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
Increasing the percentage of workers deployed to
foreign jobs through safe, legal and fair means
Increasing the number of ethical and accountable
enterprises working in the private recruitment space
Increasing the number of employers paying for
recruitment services
Scope of this Presentation
Formal
sector
Regular
migration
Causes, Benefits and Risks of
Labor Migration
Receiving countries
keep businesses incountry
Labor shortages in
receiving countries
Employers get
skilled workers
Labor migration
Labor surplus in
countries with high
unemployment and
underemployment
Workers get jobs,
and acquire and
improve skills
Sending countries
earn from dollar
remittances
Unintended outcome:
Debt bondage, forced
labor trafficking; labor
broker abuses
Workers subsidize the cost of labor
migration, fall into debt bondage
Recruitment &
Selection
On-Site Conditions
1. Commitment/
Reservation Fee
4. Deductions (Run
away insurance,
other
deductions)
2. Placement Fee
3. Direct Costs
Return/Reintegration
5. Cost of repatriation
Risks to workers
•
Forced labor
Risks to employers
•
Excessive, forced overtime
•
Worker dissatisfaction and unrest
•
Harassment and abuse
•
Runaway workers
•
Pregnancy testing, forced
contraception/abortion
•
Litigation
•
Public censure: stakeholder action,
dissatisfied customers
•
Workers who run-away
Primacy of
immigrations
policies
Entry and
exit barriers
Receiving
Country
Governments
Labor Brokers
Poor ability to negotiate
with receiving countries
for better worker
protection
Imperfect
information
Poverty and
Unemployment
Corruption
and collusion
Sending Country
Governments
Workers
Employers
Poor to no
regulation, low
penalties for
malpractice
Sub-contract
recruitment,
selection and hiring,
and even on-site
management of
foreign workers, but
have no visibility or
control over the
process
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
Guest worker programs in countries where
there is tension between labor market
requirements (worker shortages) and strong
immigrations regimes
Jobs that are highly dispersed,
and where commercial
relationships are informal
(fisheries)
Workplaces that are isolated and
not easily within reach of
inspectors/monitors/authorities
Froeign jobs that are brokered by
3rd party agents (PRAs)
Low-value, labor-intensive Jobs
on the fringes of the industry,
esp. those which can be done as
home-work
The worker’s risk to debt bondage and forced
labor starts before they even reach the
workplace - even before they get the job
•Recruitment
•Selection
•Hiring and Contracting
•Deployment
Employment
•Wages and Benefits
•Workplace Conditions
•Housing Conditions
•Other contractual conditions
•Resignation/Termination/Contract
Completion
•Repatriation
•Re-Integration
Exit and
Pre-Deployment
Repatriation
Range of Total Recruitment Fees & Expenses Paid by Workers (in USD)
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
Breakdown of a Filipino Worker’s
Wages for a 2-year Contract in
Taiwan (NT414,720), 2009
Taiwan Broker’s
Service Fees - 10%
Balance that goes
to the worker –
28%
Board and
Lodging – 20%
Source: Verité, 2009
Sending country
placement fees
15%
“Savings” –
17%
Interest on loans in
sending country –
10%
Employers need to pay for recruitment
services if they want to eliminate
forced labor in supply chains
Workers
Pay
Employers
pay
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 SubAgent and Provincial Sponsor
Philippines
3,000 to 3,500
4 to 5.5
Excludes Passport, Clearances,
Medical
Includes: Visa/Tickets
Thailand
2,200 to 3,500
3.5 to 5.5
All-In
Actual Fees Paid by Taiwan-Bound Workers
(Philippine Example)
Item (*Should be paid by Employer)
*Processing fees
Fees paid by workers (PHP)
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)
Sample cost comparison
$3,000 – $3,500
Actual Cost of
Services:
…excluding Passport,
Medical, Clearances
$750 (+/-)
+ $400
$1,150
to cover recruitment
hiring, pre-employment training
and life-planning, personality
testing, worker hot-line,
monitoring visits
actual costs paid by worker
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
Competency
No paper trail, no
receipts, no
breakdown of amounts
workers paid
Tracking informal
middlemen in labor
supply chain
Logistical challenges
(cross-border),
Costs
Workers afraid to talk,
forced to lie
Results are temporary,
do not change broker
practices
What Business Needs to Do
Get clear
details of the
problem
• Assess broker
practices
• Assess
employment
practices
• Gather information
from workers
• Know overseas
employment laws
(sending) and
foreign working
employment laws
(receiving)
Manage Onsite conditions
• Effective grievance
mechanisms
• Don’t keep
passports
• No forced savings,
deposits
• Meet contractual
conditions
• Protect workers
from harassment
• Humane living and
working conditions
Return
Overcharges
• Determine
judiciously:
• How much?
• How far back?
• Who are in
scope?
• How do you
know when
objectives have
been met?
Enforce Ethical
Recruitment
Regime
• Pay for recruitment
services
• Work with an
ethical recruitment
agency
Challenges
Competency
Collusion
(Entrenched
Relationships,
Vested Interests)
Cost (perceived or
real)
Determining
“good” from “bad”
recruiters
Thank You!
For questions, contact me at:
Marie Apostol
marie@fairhiringinc.com