Beyond Trafficking and Slavery

Confronting the root causes of forced labour: governance gaps

Governance gaps help employers push problems of forced labour even deeper into the shadows of supply chains.

Genevieve LeBaron Penelope Kyritsis Cameron Thibos Neil Howard
19 March 2019, 5.19pm
Artwork by Carys Boughton.
All rights reserved.

A final root cause underpinning the business demand for forced labour are the governance gaps that allow employers to perpetrate it with impunity. Although forced labour has long been formally banned, the laws designed to protect workers are spottily enforced and it is rare that government inspectors physically check to see whether or not businesses are selling goods made with forced labour. Indeed, in the United States, one recent study found that “an employer would have to operate for 1,000 years to have even a 1 percent chance of being audited by Department of Labor inspectors”.[1]

Where non-government monitoring systems also exist, they are generally ineffective when it comes to detecting and correcting forced labour. Most social auditing systems focus on first-tier suppliers’ core workforces, and thus neglect the portions of supply chains where vulnerable subcontractors work and the risks of forced labour are highest. Furthermore, such private systems are riddled with conflicts of interest. When abuses are uncovered, they tend to be reported only to retailers who then have discretion over whether or not to act on them.[2, 3, 4, 5, 6, 7, 8]

In this sense, businesses’ ‘freedom to exploit’ must be understood as running in parallel to workers’ lack of the freedom to say no. Klara Skrivankova of Anti-Slavery International captures this point well when she says that forced labour’s “underlying causes include a regulatory framework in which the use of forced labour makes ‘business sense’ even if illegal, because the risks of discovery and prosecution are low, [in light of] weak enforcement of labour standards”.[9]

The governance gaps and enforcement issues surrounding labour standards in global supply chains have been studied extensively.[10, 11, 12, 13, 14] There is also a smaller body of emerging research that specifically considers gaps surrounding forced labour.[15, 16, 17, 18, 19] Synthesising across this work, we suggest that there are at least three key governance gaps that have been strategically created around and within supply chains that facilitate the business of forced labour. These are:

  1. the consistent under-enforcement of national and sub-national labour regulations;

  2. weak global governance and national legislative approaches to ensuring labour standards in global supply chains, such as transparency legislation;

  3. a governmental preference for self-regulation and corporate social responsibility (CSR) initiatives, which are too often not fit for purpose such as poor quality auditing and social certification programmes.

At the outset of this report, we noted that globalisation has been characterised by declines in the national enforcement of labour standards.[20, 21, 22, 23, 24, 25, 26] In chapter 6, we showed how dangerously low levels of labour inspection create a pool of workers who are vulnerable to forced labour. Here, we show how poor enforcement of national and sub-national labour laws also contributes to businesses’ demand for forced labour.

Poor enforcement of labour standards

Across many countries, national and sub-national agencies tasked with enforcing labour standards have had their budgets and staff cut to the extent that they are no longer effective. This makes it unlikely that businesses will be caught committing labour violations. If they are, the consequences are rarely more than a minor inconvenience; the penalty for violating the labour code in Bangladesh, for example, is a mere US$325.[27] This creates a context in which businesses can safely include forced labour within their business model.

While unenforced labour standards are often considered to be a ‘developing country’ problem, they contribute to the thriving business of forced labour in developed countries as well. As Allain et al. (2013) demonstrated in their study of forced labour in the UK, “vulnerability to forced labour is not an inherent quality of the person subjected to it, but rather is rooted in structural vulnerabilities established within the UK economy. These result in denying effective protection for workers’ rights, particularly at the lower rungs of the labour market.” They found that this context creates an environment where it makes “business sense to use forced labour”, which they then demonstrated using the commercial cannabis, food and agricultural industries as examples.

The under-enforcement of labour standards has become a popular strategy for attracting and maintaining investment, or for preventing offshoring, in the era of globalisation. It is part of an ongoing redesign of the labour market and business regulation to maximise profitability.[28] Consequently, illegal business practices like forced labour have become stable and now constitute viable parts of many organisations’ business models.

