Labour Practices Learn how to correctly analyse this topic.

Sarah Simon

18 min Read Time | January 21st 2022

Key takeaways

1

Unfortunately, some companies directly or indirectly (through their suppliers) partake in forced labour. The topic includes forced labour, as well as other working conditions such as wages, unions, and general employee well-being.

2

In your analysis, add how many people work for the company (if possible) or add the number of suppliers the company has, and provide data about their working conditions. In other words, how many people and in what ways are the workers' basic rights being violated?

3

If the company’s suppliers indulge in forced labour, disclose as much information about their business ties.

Are they the company’s main suppliers? How many products does the company source from them? How close and dependent are their relationships? How much is the company indirectly responsible for by funding these suppliers (out of the total)?

Executive Summary

Forced labour and detrimental working conditions violate human rights and can seriously affect workers' physical and mental health, and overall wellbeing.

To quantify the impact, including data on how many people are trapped in forced labour in the company’s supply chain, describe the conditions they endure, and what basic rights and labour standards are being violated. 

As it is not always possible to quantify the number of workers suffering from exploitation, the analysis can show significant impact by demonstrating how strong the business ties are between a company and its suppliers involved in forced labour.

Other working conditions should also be considered, such as wages, unions, and other points that may hurt employees' well-being in the supply chain.

To fully assess the impact, consider its depth, breadth, and persistence. This touches upon the number of rights violated, what rights, where these violations are occurring, for how long, etc.

To include:

  • The number of indirect jobs only
  • The number of employees and/or total suppliers
  • Quality of those indirect jobs: wages, working conditions (forced labor, child labor, exploitation, trafficking), unions, etc.

What is it?

Forced labour is described as work performed involuntarily under the use of force, fraud, or any coercive means. During the recruitment process, workers might be deceived about working conditions and influenced to take on an exploitative job, or they might fall prey to debt or paper bondage, where employers illegally withhold workers’ documents or set unpayable recruiting fees. Abusive practices like threats of harm, force, and others might also be established to intimidate workers from leaving.

In some cases, labourers might be unwillingly separated from their families, held captive and under constant surveillance in working camps, and enforced to endure precarious, abusive, or unsafe working conditions for years.

Children worldwide are classified as child labourers when they are either too young to work or are involved in hazardous activities that may compromise their physical, mental, social or educational development. In the least developed countries, slightly more than one in four children (ages 5 to 17) are engaged in labour that is considered detrimental to their health and development.”

Currently, around 25 million adults and 152 million children are in forced and child labour, respectively. Their work in dire conditions adds significant value to goods manufactured and shipped worldwide in global supply chains. Only in the private sector, forced labor generates an estimated $150 billion US dollars in illegal profits every year. Aside from eroding a country's revenues and social wellbeing, forced labour is a fundamental violation of human rights.

KnowTheChain evaluated the 49 largest ICT companies globally on their initiatives to address forced labour and human trafficking in their supply chains. The results were straightforward. The majority of companies scored poorly, with more than three-quarters scoring less than 50%, and with an average score of 30%.

Sources

https://collections.unu.edu/eserv/UNU:3293/JRF01_ForcedLabour.pdf
https://mneguidelines.oecd.org/Ending-child-labour-forced-labour-and-human-trafficking-in-global-supply-chains.pdf
https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_243201/lang--en/index.htm
https://www.equalityhumanrights.com/en/human-rights-act/article-4-freedom-slavery-and-forced-labour
http://www.ilo.ch/global/topics/forced-labour/definition/lang--en/index.htm
https://data.unicef.org/topic/child-protection/child-labour/
https://knowthechain.org/wp-content/uploads/2020-KTC-ICT-Benchmark-Report-1.pdf

E SDG goals icons individual rgb 08

SDG Choice

✅ SDG: 8

✅ Impact Category: Processes

✅ ILG: Decent Work

Data Points & Units

Indecent Working Conditions - Values we are looking for are:

  • The number of people in the company’s supply chain (indirect workers)

  • The number of suppliers

  • The number of suppliers known for having poor working conditions

  • If a company’s supplier(s) is tainted with dire working conditions and forced labour, clearly define how strong and dependent is the company’s and its supplier’s business tie:
    • Is it a/are they the main suppliers?

    • How many products/services is the company sourcing from this supplier?

    • How reliant are the company’s operations on this supplier?

  • For how long/since when is it happening?

  • Quality of those indirect jobs: wages, working conditions (forced labor, child labor, exploitation, trafficking), unions, underpaid, overworked, etc.


