Forced Labor in Global Supply Chains: A Call to Action

Today’s supply chains span continents, yet a human rights crisis persists on a global scale. It’s estimated that there are more than 27 million current victims of forced labor worldwide, responsible for generating some $236 billion in illegal annual profits while facing systemic coercion across sectors, including agriculture, manufacturing, and technology.

Recent enforcement actions reveal the scale of corporate exposure. A 2024 study found that US Customs officials seized over $2 billion in suspect goods under 2022’s Uyghur Forced Labor Prevention Act (UFLPA) alone while jurisdictions, including the UK and Canada, prepare to strengthen their modern slavery reporting mandates.

As consumers and investors increasingly tie ESG performance to market value, organizations must act to address slavery risks hidden beyond tier-one suppliers — particularly in raw material sourcing and high-risk regions.

What is Forced Labor?

Forced labor is defined by the International Labour Organization (ILO) Convention No. 29 (1930) as “all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily.”

The definition encompasses three fundamental elements:

• Work or service: Any type of work across all activities, industries, and sectors, including formal and informal economies.
• Menace of penalty: This involves forms of coercion, including the withholding of wages, threats of violence, threats against family members, passport confiscation, and restriction of movement.
• Involuntariness: The absence of free and informed consent to take a job or the inability to leave at will. This often involves deceptive recruitment practices or false promises that lead workers to accept employment they would otherwise reject.

Forced Labor vs Modern Slavery

Forced labor is a specific subset of modern slavery and is primarily carried out through direct workplace coercion such as wage theft, document confiscation, or physical threats. In contrast, modern slavery serves as an umbrella term encompassing forced labor alongside other systemic abuses like forced marriage, descent-based slavery, and child labor. This is reflected in some modern slavery legislation, such as Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act.

While 90% of forced labor occurs in private-sector supply chains (e.g., agriculture, manufacturing), modern slavery also includes cultural practices such as ritual servitude and government-backed oppression.

Forced Labor vs Human Trafficking

Human trafficking is associated, and sometimes used interchangeably, with modern slavery and forced labor, but there are differences. Human trafficking involves the recruitment or transportation of people for exploitation, whereas forced labor focuses on the exploitative work itself. Trafficking often crosses borders but can also occur domestically.

Although 64% of trafficking victims end up in forced labor, not all forced labor stems from trafficking. Localized coercion, such as employers withholding passports from migrant workers in Gulf construction projects, demonstrates forced labor without transportation.

Forced Labor in Supply Chains

Global supply chains are naturally fraught with forced labor risks. Much of it stems from organizations aiming to cut costs and maximize efficiency by relying on opaque supplier networks, making forced labor difficult to detect and address.

The classic example is prioritizing low-cost production, leading to subcontracting and weak oversight. Migrant workers, a primary labor source, pay recruitment fees ranging from $3,000 to $5,000, trapping them in debt bondage. This is compounded by weak corporate governance, which allows exploitative conditions to persist. Only 23% of countries effectively enforce labor laws in high-risk industries like agriculture.

Forced labor thrives beyond direct corporate oversight. About 78% of forced labor cases occur at tier-2 and tier-3 suppliers, where organizations have little visibility. In industries like palm oil and construction, unlicensed labor brokers manipulate contracts and confiscate worker passports, preventing mobility and fair pay.

Which Industries Are at High Risk of Forced Labor?

• Agriculture: Seasonal labor demands and hazardous conditions make this sector one of the worst offenders, accounting for 24% of global forced labor cases. Cocoa, coffee, and palm oil supply chains are particularly affected.
• Manufacturing: Forced labor generates $472 billion annually in industries like textiles and electronics. Subcontracting to sweatshops allows exploitation to continue undetected.
• Construction: Migrant workers, who make up 7% of the global construction workforce, often experience wage theft. In the UK, 33% of construction workers report not receiving their full wages.

Fighting Forced Labor: Regulations and Corporate Governance

Human Rights and Labor Standards

ILO conventions set global standards for forced labor prevention. Convention No. 29 (1930), as we’ve already explored, defines forced labor as work extracted under threat of penalty — physical, financial, or psychological.

Convention No. 105 (1957) goes further, banning forced labor for political coercion, workforce mobilization, or labor discipline. The 2014 Protocol to Convention 29 requires states to tackle root causes like poverty and migration risks, mandates victim compensation, and compels businesses to apply due diligence. Over 50 countries have ratified it as of 2024.

Meanwhile, UN initiatives push for corporate responsibility. Sustainable Development Goal 8.7 aims to eliminate forced labor by 2030 through Alliance 8.7, a partnership involving 21 governments and 10 UN agencies. The UN Global Compact’s Principle 4 directs businesses to prevent forced labor with ethical recruitment and transparent supply chains.

Regulations and Tightening Controls

The EU Forced Labour Regulation (FLR) bans products made with forced labor at any supply chain stage. Organizations must map supply chains, conduct risk assessments, and keep records proving compliance. Violations carry fines of up to 4% of global turnover. The FLR entered into force on December 13, 2024, and the ban will take effect on December 14, 2027. Meanwhile, in the United States, the Uyghur Forced Labor Prevention Act (UFLPA) assumes all goods from Xinjiang involve forced labor. Importers must disprove this through detailed supply chain audits.

