It is empirically indisputable that vulnerability to forced labour is shaped by poverty.^{[1, 2, 3]} This chapter will draw on research from across several sectors and regions of the world to illustrate how market coercion interacts with poverty to create a supply of people vulnerable to forced labour.

Poverty and the market

The cold, hard truth of market societies is that you need wealth – or, more precisely, money – to obtain the necessities of life and thus to survive.

If you do not have money and nobody is prepared to give you the food, water, medicine, shelter and other things you require, you will die. This is the ‘invisible hand’ of the market in action. Lacking money, huge swathes of the world’s population never enjoy the effective power to say no to coercion or exploitation, and so are systematically vulnerable to forced labour.

Before delving into the data, it is important to be clear that this is not a natural state of affairs. Nor is it an accidental but inevitable consequence of globalisation and economic growth. Rather, poverty – along with the perpetuation of exploitative labour relations – is written into the very DNA of global capitalism.^[4]

We explored this theoretically in chapter 2 and gave an example of the peasant farmer accepting debt bondage as an illustration of how market societies force people to accept exploitative work, prioritising short-term survival needs over long-term economic security. In this chapter, we will provide further examples of the interplay between poverty and forced labour to illustrate how global and national markets rely on – and perpetuate – the supply of people vulnerable to exploitation.

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The big picture

In 2015, the ILO estimated that more than 75% of the global workforce was in temporary, informal or unpaid work, meaning that only a quarter of workers have the security of permanent contracts.^[5] Four in 10 young workers are either unemployed or working but living in poverty,^[6] while as of 2014, over 200 million people were entirely unemployed. This is 31 million more than before the start of the global financial crisis in 2008,^[7] with that number being expected to increase further.^[8] In fact, between 1981 and 2008, the number of people living on between US$1.25 and US$2 a day doubled worldwide.^[9]

Taken together, these statistics show that the ranks of the “working poor”^[10] are constantly expanding. In a context where corporate profits are at their highest levels in nearly a century,^[11] the majority of the world’s workers lack the certainty that they will earn a sufficient living from their work and almost half of the world’s working young people have next-to-no income security. All of which raises the question: why is poverty so resilient in the face of unprecedented wealth?

The restructuring of global and national economies along neoliberal lines (as described in chapter 3) is a major part of the answer. For the past four decades, neoliberal restructuring has divorced millions across the global south from their means of subsistence, whilst simultaneously slashing the social protection mechanisms on which they and their families relied.^{[12, 13]} Dispossessed and abandoned by the state, they have had few means with which to resist being integrated into the cash economy on unequal and often highly coercive terms.

In other words, the intensified need to obtain money to secure the necessities of life has underpinned the integration of millions of people into the labour market, but because they are poor, they have had very little scope or power to shape their working conditions. They have thus entered into dangerous, risky, insecure or poorly remunerated employment relations, because doing so has been their only way to meet urgent needs.

Adverse incorporation

Although the dominant understanding of poverty within mainstream economic thinking is that it is ‘residual’ – a pure consequence of exclusion from the market economy – research shows that one can be included in the labour market and still be very poor.^[14] Indeed, for many people inclusion actually worsens their circumstances and puts them at risk.

For example, Nicola Phillips and Leonardo Sakamoto’s mapping of forced labour in Brazil’s cattle sector shows that those most likely to be in forced labour are not actually the very poorest. For them, some social protections still exist. Instead, those most at risk are earning slightly above the income threshold for social welfare protections, and are therefore almost exclusively dependent on earned income to survive.^[15] People caught in this situation are commonly referred to as the ‘working poor’ and, as noted above, their numbers are growing.

Phillips describes situations like what she and Sakamoto observed in Brazil as “adverse incorporation”.^[16] The central insight of this concept is that when people are compelled to undertake wage labour on bad terms, this can entrench their poverty and vulnerability by preventing them from accumulating wealth or achieving long-term economic security. The dynamics of adverse incorporation are circular, which means that while poverty shapes people’s vulnerability to exploitation, their exploitation also reinforces their inability to escape poverty.^[17]

The use of children to produce garments in home-based settings in India demonstrates how this works. A survey conducted by Phillips shows that, out of a sample of 201 households, almost 70% used children to fulfil piece-work orders from garment manufacturers, and for the most part the children received little or no money for their labour.^[18] This system of production will have both immediate and long-term effects. By doing piece-work now, the children will likely eat tomorrow. However, the self-reinforcing nature of their adverse incorporation means that working now will make it less likely that they obtain better work in the future. By prioritising short-term survival over long-term security – when doing otherwise is extremely difficult, if not lethal – they must forego schooling or other opportunities to strengthen their bargaining power in the labour market. This prevents them from ‘upgrading’ towards more skilled, secure and better-paid employment prospects and entrenches their poverty further.^{[19, 20]}