Weak global governance

As awareness of forced labour has grown over the past decade, a number of transnational regulatory initiatives have sought to incentivise corporate accountability and responsibility for labour standards in global supply chains. These include the 2011 United Nations Guiding Principles for Business and Human Rights,[29] ILO’s Protocol of 2014 to the Forced Labour Convention, 1930,[30] and revised OECD Guidelines for Multinational Enterprises.[31]

In addition, the home governments of many transnational corporations (TNCs) – including the United States, UK and France – have passed national legislation intended to strengthen global governance systems to combat forced labour. This has frequently taken the form of transparency or disclosure legislation. One study found that over 55 pieces of national disclosure legislation have been passed since 2009,[32] and high profile examples include: the 2015 UK Modern Slavery Act, 2012 California Transparency in Supply Chains Act, and France’s 2017 Corporate Duty of Vigilance Law. As the authors of the study describe, this type of legislation relies on the economic leverage of the private sector to shape and improve working conditions and is anchored in the assumption that knowledge of corporate behaviour will shape consumers’ and investors’ purchasing decisions.[33]

Transparency legislation varies hugely in terms of its quality and stringency. As Genevieve LeBaron and Andreas Rümkorf note:

at one end are strong laws that mandate companies to develop a due diligence plan on human rights in their supply chain, to disclose this plan and to implement it. At the other end are weak laws that merely provide statutory endorsement to existing voluntary CSR initiatives and reporting, with no penalty for non-compliance. Most recent legislation falls towards the weaker end of the spectrum.[34]

The UK Modern Slavery Act, for instance, requires companies conducting business in the UK with an annual turnover of £36 million to report on any measures they have taken to prevent or address forced labour. But it does not require them to report whether those measures are actually effective, and does not include penalties for non-compliance. This leaves open the quixotic possibility of brazenly reporting that they are doing nothing. To date, the enforcement of transparency legislation has also been lacking.[35, 36, 37, 38, 39, 40, 41, 42] Only a fraction of companies covered under the UK legislation have published reports, and many of those that have been published have fallen short of complying with the law.[43, 44] No companies have been prosecuted for non-compliance. As such, this legislation has upheld the status quo and done little to curb the root causes of business’ demand for forced labour.

Recent initiatives to address the business of forced labour within the global governance arena have been similarly ineffective. The ILO’s 2014 legally binding protocol on forced labour, for instance, does not include a provision on supply chains, while efforts to achieve a binding convention on decent work supply chain governance have yet to bear fruit.[45, 46, 47] In short, research suggests that a key factor underlying the business of forced labour is the failure of states to either enforce existing labour standards or to create new, modern, and effective global governance solutions to the problem.

Weak social auditing and ethical certification regimes

Governments have sought to replace their own enforcement capacity by devolving sizeable power, authority and legitimacy to private companies to set and enforce their own labour standards.[48, 49, 50, 51] In this context, TNCs have created codes of conduct for suppliers, which they claim to ‘monitor’ and ‘enforce’ through social auditing. They also rely on social certification schemes like Fairtrade and Rainforest Alliance to independently verify production standards and communicate these to consumers.

However, a growing body of research reveals that social audit and certification programmes are not effective tools to detect, report or correct forced labour.[52, 53] Some of their most crucial shortcomings include:

• Limited audit duration, resulting in a ‘snapshot’ of practices rather than long-term observation;

• Weak audit methodologies with ample room for deception and cheating;

• Financial conflicts of interest and commercial relations between audit firms and their clients;

• Failure to encompass practices occurring beyond the factory gates, such as debt bondage to recruiters;

• A focus on first-tier suppliers’ core workforces rather than the many layers of sub-contracting;

• Marginalisation of workers, who are most aware of how forced labours manifest on the ground, during the audit process.

Many social auditing programmes therefore give a blinkered view of who is involved in production, missing out on vulnerable workers in heavily subcontracted and informal portions of supply chains.[54, 55] They give consumers, investors, and the public a false impression of labour standards within supply chains, and give rise to the perception that governance gaps surrounding forced labour in supply chains are being mitigated through voluntary CSR efforts. In reality, such systems do little to tackle the problems at hand.

The inspection and auditing system for global supply chains does more to safeguard corporations’ reputations, operations, and profits than protect workers in both developed and developing countries.

