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Forced Labor and Trafficking Risks in Global Supply Chains
Mission: Make fair and accountable recruitment an accessible commodity – the rule rather than the exception, by
Scope of this Presentation
Labor shortages in receiving countries
Labor surplus in countries with high unemployment and underemployment
Labor migration
Unintended outcome: Debt bondage, forced labor trafficking; labor broker abuses
Receiving countries keep businesses in-country
Employers get skilled workers
Workers get jobs, and acquire and improve skills
Sending countries earn from dollar remittances
Causes, Benefits and Risks of Labor Migration
Recruitment & Selection
1. Commitment/ Reservation Fee
2. Placement Fee
3. Direct Costs
On-Site Conditions
4. Deductions (Run away insurance, other deductions)
Risks to workers• Forced labor
• Excessive, forced overtime
• Harassment and abuse
• Pregnancy testing, forced contraception/abortion
• Workers who run-away
Return/Reintegration
5. Cost of repatriation
Risks to employers• Worker dissatisfaction and
unrest
• Runaway workers
• Litigation
• Public censure: stakeholder action, dissatisfied customers
Workers subsidize the cost of labor migration, fall into debt bondage
Labor Brokers
Entry and exit barriers
Poor to no regulation, low penalties for malpractice
Employers
Sub-contract recruitment, selection and hiring, and even on-site management of foreign workers, but have no visibility or control over the process
Receiving Country Governments
Sending Country Governments
Workers
Poverty and Unemployment
Primacy of immigrations policies
Poor ability to negotiate with receiving countries for better worker protection
Imperfect information
Corruption and collusion
Factors that increase vulnerability of the labor migration system to forced labor issues
Where the risk to forced labor, debt bondage and trafficking are most likely
The worker’s risk to debt bondage and forced labor starts before they even reach the workplace - even before they get the job
Indonesia Philippines Vietnam Thailand Bangladesh China Nepal Cambodia Myanmar
Malaysia 630 - 980 1,100 2,400 No data 3,500 NA 1750 – 2100
1200 – 1500
1,500 – 1700
Taiwan 3,200 – 4,000
1,700 – 3,000
5,000 – 8,000
3,200 – 4,900
NA NA No Data
No Data No Data
Singapore No data No Data 3,600 – 5,000
No data NA 7,000 - 12,400
No Data
No Data No Data
Japan 6,000 – 9,000
3,000 – 5,000
8,000 – 15,000
6,000 – 8,500
No Data No Data
No Data
No Data No Data
Korea 5,000 – 8,000
3,000 – 4,000
7,000 – 12,000
5,000 – 7,500
No Data No Data
No Data
No Data No Data
Range of Total Recruitment Fees & Expenses Paid by Workers (in USD)
Taiwan Broker’s Service Fees - 10%
Sending country placement fees 15%
Interest on loans in sending country – 10%
“Savings” – 17%
Board and Lodging – 20%
Balance that goes to the worker – 28%
Source: Verité, 2009
Breakdown of a Filipino Worker’s Wages for a 2-year Contract in Taiwan (NT414,720), 2009
Employers need to pay for recruitment services if they want to eliminate forced labor in supply chains
Fees Paid by Contract Workers for Taiwan Deployment
Country Placement Rate (in US$)
# of Months Equivalent
Inclusions/Exclusions
Vietnam 6,000 to 8,000 10 to 12 Incl: Language Training, Technical Skills Training, Board/Lodging, Transportation/Airfare, Documents Processing
Indonesia 3,000 to 4,000 4 to 6 All-In including payment for Sub-Agent and Provincial Sponsor
Philippines 3,000 to 3,500 4 to 5.5 Excludes Passport, Clearances, MedicalIncludes: Visa/Tickets
Thailand 2,200 to 3,500 3.5 to 5.5 All-In
Item (*Should be paid by Employer) Fees paid by workers (PHP)*Processing fees 2,177.63
OWWA Contribution 1,088.63
*Medical examination 2,500.00
*Visa 3,100.00
*Air Ticket 7,000.00
passport 900.00
NBI 115.00
Birth Certification 115.00
*Pre-departure Seminar (PDOS) 100.00
TOTAL PHP 17,096.26 (US$400.00)
Actual Fees Paid by Taiwan-Bound Workers (Philippine Example)
**
Actual Cost ofServices:
$3,000 – $3,500
$1,150
…excluding Passport, Medical, Clearances
$750 (+/-)
to cover recruitment hiring, pre-employment training and life-planning, personality testing, worker hot-line, monitoring visits
+ $400 actual costs paid by worker
Sample cost comparison
Note: “Actual cost of services” can vary depending on type of workers being recruited and the nature of the supply market.
Challenges in Auditing Labor Brokers
What Business Needs to Do
Challenges
