REPORT: Forced Labour’s Business Models and Supply Chains

This report demonstrates how businesses profit from forced labour.It considers the construction industry, the food sector and cannabis 'grow-ops' to demonstrate where and how their labour supply chains may be vulnerable to forced labour.The United Kingdom is at the forefront in creating new responsibilities for businesses to ensure that their supply chains are free of forced labour.This report assists by examining vulnerabilities in hiring practices, social auditing and government policies.It maps how forced labour may find its way into legitimate supply chains.The report demonstrates that: • the UK economy creates a pool of people vulnerable to forced labour; • forced labour in the UK is not hidden; • informality and the informal market are associated with forced labour; • within construction, food and the cannabis industries, sector-specific conditions create the possibility of forced labour. Executive summarybusiness models of forced labour• Forced labour will only be used when it makes business sense to do so.• There are two broad types of businesses conducting forced labour: direct, private producers and intermediaries (e.g.labour agencies).These businesses will exhibit various degrees of informality.• Businesses make money from forced labour in one of two main ways: either using it to minimise costs and/or to generate additional revenue.• There are two main ways in which costs are reduced: minimising labour costs, and minimising risks.• There are also two main ways in which revenue is generated: by charging for ancillary services and/or theft of benefits.• These features give rise to four broad business models of forced labour: cost-minimising producer; revenue-generating producer; cost-minimising intermediary; and revenue-generating intermediary. labour and product supply chains• To understand the business dynamics at play, we also need to understand how these perpetrators are linked with other business actors through the supply chain.• Understanding forced labour in the context of supply chains helps us map the relationships between relevant economic actors.• Focusing on supply chains also assists in identifying where and how the formal business sector intersects with the informal sector, the locus of forced labour.• Forced labour in the UK is almost always associated with some degree of informality, whether it is associated with producers or intermediaries, in product supply chains or in labour supply chains.• The product and supply chains involved in forced labour in the UK illustrate the way in which informality becomes the gateway to forced labour.combating the business of forced labour• As awareness of forced labour in the UK has grown, various systems have been developed to combat the business of forced labour.• The three most prominent interventions designed to identify or disrupt forced labour are regulatory enforcement, licensing of labour providers and social auditing.• Our research suggests that these current approaches are limited in their effectiveness at preventing, detecting, and prosecuting forced labour. conclusions and recommendations• While it is often considered that forced labour is hidden, our research demonstrates that there are links to the formal economy through supply or labour chains.• While product supply chains in the UK are relatively short, labour supply chains have a greater propensity to become complex.This complexity allows forced labour to thrive.Forced labour's business models and supply chains in some cases, to exact forced labour from them.Significantly, vulnerabilities to forced labour and exploitation are dynamic and result in denying effective protection of workers' rights at the margins of the UK economy.In particular, our study demonstrates that these structural vulnerabilities result from a UK economy which emphasises a light-touch, employerfriendly regulatory framework in which to do business; the use of agency workers; varying employment status set by immigration policy; and sector specific attributes which create a precarious segment of the workforce that is open to exploitation and, more seriously, forced labour. scope and approachThis consideration of forced labour from a business perspective takes place within the context of a number of studies commissioned by the Joseph Rowntree Foundation (JRF) which have both provided evidence of forced labour in the UK and considered its underlying causes.Building on these studies, consideration turns to conceptualising, from a business perspective, how and why forced labour emerges and is sustained within UK based businesses.Although we have developed our analysis in relation to three industries -commercial cannabis grow-ops (growing operations), construction, and food -we see no reason why the business models included in this Report are not applicable in other contexts in the UK.To develop and explain the relevant business approaches to forced labour, we present a framework for delineating the business models that enable different types of perpetrators to make money from forced labour.We then consider the relevant supply chains that feed into these business models.We distinguish between and document the intersections of two types of supply chains: those of products and labour.In the first instance, an understanding of product supply chains -i.e. the stages of economic activity that are involved in transforming raw material into finished goods -enable us to determine the amount of value that can be captured at any particular box 1: the connors case Five members of the Connors family were convicted of conspiracy to require a person to perform forced or compulsory labour in December 2012.The Connors family ran a business that involved paving, tarmacking, and roofing.The Court found that over a 20 year period, the Connors family travelled throughout England and Scotland and picked up men who were 'down and out' -either homeless or addicted to alcohol or both -to work for them as labourers and moved them around the country.The workers were often enticed by the offer of free accommodation and food.The workers were paid as little as five pounds a day for hard labour, and were subjected to violent punishment and discipline.The judge observed that "the exploitation of vulnerable men through forced labour" had brought the family "rich financial rewards" including a Rolls Royce and many other luxury vehicles, and millions of pounds in property.

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