The ‘multidimensional’ character of poverty

The experience of ‘poverty’ cannot therefore be reduced only to a lack of money. Poverty is “multidimensional”, as economics professor Sabina Alkire has made clear, meaning that those at the bottom of the socio-economic ladder are statistically more likely to face a mutually reinforcing bundle of disadvantages that combine to perpetuate their destitution.^[21] These include poor health, poor sanitation, food insecurity or a lack of education. Each may interact with the lack of money to increase an individual’s vulnerability to forced labour.

To take but one quantitative example, a multi-country study from the ILO examining the backgrounds of formally identified victims of forced labour finds that those originating from food insecure households or households that have recently experienced a sharp decline in revenue are much more likely to end up in situations of forced labour than others.^[22] In Nepal, for instance, only 9% of documented forced labourers came from food secure households, in contrast to 56% who came from households that were food insecure.^[23]

Education is another good example of the multidimensional aspect of poverty. Monetarily poor people are more likely to be educationally poor because they are obliged to prioritise short-term survival over formal training. The child labourers producing garments in India demonstrated this in the previous section. A lack of education, in turn, reduces bargaining power in the labour market, making it more likely that the only jobs on offer will come with poor conditions.^[24]

Data from a range of studies now show a strong correlation between illiteracy or low levels of schooling and the likelihood of experiencing forced labour. In Brazil, for example, nearly 70% of workers identified by the government as “slaves” between 2003 and 2009 were either illiterate or had a maximum of four years of schooling,^[25] while in Armenia, Georgia and the Republic of Moldova, forced labourers were found to be on aggregate less educated than the “freely employed”.^[26]

Debt bondage and poverty’s many faces

Nowhere is poverty’s role in creating a supply of people vulnerable to forced labour clearer than with debt. Debt, as anyone who has had any knows, can be a powerful disciplinary mechanism.^[27] Loans or advances – along with other measures such as withholding wages – are frequently used to discipline and coerce workers. In richer countries, this affects migrant workers who take out large loans to fund their travel and find themselves with no choice but to work highly exploitative contracts to pay them back.^{[28, 29, 30, 31]} In poorer countries, debt captures and disciplines the working poor who lack access to cheap credit and thus cannot absorb economic shocks when they come along.

Verité’s reports on the Guatemalan sugar sector, the palm oil industry in Ecuador and the production of electronic goods in Malaysia provide further evidence for how the intersection of debt, withholding wages, and exploitative recruitment practices increase workers’ vulnerability to forced labour.^{[32, 33, 34]} In Malaysia, 28% of 501 electronics workers were found to be in situations of forced labour, and more than 80% reported paying excessive recruitment fees. In Guatemala, Verité found that withholding wages and meals was a common punitive practice to ensure that production quotas were met for farmworkers in the sugar sector. Other research has found similarly punitive practices in use elsewhere, such as Ben Richardson’s work in the sugar cane fields of Brazil,^[35] and has confirmed the importance of debt in keeping workers labouring under them.

Much research has also been done on debt bondage as it relates to health. Typically, health expenditure is a major burden in countries where health coverage is poor and/or not universally provided. To make matters worse, in rural areas where cash is scarce, credit can be exceptionally expensive. That combination often leads to debt bondage, because when a family member is in need of urgent medical attention the only option available is usually for another family member to take a loan against the collateral of their future labour power.^{[36, 37]}

In short, poverty is not just about lacking money. It is an interlinking web of mutually reinforcing disadvantages, which interacts with the demands of the market society to shape people’s vulnerability to forced labour. The story does not stop there, however, as we have yet to answer the question of why some people are more likely to be in situations of poverty than others. Identity and discrimination play enormous roles in determining who comes out on top, and it is to these that we now turn.

