Uncovering the reality of modern slavery

modern-slaveryJames*, a Regional Manager with an Indian multinational firm was elated, having just received his offer letter for an internal transfer overseas. The opportunity not only gave him a sizeable hike from his current salary, but also included perks such as fare for the flight, food and accommodation in his new city. After settling in, everything seemed to be going well; till six months later, he received some distressing news which required him to come back to India. Fearing things to take turn for the worse, he spoke to his employer and requested to be relieved of his corporate duties.

To his dismay, his employer refused. He cited the contract which James had signed, stating the employer had the right to deny his passport and other documents, till the time his contract was over. Else, there was a significant amount of penalty which he would have to pay.

Caught between the devil and the deep sea, James was left with little choice – and unknown to him, exposed to modern slavery.

Understanding modern slavery

The Walkfree Foundation, a global human rights group released the 2016 Global Slavery Index (GSI) which estimated that close to 45.8 million people are subject to some form of modern slavery across the globe. While in principle, slavery has been officially abolished in all countries, the numbers reflect the harsh truth that many people do not even have basic human rights. For these millions, the freedom to make their own choices is not even a reality.

Modern slavery encompasses human trafficking, forced labour, debt bondage, child labour, servitude and other slave-like exploitation. To explain with an example, in large factories and mines, labourers are sometimes forced to work for more than the prescribed working hours, resulting in forced labour. In some cases, migrant workers have an additional amount added to loans taken by them in the form of accommodation or transport costs. This amount typically exceeds their capacity to repay the entire sum, trapping the workers into a ‘debt bondage’.

In India, the diversity of the economy covers an array of industries and services that contribute significantly to its growth. But certain sectors, such as agriculture, mining, construction, hospitality and manufacturing to name a few, tend to be more at risk when it comes to modern slavery. The exploitation is of the ‘disadvantaged’ social economic sections that are vulnerable to forced or bonded labour. Global reports also suggest that India numbers around modern slavery are high, making corporates vulnerable to its risks.

A global viewpoint – Modern Slavery Act, 2015

The action taken by the United Kingdom (UK) government to introduce an anti-modern-slavery legislation is a good example in recent times. In 2015, the government institutionalized the “Modern Slavery Act, 2015” which focuses on prevention and prosecution of modern slavery, and protection of victims. The objective of the law – bringing an end to the crime against humanity.

Key elements of the Act state that affected businesses need to publish an annual slavery and human trafficking statement, which is duly approved by the Board and signed by the directors. In this statement, the company needs to publicly disclose the steps it has undertaken to ensure slavery and human trafficking are not taking place in any part of its own business and as part of the supply chains. The Act applies to any commercial organizations (wherever incorporated) with a turnover of more than £36 million and conducting business, or part of a business, in the UK.

Let’s explain this with an example. Consider M Ltd*, a mining company which is headquartered in India. It has an annual global turnover of over USD 1 billion, workforce of 25,000 people in multiple countries, including Asia, US and UK. Will the Modern Slavery Act apply to M Ltd?

The answer is yes, it will apply. This is because M Ltd. falls under the purview of the Act as it fulfils the above applicability parameters, which is turnover over £36 million and has operations in UK.

The Act is unique as it attempts to not only eliminate slavery within the company’s operations, but also requires that its supply chain remain slavery free.

Are organizations at risk?

While individuals are victims of slavery but the adversity can fall on organizations as well. The global and social nature of misdemeanours, coupled with online and offline campaigns of human rights violation claims can bring forth the highest reputational, legal, financial and operational risks.

In view of the prevalent threats, ethically conscious organizations need to identify custodians for modern slavery compliance, conduct risk assessment of the supply chain to uncover areas with high exposure. They should also craft robust policies and procedures to battle modern slavery, through supplier’s code of conduct as well as agreements. Awareness at an organizational level through regular trainings to employees, third-party vendors and instituting whistle-blower frameworks with adequate grievance redressal committees will also go a substantial way to highlight any issues which may crop up and will be an important step towards ethical sourcing.

The creation of an ecosystem that is responsive and proactive to curb modern slavery is critical. This enables a safe environment to raise red flags, ask questions, voice opinions for a basic human right through various mediums.

*All names and cases in the above article are fictitious 

Follow @EY_India and track #EYForensic for regular updates

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.