In Canada, the Modern Slavery Act (or Fighting Against Forced Labour and Child Labour in Supply Chains Act) came into effect on January 1, 2024, and increased scrutiny and enforcement is expected in 2025. This legislation marks a significant step in Canada’s efforts to combat forced labor and child labor in global supply chains by requiring both government institutions and private entities to report annually on measures taken to prevent and reduce the risk of forced labor or child labor in their supply chains. Key requirements include:

• Detailed disclosure requirements covering supply chain structures and activities
• Descriptions of policies and due diligence processes related to forced labor and child labor
• Identification of high-risk areas in supply chains
• Information on employee training programs

Due Diligence and Corporate Responsibility

Leading corporations have adopted strict sourcing policies. Colgate-Palmolive follows the Consumer Goods Forum (CGF) Priority Industry Principles that ensure freedom of movement, no job fees, and no coercion. The company audits suppliers and terminates contracts with violators. Danone traces 75% of its fruit purchases to farms through its RESPECT program, combining audits with worker support projects.

In the UK, Marks & Spencer enforces sourcing principles that ban document retention and require wage transparency. It also hosts modern slavery conferences and publishes supply chain maps. Kellogg aligns with the ILO Protocol P29 through strict policies on involuntary labor and migrant worker assessments, particularly in high-risk regions like West Africa.

Cross-industry collaboration is also growing. The World Business Council for Sustainable Development (WBCSD) supports corporate efforts like Unilever and Coca-Cola’s blockchain-based palm oil traceability projects and worker education programs in cocoa farms, while the Consumer Goods Forum (CGF) has over 400 retailers adopting principles that ban recruitment fees, ensure worker mobility, and eliminate debt bondage.

How to Identify Forced Labor Risks in Supply Chains?

Forced labor risks are often hidden deep within supply chains, making detection difficult. Knowing where to look and what to watch for can help you spot potential issues before they escalate.

Key Indicators of Forced Labor Risks

Some regions and industries carry higher risks than others. Areas with weak labor laws, conflict zones, and countries that rely heavily on migrant workers often have higher rates of forced labor. High-risk industries include agriculture, construction, and manufacturing — sectors where subcontracting is common and oversight is weak.

Certain recruitment practices also signal forced labor risks. Be wary of suppliers charging recruitment fees, confiscating passports, or using wage deductions to create debt bondage. These tactics trap workers in exploitative conditions and limit their ability to leave.

Steps to Increase Supply Chain Transparency

To reduce forced labor risks, map your supply chain beyond direct suppliers. Trace raw materials back to their sources and track subcontractors. High-risk products like textiles and electronics components should receive extra scrutiny.

Layered risk assessments provide a more complete picture. This means combining geopolitical risk analysis with product-specific evaluations. Tools like the ILO’s 11 forced labor indicators can help identify red flags.

Specific red flags for forced labor in supply chains include:

• Country risk factors include those with legal regimes that outlaw peaceful strike action, countries with prison labor policies and programs, and countries without ratifying the ILO’s fundamental conventions.

• Migration and informality risk factors, such as the absence of written employment contracts, the presence of informally employed workers, and the employment of migrant workers in general.

• Debt risk factors, such as the existence of credit arrangements, debt schemes for workers, and incidences of physical or psychological abuse, violence, or harassment.

Collaboration also strengthens oversight. Industry initiatives, for example, the Fair Labor Association. Investing in solutions, such as EcoVadis’ risk mapping services, to create a comprehensive supplier database of country and category risk profiles helps to effectively map the kinds of red flags. Organizations often depend on assurance and certification to mitigate forced labor risks. Traditional certification systems have limitations, though. Audits frequently miss hidden labor abuses, and some suppliers falsify records. Also, keep in mind that many suppliers keep dual payroll systems to hide wage violations, and most forced labor cases occur beyond tier-one suppliers.

To improve verification, organizations should consider actions such as cross-checking supplier data with satellite imagery, export records, and worker remittance patterns and using forensic accounting to identify wage discrepancies and hidden recruitment fees.

Taking Action Against Forced Labor in Supply Chains

Forced labor remains a pervasive and deeply entrenched issue within global supply chains, affecting millions of individuals and generating billions in illegal profits annually. Industries such as agriculture, manufacturing, and construction are particularly vulnerable, with practices like debt bondage, wage theft, and document confiscation leaving workers trapped in exploitative conditions.

The growing momentum behind regulatory frameworks – such as the EU Forced Labour Regulation, the Uyghur Forced Labor Prevention Act, and Canada’s anti-modern slavery legislation – signals a shift toward accountability. However, compliance alone is not enough. Organizations must adopt proactive measures, including supply chain mapping, risk assessments, and collaboration with industry initiatives to address forced labor risks effectively.

To truly make a difference, organizations must move beyond surface-level audits and embrace innovative solutions like blockchain traceability, worker education programs, and forensic accounting to uncover hidden abuses. By doing so, they protect human rights, enhance their ESG performance, safeguard brand reputation, and contribute to a more equitable global economy.

To find out more about modern slavery, forced labor, and due diligence in supply chains, read our free white paper: “Modern Slavery and Human Rights Due Diligence in Supply Chains.”

Download the White Paper Now and join the movement toward ethical sourcing and sustainable business practices. Together, we can build supply chains that prioritize dignity, transparency, and fairness for all.