they meet certain standards with regard to workers receiving fair treatment and being legitimately employed.90 In mid-2017, the GLAA’s role was broadened to more effectively combat modern slavery across the entire labour market (i.e. including sectors that are not subject to GLAA licensing91). GLAA officers now have new police-style powers that allow them to carry out arrests (rather than refer offenders on to the police) and to search and seize evidence of labour offences.92
In two G20 countries, Canada and the United States, policies prohibiting recruitment fees charged to the employee exist in certain states and provinces but are not federally legislated.
Another group of G20 countries allows the charging of recruitment fees to the employee but caps the amount according to certain conditions. For example, in Germany, paragraph 296 of the German Social Code of Law (Sozialgesetzbuch) states that when using a private recruitment agency, the job seeker enters into a contract with the agency. If the agency finds employment for the job seeker, the job seeker is required to pay a fee to the recruitment agency, as per the contract. This fee is generally capped at €2,000 (US$2,48093) and at €150 (US$18594) for au pair jobs.95
The Japanese government prohibits the charging of recruitment fees to the employee under Article 6 of the Labour Standards Act, with the Labour Standards Inspection Offices conducting inspections to ensure compliance.96 Recruitment agencies, however, are governed by the Employment Security Act (Article 32-3), which allows licensed recruitment agencies to collect fees from job seekers in special cases, such as when “collection of a fee from a job seeker is found to be necessary for the interest of said job seeker.”97 These provisions are also applicable to migrant workers if they use agencies based in Japan to either find them work in Japan or make arrangements for them to come to work there.98
India’s Employment (Amendment) Rules 2009 states that recruitment agents can charge fees to the employee but that they must be limited to 45 days’ wages or a maximum of 20,000 Indian Rupees (US$31299).100 Overcharging and abuses within this system are, however, common and well documented.101 The Ministry of External Affairs launched an eMigrate online foreign worker recruitment system in 2015102 in an effort to make the system “safer, more orderly and humane.”103 through ensuring foreign employers and recruiters comply with relevant regulations. However, widespread abuses confirm that compliance remains an issue.104
Half the G20 countries have not implemented any laws to make sure that workers are not charged any recruitment fees. Australia does not have a federal policy that explicitly prohibits charging of fees to the employee as a payment for labour supply services or facilitating migration. Although the Fair Work Act 2009 specifies that companies hiring through labour hire agencies pay the labour hire agency (the “on-hire business”) a fee for their recruitment services, it does not specifically prohibit recruitment fees from being charged to the employee.105 There are some existing regulatory frameworks for labour hire firms and recruitment agencies, however these differ largely among Australia’s states and territories.106 Also, it is uncertain whether and how these laws can be enforced on overseas agents or brokers.107
China does not have a comprehensive legislative framework prohibiting recruitment fees from being charged to the employee, but China’s legal framework does include some unique features focused on protecting workers in the informal economy and those who are engaged through recruiters.108 In 2008, China enacted a Labour Contract Law in an effort to formalise all employment relations.109 This gave workers robust protections and made contracts compulsory for all workers.110 An amendment made to the law in 2013 allows for greater protection of workers who are employed through a recruitment agency. The revisions require employers to hire the majority of their workforce directly in order to restrict the number of workers engaged through recruiters. The amendment guarantees contract workers the same rights as their directly-employed counterparts, such as the required social benefits (including pensions, health insurance, and unemployment benefits)111 and payment of their full wage.112
Once migrant workers have been recruited, it is important that they are provided with safeguards that ensure decent working conditions. This should include protection under domestic labour laws, regardless of industry or specific characteristic of their work arrangements (such as not having a written contract). Table 7 classifies the legal protections afforded to workers across the G20 countries. Nine G20 countries have labour laws that cover all workers (national and foreign workers). While such legislation exists in Indonesia, in practice domestic workers are unable to access the protections these laws afford. As for the majority of G20 countries, certain sectors are not covered by national labour law. Table 7 details which sectors are excluded in each of those countries.
Table 7G20 government responses on equal labour laws
|Labour laws cover all workers||Labour laws exclude workers in certain sectors|
|Argentina||Australia (domestic workers excluded in one state)|
|Brazil||Germany (domestic workers and domestic workers of diplomats excluded)|
|Canada||India (domestic workers excluded)|
|China||Italy (employees of companies with fewer than 15 workers and domestic workers excluded)|
|France||Japan (domestic workers and those in informal sectors excluded)|
|Indonesia||Russia (employees of companies connected with 2018 World Cup excluded from labour law)|
|Mexico||Korea, Republic of (South Korea) (domestic workers excluded)|
|South Africa||Turkey (multiple sectors excluded)|
|United Kingdom||United States (domestic workers excluded from laws to unionise and from protections when working in the private home of a family)|
|Saudi Arabia (migrant workers, domestic workers and seafarers excluded)|
Recommendations: What should governments and businesses be doing?
- Governments should require publicly funded entities to report on steps taken to eliminate modern slavery from their supply chains.
- Governments should require government contractors (and their sub-contractors) to certify that they take specific preventive measures to detect and eliminate trafficking and forced labour in their supply chains.
Business supply chains
- Governments should enact legislation that requires large businesses to report on steps taken to eliminate modern slavery within their business and supply chains (“modern slavery statements”).
- Governments should manage a free and publicly accessible repository to file all modern slavery statements to ensure businesses can be held accountable for non-compliance.
- Ensure that any legislative reform aligns with legal and regulatory efforts within the G20, in consultation with business, civil society, and other stakeholders.
Governments should take measures to make sure that migrant workers (and not just nationals) are protected by:
- Ensuring that labour law covers national and migrant workers in all sectors.
- Enacting legislation that prohibits charging recruitment fees to the employee.
- Enacting laws prohibiting employers or agencies from withholding personal identification documents of workers.
- Regulating third party labour agencies via a formal licensing system that is aligned across G20 countries (similar to the UK Gangmasters and Labour Abuse Authority).
- Identifying and promoting safe migration corridors for workers.
Transparency in Supply Chains
- Businesses should report annually on steps taken to address risks and eradicate modern slavery within their organisations and supply chains, ensuring these reports are signed by their boards and made publicly available.
- Businesses should proactively and regularly conduct due diligence for modern slavery risks (in accordance with emerging international standards) internally and within supply chains, and they should encourage their suppliers to make similar efforts.
- Businesses should demonstrate good practices around ethical recruitment. These include:
- Never withholding workers’ identity documents.
- Never charging recruitment fees to workers and using only those recruitment agencies that have a zero-fee policy.
- Businesses should provide jobs, internships, skills training, and opportunities to survivors of modern slavery.
- Businesses should engage with governments and stakeholders to develop laws and regulations relating to supply chains to ensure legislative reform has meaningful impact.
- Businesses should share information and good practices with regard to ensuring their supply chains are free of modern slavery on a pre-competitive basis across industries and sectors, as well as support and engage with civil society groups on these matters.