US$236 billion – this is the estimate of International Labour Organisation(ILO) on the level of annual profit generated from forced labour in the world today. ILO’s March report provides a new estimate of the illegal gains generated through forced labour, building on the 2014 edition and the 2021 global estimates of forced labour. This figure reflects the wages or earnings subtracted from the incomes of workers or “effectively stolen from the pockets of workers” through coercive practices.
What the study reveals is alarming. Total illegal profits from forced labour are not only extremely high but appear to have risen dramatically over the last decade, as a result of both more people in forced labour and higher levels of profit being generated from each victim. This in turn have incentivised further exploitation.
There are 27.6 million people in forced labour (2021). This figure translates to 3.5 people for every thousand people in the world. Between 2016 and 2021, the number of people in forced labour increased by 2.7 million. The overall rise was the product of an increase in the number of people in privately-imposed forced labour.
There are important differences across regions in illegal profits:
- Total illegal profits are highest in Europe and Central Asia (US$84.2 billion)
- Followed by Asia and the Pacific (US$62.4 billion)
- In Asia and the Pacific, where profits per victim are relatively low, total illegal profits are a reflection in large part of the large number of victims in the region.
Industry remains the sector where total and per victim illegal profits are the highest.
- Forced labour in industry yields annual total profits of US$35.4 billion and annual per victim profits of US$4,944
- Per total and per-victim profits are next highest in services (US$20.9 billion and US$3,407, respectively)
- Followed by agriculture (US$5.0 billion and US$2,113) and finally domestic work (US$2.6 billion and US$1,570).
The underpayment of wages can operate through a variety of mechanisms across these sectors. Although most cases of underpayment are not forced labour, underpayment is a common feature of forced labour and a critical driver of profits from it. Understanding the mechanisms of underpayment can therefore provide insight into how profits from forced labour are generated. Piece rate payment schemes used in the brick kiln industry are linked in some contexts to wages falling far below minimum wage standards. Piece rate payments are also associated in some contexts with underpayment in agriculture and in other parts of the manufacturing sector, especially when workers are required to meet unrealistic production targets.
Underpayment Practices by Industry
Fishing
In the fishing sector, share-of-the-catch payment schemes controlled by vessel owners, skippers, or supervisors are used in some contexts to underpay fishers. Other practices include:
- Underpayment or non-payment of bonuses
- Lack of clarity around how bonuses are calculated or paid
- Illegal deductions (such as for food and water), or excessive deductions for items such as on-board phone calls.
Construction
In construction, documented forms of underpayment include:
- Unpaid overtime
- Wages lower than what was agreed upon
- Illegal or excessive deductions
- Withholding of wages.
Mining
In the mining industry, debt bondage may arise when small-scale miners borrow from “sponsors” to buy equipment in exchange for a percentage of the ore they collect. Workers often do not earn enough and take additional loans for food. This cycle ultimately results in workers losing their freedom, as they are compelled to continue working to pay back their debts.
Domestic Work
Domestic workers – 8 of 10 of whom are in informal employment – are particularly vulnerable to wage underpayment. Common practices linked to underpayment are:
- Unpaid overtime
- Lack of rest periods
- Withholding of wages
In the hospitality and recreation sector and in other sectors where informality is common, the absence of formal contracts means less wage transparency and greater vulnerability to wage abuses. Wage transparency is also often undermined in such contexts by the absence of payslips detailing basic wages, bonuses, and deductions. Across all sectors, workers classified as seasonal and casual workers are frequently excluded from minimum wage protection granted to regular workers, leaving them especially vulnerable to underpayment.
Under new legislation such as the European Corporate Sustainability Due Diligence Directive (CSDDD), more companies will be required to identify structures behind forced labour and other forms of human rights abuses in the supply chain. Though these laws target large companies, small and medium enterprises are also likely to bear the burden of cascading obligations.
In today’s globalized and interconnected world, where issues of forced labor and unethical practices persist, it is imperative for companies to prioritize building due diligence processes. Where are you in your due diligence journey?
Source: ILO, Profits and Poverty: The Economics of Forced Labour, 1st edition, 2014. Note, the ILO has previously produced estimates of the profits from forced labour in 2005 (Belser, 2005) and 2009 (Vinogradova, de Cock, and Belser, 2009; ILO, 2009).