Unit 3, Lecture 3 - Child and Forced Labor in Global Supply Chains
The majority of children and forced laborers are likely found in the informal economy (at the end of gscs). High-risk industries – agriculture (palm oil, cotton, cocoa, etc), mining, construction, entertainment, manufacturing. Child/forced labor practices are often linked to deeply rooted practices and custom, absence of collective bargaining, discrimination against certain groups of people. There are ILO standards to address child and force labor. Some extra legislation pushes companies to disclose what they are doing to protect against child/forced labor. Growing connection between GSCs and the informal economy – trade unions can affect change here (at the community level).
Forced labor in the global private economy generates profits of $150 billion a year.
Brazil and the US are engaged in legislative and administrative action to implement disclosure and transparency measures to eliminate forced labor from supply chains.
Brazil is focusing on products and production carried out within Brazil, while the US is focusing on goods and services produced abroad and domestically. Brazil publishes a national ‘Dirty List’ of companies that have been found to have forced labor in their supply chains. The Brazilian government reinforces the viability of the Dirty List through investigations, sanctions (bank-lending penalties) and business adherence through a voluntary pact that some businesses have joined. The US has federal disclosure requirements on conflict minerals, an executive order overseeing the federal government’s supply chain and a state-level chain disclosure law, but has yet to enact a federal law specifically targeting forced labor in supply chains.
Int’l system mainly focused on conduct of governments and usually when addressing TNCs focused on corrupt business practices.
Corporations are making efforts to address forced labor in supply chains through implementation of voluntary codes of conduct, transparent sourcing programs and other corporate social responsibility initiatives.
In 1995, the Brazilian government created the Special Mobile Inspection Groups (GEFM) operating out of the Ministry of Labor and Employment – uses investigation, unscheduled visits and civil society cooperation. The government also created the National Commission to Eradicate Slave Labor (CONATRAE) to coordinate government efforts to combat forced labor in 2003. In 2004, Brazil introduced legislation ‘Dirty List’ to name and shame companies who used forced labor. One a complaint is initiated the GEFM investigates the workplace. If the business creates obstacles, the Ministry of Labor and Employment has the power to request freeze company bank accounts as well as arrest those impeding the investigation. Only businesses found guilty will have their names included on the Dirty List. National Pact for the Eradication of Slave Labor has assisted in solidifying business support. In 2005 the pact was created as a voluntary multi-stakeholder initiative and engages national and international signatory companies to maintain slavery-free supply chains. Organizations that sign the Pact commit themselves to not collaborating with companies named on the Dirty List. The Pact is innovative in its vision of shared responsibilities for labor rights violations going beyond companies to supplier and outsourcing networks. The Pact functions as a transnational instrument that can cripple a company’s key asset, its public image. As of 2013, about 30% of Brazil’s gross national product (380 corporations) had signed onto the Pact. Public and private financial institutions have also refused to credit companies included on the Dirty List. Businesses included on the Dirty List are also excluded from competing for new projects within public programs.
US regulatory framework:
Dodd-Frank Wall Street Reform and Consumer Protection Act (Section 1502) – mandates that publically traded companies must disclose use of ‘conflict minerals’ from the democratic republic of Congo in their supply chains.
Business Supply Chain Transparency on Trafficking and Slavery Act of 2014
Executive Order 13627 Strengthening Protections Against Trafficking in Persons in Federal Contracts
California Transparency in Supply Chains Act (CTSCA) – applies to retailers or manufacturers doing business in California but does not forbid the sale of goods produced through forced labor. Requires companies that make over $100 million annual to disclose their efforts to eradicate trafficking and forced labor in their direct supply chains. It does not criminalize the existence of forced labor, its primary benefit is that it mandates the disclosure of information about forced labor and human trafficking to consumers. The lack of legal ramifications, regulatory incentives or penalties weakens the CTSCA’s power.
US and Brazil share common obstacle: pushback from corporate interests through litigation
Both governmental agency and business community need to buy-in for successful federal supply chain legislation in the US.