Next chapter: Supply 2 of 4: Identity and discrimination

1. ILO (2014) ‘Profits and Poverty: the Economics of Forced Labour’, Geneva: ILO. ↩︎
2. Verité (2017) ‘Strengthening Protections Against Trafficking in Persons in Federal and Corporate Supply Chains’. ↩︎
3. N. Phillips (2015) ‘What has forced labour to do with poverty?’, Beyond Trafficking and Slavery. ↩︎
4. B. Selwyn (2015) ‘Harsh Labour: bedrock of global capitalism’, Beyond Trafficking and Slavery. ↩︎
5. ILO (2015) ‘World Employment and Social Outlook 2015: The Changing Nature of Jobs’, Geneva: ILO. ↩︎
6. ILO (2015) ‘Global Employment Trends for Youth’, ILO. ↩︎
7. ILO (2015) ‘World Employment and Social Outlook 2015: The Changing Nature of Jobs’. ↩︎
8. ILO (2017) ‘World Employment and Social Outlook: Trends 2017’, Geneva: ILO. ↩︎
9. N. Phillips (2015) ‘What has forced labour to do with poverty?’ ↩︎
10. N. Phillips (2017) ‘Power and inequality in the global political economy’, International Affairs, 93(2), 429-444. ↩︎
11. F. Norris (2014) ‘Corporate Profits Grow and Wages Slide’, The New York Times. ↩︎
12. D. Harvey (2005) A Brief History of Neoliberalism, Oxford University Press. ↩︎
13. J. Peck (2010) Constructions of Neoliberal Reason, Oxford University Press. ↩︎
14. N. Phillips (2011) ‘Informality, global production networks and the dynamics of ‘adverse incorporation’, Global Networks, 11(3), 380-397. ↩︎
15. N. Phillips & L. Sakamoto (2012) ‘Global Production Networks, Chronic Poverty and ‘Slave Labour’ in Brazil’, Studies in Comparative International Studies, 47(3), 305. ↩︎
16. N. Phillips (2013) ‘Unfree labour and adverse incorporation in the global economy: comparative perspectives on Brazil and India’, Economy and Society, 42(2), 172. ↩︎
17. Ibid., 176. ↩︎
18. N. Phillips, R. Bhaskaran, D, Nathan & C. Upendranadh (2014) ‘The social foundations of global production networks: towards a global political economy of child labour’, Third World Quarterly, 35(3), 434. ↩︎
19. Ibid., 441. ↩︎
20. B. Singh Mehta & K. Sherry (2008) ‘Wages and productivity of child labour: a case of the Zardosi industry’, Working Paper No. 42, New Delhi: Institute for Human Development. ↩︎
21. S. Alkire et al. (2015) Multidimensional Poverty Measurement and Analysis, Oxford University Press. ↩︎
22. ILO (2014) ‘Profits and Poverty: The Economics of Forced Labour’. ↩︎
23. Ibid., 35-36. ↩︎
24. N. Phillips & F. Mieres (2014) ‘The Governance of Forced Labour in the Global Economy’, Globalizations, 2(2), 8. ↩︎
25. N. Phillips (2013) ‘Unfree labour and adverse incorporation in the global economy: comparative perspectives on Brazil and India’, 187. ↩︎
26. ILO (2014) ‘Profits and Poverty: the Economics of Forced Labour’, 35. ↩︎
27. G. LeBaron (2014) ‘Reconceptualizing Debt Bondage: Debt as a Class-Based Form of Labor Discipline’, Critical Sociology, 40(5), 763-780. ↩︎
28. S. Plambech (2017) ‘My body is a piece of land’, Beyond Trafficking and Slavery. ↩︎
29. J. Gordon (2016) ‘Migrant workers and labour recruitment in Mexico’, Beyond Trafficking and Slavery. ↩︎
30. A. De Lauri (2016) ‘Brick kiln workers and the debt trap in Pakistani Punjab’, Beyond Trafficking and Slavery. ↩︎
31. K. Strauss (2015) ‘The role of labour market intermediaries in driving forced and unfree labour’, Beyond Trafficking and Slavery. ↩︎
32. Verité (2017) ‘Risk Analysis of Labor Violations Among Farmworkers in the Guatemalan Sugar Sector: A Report on Findings from Rapid Appraisal Research’. ↩︎
33. Verité (2016) ‘Labor and Human Rights Risk Analysis of Ecuador’s Palm Oil Sector’. ↩︎
34. Verité (2014) ‘Forced Labor in the Production of Electronic Goods in Malaysia: A Comprehensive Study of Scope and Characteristics’. ↩︎
35. B. Richardson (2015), ‘Still slaving over sugar’, Beyond Trafficking and Slavery. ↩︎
36. A recent project on the links between health, loans and debt bondage in India has explored these questions in some detail, while the famous Indian basic income experiment also found strong links between health shocks, borrowing and bondage. ↩︎
37. S. Davala et al. (2015), Basic Income A Transformative Policy for India, London: Bloomsbury Publishing.  ↩︎