Ethical Supply Chain Management: Short Term Investments, Long Term Gains

We live in a world on the move. IOM, the UN Migration Agency estimates that 1 in 7 (or 1 billion) persons globally is a migrant - essentially anyone that has moved away from his or her habitual place of residence either within their native country or across borders. Scarcity of decent jobs and income inequality within and between countries push many workers to move.

At the same time, many economies see a continuous decline in their working age population which results in labour shortages. Thailand is one of these countries and already has one of the highest shares of elderly people in the Asia Pacific. By 2040, the country’s workforce is expected to decrease by 11 per cent. To support its export oriented economy which helps feed, supply and clothe the world, the country currently relies on a foreign workforce of up to 5 million migrants. In order to enable future competitiveness and growth of the Thai economy, efforts to mitigate the decline of the working age population and enhance the productivity of the labour force are needed.

The key to success lies in improving human resources. Under the Ministry of Labour’s 20 year strategic plan for Thailand 4.0, several priority areas have been identified to achieve the overarching goal of "Stability, Prosperity, and Sustainability”. These include commitments to enhance job security, decent work, and legal protection for workers as well as the enhancement of skills.

While the initiative is largely focused on native workers, extending fair treatment, safe working conditions and skills development opportunities to migrants will help Thailand to achieve sustainable development and move closer towards its goals under Thailand 4.0. The private sector stands to gain considerably if it plays a complementary role in achieving this.

Thailand is a major country of destination for migrants from the neighbouring countries, largely due to its role as a regional supply chain hub and one of the world’s largest exporters of agricultural products, seafood and electronics. Regardless of the product, brands operating in Thailand are likely to have migrant labour within their value chains.

Many migrants face a unique set of risks and challenges getting into jobs and at the workplace. Limited transparency of the recruitment and migration process, debt incurred due to high recruitment fees as well as local regulations can limit migrants’ options in finding suitable work and moving safely. Lack of family support, social exclusion, language and cultural barriers and lack of access to remedy further exacerbate their vulnerabilities which can lead to situations of abuse and exploitation.

Migrants are particularly vulnerable to human trafficking and slavery – crimes that still exist today and on an extremely wide scale. According to the International Labour Organization, it is estimated that over half of the world’s 21 million victims of slavery are found in the Asia Pacific region. The cycle of exploitation often starts at the recruitment phase where migrants are forced by unethical recruitment mediators to pay exorbitant fees and receive misleading information about their employment. Once at their workplace, they are often forced to work in hazardous conditions and are subjected to movement restrictions through measures such as the withholding identity documents. In extreme cases, migrants are subjected to abuse and forced labour, working long hours for little or no pay.

Businesses that employ these workers can be found along value chains that supply to major international brands and retailers, particularly towards the production end. More often than not, these multinational companies are unaware that their products have been tainted with labour rights violations and possibly slave labour due to a lack of transparency and oversight in a complex and fragmented web of intermediaries.

Companies that do not have a clear picture on how their products are made are undertaking unnecessary business risks. Reliance on exploitative suppliers, and their possible affiliation with criminal smuggling and trafficking networks may result in supply chain disruptions, and criminal and civil liability when regulatory action and legal sanctions are imposed.

The risk of reputational damage is also very real. Numerous media exposés have linked popular consumer products with migrant slave labour on farms, fishing boats and factories. Regulatory frameworks that extend to global supply chains are also becoming the norm in many countries. The California Transparency in Supply Chains Act of 2010 requires retailers and manufacturers operating in the state to disclose internal efforts to combat human trafficking and slavery in their supply chains. The United Kingdom also introduced a similar law known as the Modern Slavery Act in 2015.

Errant brands may be subjected to boycotts and lawsuits brought on by consumers. This was the case in 2015 when class action lawsuits were filed against several multinationals in the US for the use of forced labor within their supply chains in Southeast Asia. As more businesses start to disclose their policies, increasingly discerning consumers will begin to express their policy preferences through the products they purchase. Failure to comply with regulations can lead to dented consumer trust as companies are be blacklisted and investigated by authorities.

Protecting and empowering migrant workers can reap economic benefits. Protecting the rights of migrant workers often leads to safer and more productive workplaces with motivated employees, as well as lower turnover rates and skill retention. Companies that invest in ethical business practices are also likely to experience positive results in terms of increased customer and investor trust. Moreover, application of stringent standards throughout companies’ multinational operations can help to increase policy harmonisation across countries.

What actions can businesses take to prevent trafficking in human beings and modern slavery and ensure migrant worker protection and empowerment? The most successful companies are proactive and commit to developing internal checks and balances to tackle slavery and exploitation in their daily operations. IOM recommends efforts in several focus areas to enable businesses to implement robust oversight in their supply chains.

Firstly, it is important to raise awareness about slavery and trafficking with staff and with the broader supplier network. Knowing how to identify and reduce the risk of slavery and trafficking, comply with relevant legislation, as well as knowledge on ethical recruitment practices will enable managers to better monitor suppliers and take immediate action if ethical codes of conducts are breeched.

Secondly, ethical businesses should also have good oversight over all aspects of their supply chains and actively engage with suppliers to protect the migrants. This can be achieved through thorough mapping exercises to ascertain the presence of migrant workers in supplier factories as well as assessments on the recruitment management systems of suppliers and labour recruiters to identify potential risks, develop risk mitigation strategies and build capacity on their implementation.

Thirdly, businesses can take an active role in providing safe migration and employment information through pre-departure and post-arrival orientation for migrant workers, possibly in partnership with business associations, civil society and international organizations. Provision of valuable information on living and work-related conditions, contract terms, building human rights’ awareness, and facilitating access to remedy are important steps in ensuring worker protection.

Lastly, businesses can demand and enforce the ‘employer pays’ principle in which the cost of recruiting workers is borne by employers. This can lead to transformative change in the recruitment industry and ensure that migrants need not pay for an opportunity to get a job.

To support these efforts, IOM is part of the global Leadership Group for Responsible Recruitment, a collaboration between leading companies and expert organisations to drive positive change towards the total eradication of fees being charged to workers to secure employment. IOM is also leading on the development and current piloting of a multi-stakeholder voluntary certification scheme for international labour recruiters – the International Recruitment Integrity System (IRIS).

Moreover, IOM supports employers, particularly those in the manufacturing, construction and hospitality sectors, in establishing skill development partnerships with training institutions in countries of origin such as Cambodia, Laos and Myanmar. In Thailand efforts are being undertaken to develop tailored market-driven curricula for potential and current migrant workers. Such efforts aim to promote more inclusive technical and vocational training systems in the region, and assist employers in the areas of skill validation and matching. Improving access to quality skills development and recognition for all is key to improving Thailand’s competitiveness.

Ethical supply chain management and migrant worker empowerment, often go hand in hand in producing numerous benefits for workers, businesses and broader society. Private sector leadership play an essential role in achieving the elimination of modern slavery and reinforce growth and development in Thailand and the wider region.

IOM provides a suite of services for businesses to ensure ethical recruitment and clean supply chains under its Corporate Responsibility in Eliminating Slavery and Trafficking (CREST) programme. For more information, visit https://thailand.iom.int or email iomthailand@iom.int.

Further information on the Leadership Group for Responsible Recruitment visit http://www.employerpays.org

Reuben Lim is Communications and Media Officer at IOM Bangkok