Workforce Health& Safety - Values we are looking for are:

  • The number of direct employees

  • The absolute impact in terms of fatalities and injuries

  • Types of injuries and sicknesses and how these occurred

  • Nature of the employees' work and their contracts

  • Use of metrics (like TRIF and LTIR) to calculate the absolute impact

  • A comparison to the industry average

  • How long-lasting and deep the impacts are on the workers


  • For LTIR/TRIR: We need to fill the absolute number of injuries/accidents and not the rate

  • For Year Range: One number for the duration including both the years.
    • Example: if the company has been involved in forced labour from 2018-2022 -> it should be filled as 5

  • For Year: We provide the latest year.

Example: if the company has been involved in forced labour from 2018-2022 -> it should be filled as 2022

Some definitions:

  • Disclosed: When the data is directly disclosed by the company, i.e., we did not do any calculations/estimations to obtain the figure.

  • Estimated: When we have calculated the figure.

  • Complete: When the data represents 100% of the company’s operations.

  • Partial: When the data is given for only a portion of its operations (not 100%).

Impact assessment

In your analysis, examine the company’s treatment of employees and suppliers. To quantify the impact, include data on how many people are trapped in forced labour in the company’s supply chain, describe the conditions they endure, and what basic rights and labour standards are being violated. Consider how the workers’ health, socioeconomic status and overall well-being are being compromised.

You may use studies as proxies to report the impact and the IMP framework to describe the what, how much, and who.

Introduction

The introduction should describe the broader impact issue to set the stage for the reader.

Provide enough context information about the social impacts of poor working conditions such as wage issues and working overtime, forced labour, and others.

It should give the reader a general panorama of poor working conditions forced labour worldwide.

If needed, the introduction could also treat pervasive labour practices in the company’s specific industry or a specific country. What is the global/industry scale of the problem? Why are poor working conditions and forced labour detrimental?

Core Analysis - Labour Practices

Include:

  • The number of people in the company’s supply chain
  • The number of suppliers
  • The number of workers/suppliers known for having poor working conditions or that are under forced labour.
For example, "The company has 100,000 employees, but it is estimated/documented to have 1,000 forced labourers."
  • If a company’s supplier(s) is tainted with dire working conditions and forced labour, clearly define how strong and dependent is the company’s and its supplier’s business tie:
    • Is it a/are they the main suppliers?
    • How many products/services is the company sourcing from this supplier?
    • By how much is the company funding this supplier?
    • How reliant are the company’s operations on this supplier?

Caution: Please note that analyses could only be considered when there are close ties between a company and a supplier profiting from forced labour and having poor working conditions. Otherwise, the impact is deemed peripheral to the company’s activities.

For example, "A company buys 1.5 million tonnes of palm oil. It has four suppliers, two of which are known to indulge in child labour since 2015. These suppliers provide 55% (825,000 t) of the company’s total palm oil consumption".


Helpful tip: Using ranking systems like KnowtheChain can often help understand where a company stands amongst this significant issue and how it compares with its competitors.

  • Describe the conditions in which workers are kept.
    • Have there been any violations of human rights?
    • Are the workers underpaid?
    • Are they overworked?
    • Are they exploited?
    • For tobacco and, metals & mining companies, are the working conditions hazardous?
  • For how long have the events taken place?
  • Is there a poor track record?
  • Had the company pledged to end its ties with this supplier and failed to do so?

Including various sources in your research and being critical of the information presented by the company and third parties will help you add nuance to your analysis.

Common mistakes:

  • Writing borderline analyses which do not establish a direct link between the company's supply chain and unfair labour practices.
  • If a company's supplier is using forced labour to extract specific raw materials, the analysis can make a claim stating that the company is procuring materials from the materials in question.
    • For instance, if a link can be made with sourcing one type of mineral, metal, or other, such as cobalt, then the analysis cannot accuse the company of using another raw material, like copper.
    • Looking at the company's products and the materials they use, there is no link between the company's supplier using child labour for the company's specific materials that they are sourcing.

Core Analysis - Workforce Health & Safety

  • We do not accept notes based on frequency rates only, i.e. TRIR and LTIR values only.
  • Whenever companies are not reporting the exact number of accidents, but rather a frequency rate, we can estimate total accidents/injured by applying the internationally recognized OSHA formulas.
    • If the company does not provide the number of total hours worked by its workforce in X year, we estimate it by:

Estimated total worked hours by the workforce in one year = total workforce * 40hrs weekly * 50 working weeks/yr * 90% rate to avoid overestimation


  • Then, we can apply the OSHA formula both for the LTIR & TRIR (same formula applies to both)


Number of injuries/accidents = (TRIR or LTIR * number of hours worked) / 200,000 (or 1,000,000)#

#Warning: We divide by 200,000 because this is the standard formula used by OSHA that all companies follow around the world. However, at times, companies might explicitly state that their TRIR and/or LTIR or similar frequency rates are “per 1,000,000” worked hours. In those cases, we simply divide by what is disclosed by the company (say, 1,000,000) and not by 200,000.

