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July 07, 2010
Verite Publishes Report on Role of Brokers in Forced Labor
    by Robert Kropp

The report coincides with the organization's launch of the Well Made initiative, which aims to engage stakeholders in finding solutions to the problem.


At least as far back as 2001, when sustainable investors joined human rights activists in addressing Unocal's complicity in the use of forced labor on a Burmese pipeline, the issue has been central to the concerns of such investors in their role as shareowner activists. Yet today, nearly a decade later, an estimated 12 million people are victims of human trafficking, which includes sexual exploitation as well as forced labor.

Verite, a US-based non-governmental organization (NGO), has been conducting workplace audits since the 1990s, to ensure that people worldwide work under safe, fair, and legal working conditions. According to Dan Viederman, the Executive Director of the NGO, "Since we started auditing, we've been aware of a correlation between migrant workers and serious labor violations in a facility."

Seeking to address the problem of the exploitation of foreign migrant workers, Verite has published a report entitled
Help Wanted: Hiring, Human Trafficking and Slavery in the Global Economy, which focuses on what the report describes as "the intersection of brokers, migrant workers and slavery."

"When a human being is trafficked for the purposes of forced labor, the result is a form of modern-day slavery," the report states. "More than 2.4 million victims of forced labor have been trafficked, and 161 countries are either a source, transit, or destination country for the trafficking of human beings."

In a further effort to eliminate the problem, Verite has also launched an initiative it calls
Well Made, which seeks to "demonstrate how all stakeholder groups can make a difference through impactful programs in their supply chains."

According to Viederman, "The focus of Well Made for now is to recruit companies and others to work with us to eliminate risks to migrants. We intend to highlight the positive steps that companies can take."

As the report illuminates, the problem of forced labor in supply chains is in "urgent need of attention," and has thus far tended to fall below the radar of companies and sustainable investors alike. The involvement of labor brokers, who, according to Viederman and the report, form an industry that is largely unregulated, exacerbates the problem, by transporting migrant workers to foreign countries, "with formidable recruitment debt and possibly even ancestral family land hanging in the balance."

"In borrowing money, workers take on a substantial amount of risk," Viederman said. "If they cannot pay off the loan, they are putting their property and families at risk. In countries such as Malaysia, termination results in immediate repatriation, which could mean financial ruin for the worker."

He continued, "We documented numerous instances where the worker showed up at the airport, having signed a contract, only to be presented with a contract with much less favorable financial terms."

The report focuses on the trafficking of adolescent girls into indentured servitude in apparel manufacturing in India, the plight of Indian migrant workers hired for construction jobs in Gulf Cooperation Council (GCC) states, Asian migrant workers in Information Technology (IT) factories in Taiwan and Malaysia, and Latin American and Thai migrant workers in US agriculture.

"We're not only talking about manufacturing of shoes and clothes, but construction in the Gulf countries and agriculture in the US as well," Viederman said.

At this point, very few multinational companies look for the problems, according to Viederman. In fact, the short-term benefits to companies of engaging with labor brokers in the trafficking of migrant workers probably encourage the turning of a blind eye to the problem.

"One of the interesting things we found was that brokers play the role of a human services department for the factories and farms that employ migrant workers," Viederman said. "Companies are effectively outsourcing their human resources functions to a third party. Essentially, workers are paying for the human resources function of the companies."

Verite launched its Well Made initiative to engage with stakeholders to reduce trafficking and forced labor. Asserting that "it all starts with hiring," the initiative states that "protecting migrant workers is not complete unless it includes a focus on the path into the workforce."

Corporate "compliance programs can address these vulnerabilities through questioning practices used to recruit and place workers," the initiative states, and provides a number of questions that companies, investors, governments, and others can ask to ensure that forced labor does nor occur in corporate supply chains.

"The first step is for companies to look for red flags that we listed in our report," Viederman said. The red flags for vulnerability to broker-induced hiring traps include such indicators as the presence of a migrant population, recruitment and hiring by labor brokers, the presence of a labor broker as an on-site manager, and the confiscation of passports.

Regarding the practice of confiscating the passports of migrant workers, Viederman said, "Anything that increases their isolation increases their vulnerability."

For investors, who, the initiative states, are "well-positioned to take a leadership role in addressing trafficking and modern-day slavery among migrant worker populations," the initiative recommends that they use their "leverage to shape company policies so that migrants are treated fairly not only at work, but also in recruitment and hiring."

"Social investors have to become more aware of the specific vulnerabilities of which they are not aware in their due diligence in the companies the own," Viederman said. "Most ethical funds are probably invested in one company or another where there's risk of forced labor. This is a broad-based problem that is not currently being dealt with."

 

 
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