Nick Grono is CEO of the Freedom Fund
The ILO estimates that the annual profits from ‘forced labour’ amount to $150 billion per year. Much of this exploitation takes place in corporate supply chains. Of course, although labels and estimates such as these must be treated with caution, we do know that what we call forced labour is often highly profitable for those who perpetrate it. It allows businesses or small-scale employers to illicitly minimise their labour inputs – usually the largest component of their operating costs – and hence to minimise the cost of producing goods and services. This, in turn, maximises profits. It also enables otherwise uneconomic businesses to remain financially viable, albeit at a massive social cost. We’ve seen this starkly in the Thai seafood industry over the last year or so. Decades of overfishing in the Gulf of Thailand have severely depleted fish stocks, with the result that fishing boats can only remain economically viable if owners coerce their migrant crews to work for minimal or no pay. Yet, despite the global prevalence of exploitation like this, there are almost no prosecutions for crimes like forced labour. The combination of the economic benefits that accrue to perpetrators and this lack of prosecutions means there is a rational (albeit illegal and immoral) economic model underlying the use of forced labour by some employers in supply chains. One way to challenge this and to promote business accountability would be to change that economic calculus. Strategic litigation is a means that we could use to do this. Successful litigation can impose significant financial costs on the corporations at the top of the supply chain, which are the ultimate beneficiaries of forced labour, and it could serve as a warning to others. The recent Signal case in the US resulted in a large US engineering company being ordered to pay $14 million to five Indian workers who were forced to work in its camps. Facing hundreds more potential claimants, the company went into bankruptcy. Greater investment in strategic litigation against corporations with forced labour in their supply chains would undermine their illicit economic model, challenge their current impunity, and serve as a deterrent to others.
Shelley Marshall is senior lecturer at Monash University, Australia. She researches labour law and development and corporate governance and accountability. Her latest book is New Visions for Market Governance: Crisis and Renewal.
The time has passed for voluntary initiatives alone. Mechanisms are required for the enforcement of core labour standards where there is evidence that business practices are undermining the capacity of direct employers or principle contractors in supply chains to provide living wages and fair conditions. These mechanisms can be both national and transnational in character.
Some nation states have legislated for such supply chain regulation and their laws are a useful model that any future transnational mechanism could follow. In Australia, for example, legislation has been enacted in the clothing industry and the transport industry, where supply chain practices are particularly egregious. Pressure for fast deliveries from buyers in the transport industry, for instance, was leading to deaths on the road as drivers drove dangerously fast or for too long. It was not enough to hold the direct contractor who gave the work to the driver responsible. Action had to be taken higher in the supply chain, and the only way to ensure that this happened was by giving workers the right to make claims against parties higher up in the supply chain. The Australian Road Safety Remuneration Act 2012 (Cth) provides one excellent example of a way that business accountability can be promoted within supply chains.