Conclusion

Decide if the company’s impact has been positive or negative, and give the reader a succinct summary of the scale and persistence of the matter. In general, no new information should be presented to the reader.



Make sure to describe the scale of the impact by taking into account:

1/ The breadth of the impact

  • Is the impact local, national, or global?

  • How many people are concerned? Thousands? Hundreds of thousands?

2/ The depth of the impact

  • Is the life of people concerned deeply affected, or does the issue just marginally impact them?

  • Are the changes brought by the issue profoundly changing society or the planet?

3/ The persistence of the impact

  • How long would the impact described last for? Months? Years? Decades?

  • How reversible is the impact described in the impact analysis? Can it be easily stopped/extended?

Context:

As of 2021, globally 40.3 million (Mn) people are involved in modern slavery of which nearly 24.9 Mn work as forced labourers. Modern slavery is a contradiction of human rights as it strips a person’s freedom of control and decision-making to work through threats and violence.

While modern slavery has boomed within the supply chains of global companies, the footwear and apparel industry relies the most on forced labour.

Activities:

Yue Yuen ranks 38th of 43 companies that lack disclosure of policies and practices on forced labour. It majorly imports leather from Minerva S.A., a Brazil-based livestock company tainted with child labour and forced labour in its activities.

Outputs, outcomes, and impact:

In recent years more than 12 cases have been recorded where slaughterhouses of Minerva, along with beef producers like JBS, have been involved in extreme labour abuses. In Paraguay’s Chaco region, Minerva’s 5 slaughterhouses are linked with child labour, slave labour, and indigenous labour exploitation.

In Brazil where it owns 10 slaughterhouses, workers in beef farms (supplying Minerva and JBS) were treated as slaves without electricity, toilets, and water. Thus far, 32% of slave worker rescues have happened from Brazil’s cattle farms.

Labour Practices merged with Workforce Health & Safety

For certain industries, we have merged the topic of Labour Practices with Workforce Health & Safety (can always be confirmed with the topic description). The industries for which the topics are merged are:

  • Aerospace & Defense

  • Agricultural Products

  • Alcoholic Beverages

  • Appliance Manufacturing

  • Auto Parts

  • Automobiles

  • Biofuels

  • Chemicals

  • Coal Operations

  • Construction Materials

  • Containers & Packaging

  • Electric Utilities & Power Generators

  • Electronic Manufacturing Services & Original Design Manufacturing

  • Engineering & Construction Services

  • Forestry Management

  • Fuel Cells & Industrial Batteries

  • Gas Utilities & Distributors

  • Home Builders

  • Industrial Machinery & Goods

  • Iron & Steel Producers

  • Marine Transportation

  • Meat, Poultry and Dairy

  • Electrical & Electronic Equipment

  • Oil & Gas - Exploration & Production

  • Oil & Gas - Midstream

  • Oil & Gas - Refining & Marketing

  • Oil & Gas - Services

  • Pulp & Paper Products

  • Rail Transportation

  • Road Transportation

  • Semiconductors

  • Solar Technology & Project Developers

  • Tobacco

  • Wind Technology & Project Developers

  • Metals & Mining

Helpful Sources

What is forced labour, modern slavery and human trafficking
Article 4: Freedom from slavery and forced labour
In the world’s poorest countries, slightly more than 1 in 5 children are engaged in child labour
Forced Labour: Does it Make Economic Sense? (pages 3-4)
Ending child labour, forced labour and human trafficking in global supply chains
ILO says forced labour generates annual profits of US$ 150 billion
2020 Information and Communications Technology

Direct sources you can use:

  • Annual reports

  • Ranking Systems: such as KnowtheChain can often help understand where a company stands on the issue of forced labour

  • Sustainability reports

  • CSR/ESG reports

  • URD (Universal Registration Document)

  • National and local news outlets

  • This doc goes through all the possible frequency rates that we might encounter in a company report, explaining how to calculate it and what it stands for

Whenever there are doubts about the meaning of something, we encourage you to thoroughly read the reports of the company, considering footnotes, and methodology frameworks, as those might contain the answer to your doubts.

Refresh

1. Check if the assigned analysis has more recent data of labour practice violations in its supply chain and workforce health and safety data (we require the latest data available)

NO: do not refresh the analysis and please report it

YES: Move to step 2

2. Update the analysis following our Important Metrics & Standards 

3. Check the intro: Is it up to standard? Are sources working? Is data current and relevant?

YES: do not refresh the introduction

NO: move to step 4

4. Fix the Introduction

5. Fix the Headline

6. Fix the Conclusion, if needed

7. Update the data points as per the available data

Recording of Topic Webinar

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Learn how to assess the analysis you are writing or reading.

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