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A compilation of articles, highlighting the depth and complexity of this world wide problem. 

A compilation of articles, highlighting the depth and complexity of this world wide problem. 

Solving the Human Migration Crisis: How Multiple Migration Crises Are Testing Compliance Across the Globe?

Human migration is always a top political concern, and it seems that nations the world over are facing escalating crises that cause dangerous ripple effects on multiple facets of society. Most recently, large influxes of migrants are underpinning a rise in labor violations across the European continent, the U.K., and the United States that are proving compliance is more complex than many expect.

Continued Scrutiny in China

When considering modern slavery and other labor violations, the spotlight is typically on goods and materials coming from China. Between June 2022 and April 2023, nearly $1 billion worth of goods have been seized in transit as a result of the Uyghur Forced Labor Act (UFLA) of 2021. The goods are highly concentrated in electronics and agricultural categories, though other product categories are involved as well. But it’s not just China where labor violations are rising; the U.K. and U.S. are experiencing disturbing spikes as well.

Worker shortages in the UK

In 2015, the U.K. took an ostensibly significant step in combating harmful practices by implementing the Modern Slavery Act. The Act details efforts to reduce forced labor in the form of modern slavery, as well as human trafficking. Yet, despite this implementation, rates of labor violations continue to rise as the U.K. relies more and more on overseas workers since Brexit.

The United Kingdom has seen an immense expansion in the need for workers, which resulted in the issuance of 40,000 seasonal worker visas in 2022–a shocking jump from the 2,500 granted in 2019. With more migrants vying for work in deteriorating conditions, the concerns for a perfect storm of modern slavery incidents are rising. Early last year, the U.K.’s anti-slavery commissioner listed exploitation risks specific to agricultural workers, including debt bondage, unsanitary housing, and exploitative contracts among other poor practices leading to violations.

Increasing numbers of refugees seeking asylum contribute to the issue of compliance management. In 2022, the U.K. processed more than 72,000 applications for asylum, which doubled the number seen in 2019. Without enough resources or people power to handle the influx, the number of violations logged has not significantly increased despite the swelling number of applicants. The most recent U.K. data, from 2021, indicates a 27 percent increase in the number of police-recorded modern slavery offenses involving children, but simultaneously a 43 percent decrease in the number of potential victims reported to the Modern Slavery and Exploitation Helpline. This mismatch is one indicator that enforcement of the Modern Slavery Act is well below what regulators would have liked to see by this point in the timeline.

Child labor spikes in the US

In the U.S. another migrant crisis is fueling child labor violations on its own shores. In 2022, nearly 4,000 children spread across hundreds of companies were found to be victims of federal labor law violations–marking a dramatic increase over a five-year period. The highest-profile cases were violations found at multiple points in the Hyundai-Kia supply chain, and violations by cleaning agency Packers Sanitation Services Inc. which employed more than 100 children to work with dangerous chemicals cleaning meatpacking plants for multiple multinational brands.

The proliferation of child labor stems from the failure of the Health and Human Services Department (HHS) to release children from overcrowded shelters to properly vetted sponsors. Those improperly vetted sponsors then went on to employ children in dangerous and illegal jobs. As the HHS and Department of Labor (DOL) tossed the issue back and forth, they also failed to acknowledge the urgency and growth of the exploitation problem.

While the focus is on framing child labor specifically, it’s critical to note that a majority of these cases revolve around migrant children being forced to work to support their families–placing the issue squarely within the purview of modern slavery. That makes it essential for any business with an international supply chain to take modern slavery regulations more seriously by rethinking and reinforcing governance frameworks to meet international standards.

The beginning of a new crackdown

While the U.K. struggles to manage the proliferation of modern slavery, the U.S. is developing a new task force to enforce existing prohibitions in the Fair Labor Standards Act (FLSA). The FLSA was updated in 2014, and the upcoming crackdown may provide a blueprint for the U.K. to follow in upholding the Modern Slavery Act.

Under the FLSA, “hot goods” are anything produced under conditions that violate the FLSA. The existing prohibition already prevents “the interstate shipment of goods that were produced in violation of the minimum wage, overtime, or child labor provisions of the FLSA”. The upcoming task force will serve to ensure that prohibition is rigorously enforced as a way to curb the rising tide of child labor, and the U.K. could significantly cut down on overall modern slavery incidence by using a similar tactic.

Worldwide business implications

The adoption of a goods confiscation model will have intense ramifications, whether it spreads to the U.K. or not. Under current conditions, any companies found to have links in the supply chain that produce “hot goods” can generally pay a fine, cut ties with the offending supplier and move on to make a slightly reduced profit. If the crackdown really does occur, the end products made with the hot goods can be seized, making a huge dent in actual profits. For Hyundai and Kia, for example, the results could be disastrous. If a manufacturer that makes their manifolds are found to be using child labor, the government could theoretically prevent the sales of fully-built vehicles.

It is worth noting that the current “hot goods” provisions do not apply to a “good faith” purchaser who acquires the goods for value, in good faith, and in reliance on written assurance from the producer that the goods were produced in compliance with the FLSA. This effectively requires greatly heightened due diligence in order to provide strong evidence of good faith. In order to minimize the risk of human rights and labor violations–and to prepare for potential future crackdowns–leaders should consider looking at regulations beyond their own borders of operation and move toward compliance with the strictest due diligence requirements. For example, even a company without operations in Germany should examine the stringent requirements of the German Due Diligence Act as a model for advancing its third-party management.

Building a 360° defense

The current overlap between migrant crises, labor violations, and upcoming crackdowns is a strong signal that regulatory pressure will continue to heat up. Companies with supply chains that cross international borders would do well to examine international regulations and adopt the most stringent level of governance possible to mitigate third-party risks associated with suppliers or intermediaries that fall afoul of human rights or modern slavery requirements.

Learn how Ethixbse360’s suite of capabilities can help you with third-party verification, risk assessments, and risk-proportionate due diligence. Ethixbase360 provides comprehensive due diligence tools that make it simple to vet third parties for compliance with various global Modern Slavery regulations and the recently enacted German Due Diligence Act.

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Modern Slavery & Forced Labor: A Global Perspective’ 

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