Addressing Labor Issues in the Supply Chain

The concept of forced labor is not new. It’s been newsworthy since at least the mid-’90s when reports of sweatshops in apparel became commonplace. Forced labor in industries such as agriculture and apparel have continued to be a problem over the years, with prevalence in commodities such as palm oil, cotton, cocoa, coffee, and sugarcane, to name but a few.

Recently forced labor has been in the spotlight with the discovery of forced labor camps operating out of China’s Xinjiang region. The white house has even go so far as to ban imports originating from the region.

However, despite the media’s recent focus, forced labor is not isolated to China. In 2017, the International Labor Organization estimated that 40 million people globally were victims of modern slavery, and of those, 25 million were victimized by forced labor.Due to the nature and regionality of forced labor, the reality is that it is most likely to be found deeper in supply chains, at the second, third, or fourth tier. In order to address the issues of forced labor, it’s important to know how identify and address its common indicators.

Labor Issues Today

In 2020, the statistic of people in forced labor remained at 25 million. After three years, little progress had been made. And this problem continues to be exasperated by rampant shortages in the supply chain.

Both domestically and abroad, 2021’s labor shortages in logistics, manufacturing, and service jobs prove to be an ongoing issue. Post-COVID demand has increased as the world opens back up and gets back onto its feet. However, as a consequence, workers are stretched to breaking point as they attempt to make up for demand.

More often than not, this results in unpaid overtime, cutting corners, and workplace safety becoming lax, potentially putting livelihoods at risk.

How to Identify Labor Issues in the Supply Chain

To pick up on any labor red flags in your operations, it’s important you think critically about your end-to-end supply chain.This entails mapping out your relationships with suppliers, including sub-tiers, and creating a baseline of data to evaluate their performance on labor-related topics.

Before you start to collect detailed performance data, it’s a good idea to double-check that all of your stakeholders are aligned and your company policy clearly outlines forced labor policies. Ideally, procurement teams should be consulted at this stage as they are likely to do most of the sourcing and ensure compliance.

Once your internal policies are squared away, you can begin assessing suppliers to get a better sense of their standing. This process will vary depending on your internal capacity and unique exposure to labor risks, however, some common approaches include:

• Leveraging mutually recognized audit information and corrective action plan reports (CAPR) to spot existing issues or non-compliaces
• Performing assessments to ensure compliance with any regional modern slavery legislation (such as in California, France, United Kingdom, or Australia)
• Deploying your own assessment to quantify specific forced labor risks that might apply to your business

After you’ve collected some data about supplier performance, any areas with potential for violations should be jumping out at you. It’s these areas you need to focus your efforts on and tackle.

How to Address Labor Issues in the Supply Chain

After identifying any labor red flags in your supply chain, it becomes a matter of addressing them. But mitigating the risk of modern slavery and forced labor is not a one-size-fits-all approach. While the process of spotting violations is one that can be easily aided by technology, actually working with suppliers to remedy issues takes a finer touch.

Where issues like greenhouse gas emissions may have more room for supplier improvement programs, forced labor is more black and white. Most businesses that locate an instance of forced labor with a supplier will immediately terminate the contract. However, there may be cases where a supplier is not actively employing forced labor, but does not have the right infrastructure to ensure it does not occur. These are the cases where intervention is important. Work closely with the supplier to ensure they have the right policies and safeguards in place.

Here are a few tips to help you navigate that process:

1. Occasionally, workers are unaware that they even possess rights, so make sure that any contracts are written in a language they understand.
2. Ensure your business has policies regarding forced overtime and knows how to tell the difference between forced and regular overtime.  Make sure the supplier understands these policies and implements them on their side as well.
3. Ensure the supplier has sufficient grievance procedures to protect workers.
4. Investigate how the supplier is handling recruitment. Engage their HR or recruitment teams to ensure their policies meet standards to avoid acquiring employees that may have been trafficked.

Statistics for forced labor remain concerningly consistent with earlier years despite the increasing attention on the matter. But one of the ways we can help to combat this is to recognize the red flags, identify any issues, and make sure measures are in place to avoid the potential for the same problems to occur in the future.

In this day and age, labor issues should be a thing of the past, and yet they remain a prevalent and pressing issue for the supply chain and one we really can’t afford to ignore. Take note of the advice we’ve mentioned above and make sure to act upon it, not only to ensure your business avoids any potential labor concerns but to help gradually remedy the wider problem.