For the first time since 2000, child labor is on the rise, according to the International Labour Organization (ILO) and United Nations Children’s Fund (UNICEF). A staggering 160 million children were victims of forced labor in 2020.
Against the backdrop of this distressing child labor trend, COVID-19 arrived on the scene, bringing with it the elements of a tragic perfect storm: a greater supply of susceptible children, greater demand for cheap labor, companies and families financially stretched, businesses shifting resources from business-enhancing to business-sustaining, and diminished protections against child labor due to reduced enforcement and regulatory oversight, such as factory visits. What follows is a brief overview of how this quintet of concerning trends has generated a record number of child laborers.
Supply and Demand
The pandemic disrupted business operations, supply chains and economies around the globe, deepening the plight of our world’s most vulnerable people. Millions lost their jobs due to the pandemic. This rise in unemployment and loss of income pushed many households into poverty, forcing children to become income earners to help make ends meet.
As if these factors weren’t bad enough, global school closures affected approximately a billion students. Sadder yet, many of these children depended on schools for their meals. The result is that more children than ever were conscripted into work for basic sustenance, often trapped in dangerous occupations such as mining, agriculture and manufacturing. Common injuries include burns, amputations, fractures, blinding, toxin exposure, and electrocutions. These exposures increase the risk of developing lifelong neurologic impairment, lung cancer and mesothelioma.
COVID-19 has increased demand for cheap labor, as companies up and down supply chains face shrinking revenue. Many businesses were compelled to reduce wages to make even a small profit. Unfortunately, corruption creeps in during such desperate times. And like hawks scanning for prey, organized child traffickers, who care little about the health of their “workforce” and will make profits whenever and wherever possible, see a golden opportunity in the midst of this misery.
Rather than paying fair wages, these wrongdoers “employ” forced and child labor at the lowest possible cost. Shady labor recruiters, likewise recognizing this economic shift, have been more aggressive in enlisting workers. In addition, these low wages intensify the struggle to escape debt bondage (where a person’s services are pledged as security for the repayment of debt) because less revenue makes it more difficult to pay off the debt.
With many of the world’s supply chains in chaos and government resources stretched, COVID-19 has tragically reduced mechanisms that would otherwise combat child labor. Government agencies, nongovernmental organizations and private parties have been hobbled in their ability to perform their normal oversight. The pandemic has minimized travel, thus preventing customers, third-party auditors and government regulators and enforcers charged with ferreting out child labor from inspecting factories and other work sites. In addition, many organizations established to protect and support survivors of human trafficking (including forced and child labor) have seen their funding diminished during the pandemic.
Time for a Reset
Granted, companies sought to make good choices concerning procurement, logistics, human resources, and “go-forward” strategies. However, the pandemic has been immensely challenging and, with time and financial constraints, the best decisions may not have been made. These decisions should be reevaluated. It’s time to recognize that as economies, businesses, and stakeholders adjust to what may be called “a new normal,” we’re also moving ever closer to a period of judgment. While the past few years have been a period when few were watching, soon consumers and enforcers alike will be evaluating the conduct of companies.
In short, the time is right to get compliance houses in order. Companies can take stock and resume the fight against child labor inside and outside their supply chains. Consumers, and particularly the ever-expanding subgroup of socially conscious consumers, will expect nothing less.
Following are eight ways that businesses can address the scourge of child labor in their supply chains.
Engage in robust messaging. Company leaders, including top management, should emphasize the importance of the company’s opposition to all forms of child labor. Now is a good time for these leaders to speak out and influence the entire organization as well as stakeholders and business partners. Follow-through is important, and leaders should continue to champion their company policies.
Dust off and update the company’s code of conduct. Companies should create, revisit or revise their code of conduct, policies and procedures. They should also ensure that these documents specifically address child labor and other human rights concerns. For example, if a company is required to publicize, but doesn’t have in place, the required California Transparency in Supply Chains Act or U.K. Modern Slavery Act disclosures, it should retain experienced counsel to help it do so.
Honestly evaluate the company’s risk profile. Companies should rigorously verify their supply chains to evaluate risks of child labor and human rights violations. They should implement practical, focused measures to eliminate any risks that may exist. Obviously, this is not a one-time act but an activity that should be performed continuously.
Make sure that suppliers understand the company’s expectations. Companies should partner with suppliers and their suppliers’ employees to ensure that they are complying with the company’s requirements concerning child labor and human trafficking. Supply agreements should require compliance with relevant laws and regulations as well as incorporate the company’s code of conduct and audit rights.
Trust but verify through targeted audits. Companies should commit to a practical, risk-based supplier auditing program, whereby the evaluate supplier compliance by using company standards regarding child labor and other important concerns. Social audits should be tailored to address the topics the company prioritizes. The auditing program should first focus on those suppliers who pose the most risk to the company.
Train to ensure understanding. Companies should train employees and leadership responsible for supply chain management on child labor and human trafficking. They should focus on identifying and mitigating risks within their supply chains. Note that many nonprofit organizations, vendors and even attorneys offer such training and can provide industry-specific presentations. Companies should emphasize the importance of identifying and reporting such issues to management and law enforcement.
Ensure confidential reporting options. Companies should establish a toll-free hotline where employees, suppliers and other stakeholders can confidentially report prohibited child labor and other violations of the company’s policies. Companies should publish the hotline with assurances that supplier employees need not fear retaliation.
For “extra credit,” publish (without overstating or understating) what the company is doing. If the company’s compliance program has achieved the appropriate level of maturity, it may commit to publishing (or be required to publish) an annual report summarizing all of its ESG efforts — including those addressing child labor — with objective measurements of achievements and successes. As in all company pronouncements, special care must be taken to ensure that the report is accurate and aspirational, rather than overconfident and promising “absolutes.”
The ILO reports of child labor are distressing. The pandemic has provably degraded the situation. Fortunately, companies once forced to make hurried decisions can now reset their practices and introduce necessary course corrections. Considering the dire consequences of noncompliance, now is the time to consult with qualified counsel about the practical steps that can be taken to get an organization’s compliance house in order.
Paul O. Hirose and T. Markus Funk are members of Perkins Coie’s Retail & Consumer Products Industry team.
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