Briefly put, the inspection and auditing system for global supply chains does more to safeguard corporations’ reputations, operations, and profits than protect workers in both developed and developing countries.[56] As LeBaron et al. have argued, “for nearly two decades, workers’ rights and trade union organizations, scholars, and auditors themselves have documented the flaws of the audit regime; yet, corporations have done little to transform it. The problem is not one of finessing the institutional design or audit methodology, but rather relates to corporate power, politics, and profits”.[57]

Weaknesses in private supply chain monitoring systems render them ineffective tools for detecting and addressing forced labour. They are, along with weak enforcement of labour standards and poor global governance frameworks, a key governance gap fuelling the business demand for forced labour.


Existing research suggests that forced labour tends to happen in certain types of industries, activities, and portions of supply chains. It furthermore materialises in the face of specific business pressures, such as cost and time pressures and seasonality. Yet, these insights about the patterns of forced labour in supply chains have not been incorporated into the latest governance initiatives, which systematically under-protect workers by leaving open gaps in which exploitation can occur without redress.

Adequate regulation and enforcement of labour standards within global supply chains would go a long way to eliminating the business demand for forced labour within those chains. And, as the next and final chapter of this report notes, where labour law is effectively enforced, and where businesses face consequences and penalties if they are caught using forced labour, it becomes a lot less viable as a business model.

The key barriers to closing these governance gaps are not technical, but political. As Nicola Phillips and Fabiola Mieres note, they derive from “an unshaken ‘market fundamentalism’ and a reluctance significantly to challenge the private sector and powerful corporations”.[58] It is time for that to change.

Next chapter: Conclusion: where do we go from here?

