UK companies must ensure quest for profits avoids modern slavery

18 October 2018

Capitalism has long accepted that to generate business profits it is crucial to drive down costs but how far should this go?

Ten years since the global banking crisis, rampant consumerism, easy credit and demand for cheap goods, usually through ‘offshoring’ - using cheap overseas labour to manufacture British goods - has put modern slavery back on the agenda for UK companies.

No longer just part of the UK’s ignominious history in the cotton plantations of the West Indies or the East India Company, modern slavery, may unwittingly – in the quest for ‘cost-efficiency’ – be lurking in company computer files and supply chains.

In a competitive commercial environment globalisation means supply agreements are often made remotely or through third parties and many honest business people may be unwittingly dealing with forced labour or criminal gangs.

This summer, The Home Office announced a review of the Modern Slavery Act 2015 that aims to protect vulnerable people from enforced labour following evidence that criminal gangs are finding loopholes to avoid enforcement. Companies must ensure that they are not involved.

The legislation’s Transparency in Supply Chain Provisions mean all UK-registered businesses with a £36m or more turnover must publish a website statement confirming their steps to ensure that slavery and human trafficking are not taking place in their business or any of its supply chains.

There are fears that a very large number of businesses may be involved. A Chartered Industry of Procurement and Supply survey in 2017 said that only six per cent of British companies were confident that their supply chains were not affected.

The on-line company statements reveal a modern slavery risk in the UK in casual and temporary labour, such as temporary agency staff in logistics businesses, distribution and office cleaning; people working in car washes sub-contracted cleaning company vehicles; external security staff and workers building or renovating company premises.

In sectors associated with overseas trade, modern slavery is present in clothing manufacture, meat processing, horticulture, fisheries, and tea plantations, to list only a few.

Figures complied by the International Labour Force website and the Walk Free Foundation in conjunction with the UN Migration Agency suggest that, in the past five years, 89m people globally were victims of some form of modern slavery, ranging from a few days to the entire period.

In 2016, there were 5.4 victims of modern slavery for every thousand people globally.  Of these, there were 5.9 slavery victims for every 1,000 adults and 4.4 child victims for every 1,000 children. Women and girls accounted for 71 per cent of modern slaves.

The problem is most prevalent in Africa (7.6 per 1,000 people), followed by Asia and the Pacific (6.1 per 1,000) then Europe and Central Asia (3.9 per 1,000) although the statistics should be interpreted cautiously due to lack of available data, notably from the Arab States and the Americas.

Forced labour is highest in Asia and the Pacific, where four out of every 1,000 people were victims, followed by Europe and Central Asia (3.6 per 1,000), Africa (2.8 per 1,000), the Arab States (2.2 per 1,000) and the Americas (1.3 per 1,000).

Of the 24.9m victims of forced labour, 16m were in the private economy, 4.8m in forced sexual exploitation, and 4.1m in forced labour imposed by state authorities. An estimated 16m people were in forced labour in the private economy in 2016. More women than men are affected by privately imposed forced labour, with 9.2m (57.6 per cent) women and 6.8m (42.4 per cent) men.

Chamber International director, Tim Bailey, says: “The incidence of modern slavery is horrifying, especially in the context of moves towards greater equality, business transparency, the minimum wage, higher ethical standards and the Fair Trade initiative.

“Businesses involved - even innocently – will suffer huge reputational damage, including the likelihood of not being able to raise funding for trading overseas. Clearly we must all adopt thorough due diligence in our overseas operations to stamp this out.”

Follow Chamber International on Twitter @ChamberInt and on Facebook to learn about upcoming events.