  1. G. Lafer (2013) ‘The Legislative Attack on American Wages and Labor Standards, 2011-2012’, Washington DC: Economic Policy Institute, 29. ↩︎
  2. A. Crane et al. (2017) ‘Governance gaps in eradicating forced labor: from global to domestic supply chains’, Regulation and Governance. ↩︎
  3. G. LeBaron & J. Lister (2016) ‘Ethical Audits and the Supply Chains of Global Corporations’, SPERI Global Political Economy Brief No. 1. ↩︎
  4. G. LeBaron et al. (2017) ‘Governing Global Supply Chain Sustainability Through the Ethical Audit Regime’, Globalizations, 14(6), 958-975. ↩︎
  5. G. LeBaron & J. Quirk (2016) ‘Can Corporations Be Trusted to Tackle Modern Slavery? Introducing the Terms of Debate’, Beyond Trafficking and Slavery. ↩︎
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  7. G. LeBaron & N. Phillips. (forthcoming) ‘States and the Political Economy of Unfree Labour’, New Political Economy. ↩︎
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  15. G. LeBaron & N. Phillips. (forthcoming) ‘States and the Political Economy of Unfree Labour’. ↩︎
  16. A. Crane et al. (2017) ‘Governance gaps in eradicating forced labor: from global to domestic supply chains’. ↩︎
  17. N. Phillips & F. Mieres (2014) ‘The Governance of Forced Labour in the Global Economy’, Globalizations, 12(2), 244-260. ↩︎
  18. J. Allain et al. (2013) ‘Forced labour’s business models and supply chains’, Joseph Rowntree Foundation. ↩︎
  19. G. LeBaron (2014) ‘Unfree Labor Beyond Binaries: Social Hierarchy, Insecurity, and Labour Market Restructuring’, International Feminist Journal of Politics, 17(1), 1-19. ↩︎
  20. International Labour Organization (2005) ‘The global challenges of labour inspection’, Geneva: ILO. ↩︎
  21. J. Heyes & L. Rychly (eds) (2013) Labour Administration in Uncertain Times Policy, Practice and Institutions, Cheltenham: Edward Elgar Publishing. ↩︎
  22. FLEX (2015) ‘Combatting Labour Exploitation Through Labour Inspection’. ↩︎
  23. FLEX (2017) ‘Risky Business: Tackling Exploitation In The Uk Labour Market’. ↩︎
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  27. International Labour Organization (2015) ‘Observation (CEACR), Follow-up to the discussion of the Committee on the Application of Standards (International Labour Conference, 103rd Session, May-June 2014’ - adopted 2014, published 104th ILC session’. ↩︎
  28. G. LeBaron & N. Phillips. (forthcoming) ‘States and the Political Economy of Unfree Labour’. ↩︎
  29. OHCR, ‘The UN Guiding Principles On Business And Human Rights: An Introduction’. ↩︎
  30. International Labour Organization, Protocol of 2014 to the Forced Labour Convention, 1930. ↩︎
  31. OECD (2011) OECD Guidelines for Multinational Enterprises. ↩︎
  32. Nicola Phillips, Genevieve LeBaron & Sara Wallin (2016) ‘Mapping and Measuring the Effectiveness of Disclosure Requirements for Global Supply Chains’, Commissioned report for the International Labour Organization, Geneva: ILO. ↩︎
  33. Ibid., 3. ↩︎
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  35. L. Palumbo & A. Triandafyllidou (2016) ‘Addressing severe exploitation: a critical view ofawareness and transparency initiatives’, Beyond Trafficking and Slavery.  ↩︎
  36. C. Falconer (2016) “Carrots and sticks: increasing corporate accountability for ‘modern slavery’”, Beyond Trafficking and Slavery. ↩︎
  37. P. Carrier & J. Bardwell (2017) ‘How the UK Modern Slavery Act can find its bite’, Beyond Trafficking and Slavery.  ↩︎
  38. J. Vogt (2017) ‘Efforts to clean up global supply chains so far come up short’, Beyond Trafficking and Slavery.  ↩︎
  39. C. Feingold (2016) ‘A binding convention on decent work: the first step to workers' rights’, Beyond Trafficking and Slavery. ↩︎
  40. G. LeBaron & A. Rühmkorf (2017) ‘The Domestic Politics of Corporate Accountability Legislation: Struggles Over the 2015 UK Modern Slavery Act’. ↩︎
  41. G. LeBaron & A. Rühmkorf (2017) ‘Steering CSR Through Home State Regulation: A Comparison of the Impact of the UK Bribery Act and Modern Slavery Act on Global Supply Chain Governance’, Global Policy Journal, 8(S3), 15-28. ↩︎
  42. M. L. Stein (2017) ‘FTSE 100 Companies Fall Short on Slavery Statements, Report Says’, The Wall Street Journal. ↩︎
  43. Ibid.  ↩︎
  44. Business and Human Rights Resource Centre (2016) ‘UK Modern Slavery Act: Analysis of early company statements, new guidance available’. ↩︎
  45. A. Barrenechea (2016) ‘Decent work in a globalised world? Week one at the International Labour Conference and the supply chains dilemma’, Beyond Trafficking and Slavery. ↩︎
  46. N. Howard & G. LeBaron (2016) ‘Making supply chains work for workers? The 2016 International Labour Conference and beyond’, Beyond Trafficking and Slavery. ↩︎
  47. J. Gearhart (2016) ‘Global supply chains: time for a new deal?’, Beyond Trafficking and Slavery. ↩︎
  48. A. C. Cutler (2003) Private Power and Global Authority: Transnational Merchant Law in the Global Political Economy, Cambridge: Cambridge University Press. ↩︎
  49. A. C. Cutler & T. Dietz (2017) The Politics of Private Transnational Governance by Contract, London: Routledge. ↩︎
  50. A. C. Cutler et al. (eds) (1999) Private Authority and International Affairs, Albany: SUNY Press. ↩︎
  51. F.W. Mayer & N. Phillips (2017) “Outsourcing governance: states and the politics of a ‘global value chain world’”, New Political Economy, 22(2), 134-152. ↩︎
  52. G. LeBaron et al. (2017) ‘Governing Global Supply Chain Sustainability Through the Ethical Audit Regime’. ↩︎
  53. G. LeBaron & J. Lister (2015) ‘Benchmarking Global Supply Chains: The Power of the ‘Ethical Audit’ Regime’, Review of International Studies, 41(5), 905-924. ↩︎
  54. G. LeBaron & A. Crane (2013) ‘Hidden in plain sight: slavery on a high street near you’, The Guardian. ↩︎
  55. J. Allain et al. (2013) ‘Forced labour’s business models and supply chains’. ↩︎
  56. G. LeBaron & J. Lister (2016) ‘Ethical Audits and the Supply Chains of Global Corporations’. ↩︎
  57. G. LeBaron et al. (2017) ‘Governing Global Supply Chain Sustainability Through the Ethical Audit Regime’, 9. ↩︎
  58. N. Phillips & F. Mieres (2014) ‘The Governance of Forced Labour in the Global Economy’, 14. ↩︎
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