It is not if you will find modern slavery in your supply chain, it’s a matter of when

It is estimated that 40.3 million people were victims of modern slavery globally in 2016. Up to two-thirds of victims are believed to be in the Asia-Pacific region, where many Australian companies’ supply chain extends[1].

The construction sector, which employs approximately 7% of the global workforce, is highly vulnerable to modern slavery risks.[1] While it provides employment to many of the world’s poorest and vulnerable people, the sector also captures 18.2% of the 16 million people exploited in the private sector globally.

Businesses are faced with the sobering reality that it is not IF they find modern slavery in their supply chain, it is WHEN.

Modern slavery risks in the construction sector lie mostly within labour and materials procurement. Construction companies also face inherent risks when doing business, for example:

  • Weak or no enforcement of laws prohibiting forced labour
  • Weak and/or inconsistent labour inspection framework
  • Partnership with government with a history of recruiting compulsory labour
  • Public Corruption
Industry practices
  • Intense competition between suppliers (pressure on time and costs)
  • Decentralised operations
  • widespread use of third party recruiters and subcontractors
  • Short-term nature of construction projects
  • Sourcing from country with high level of unemployment and poverty – labour force is vulnerable to exploitative practices
  • Migrant labour represents a large part of the workforce
  • Low-skilled work and minimum wage

The report by The Chartered Institute of Building on tackling modern slavery in the UK construction sector provides some good insights on the sector’s response to the UK legislation.[3] Interestingly, when asked how certain that there is no modern slavery occurring within a company’s supply chain, 58% of construction procurement managers in the UK responded that they were very or fairly confident that they did not have this issue.

Deloitte’s 2018 State of CSR report provides similar findings, with 79% of senior CSR managers believing that it is unlikely there is any slavery in their supply chains.[4]

These numbers point to a lack of awareness and understanding of the issue and that there is a presumption existing management system already capture instances of modern slavery. Unfortunately, as University of Bath’s Professor Andrew Crane said:

“If you think you have a system in place that guarantees you haven’t got modern slavery, you’re in cloud cuckoo land”.[5]

We have passed the stage of questioning whether modern slavery is really an issue. Overseas construction companies are moving fast in this space and leaders are emerging, responding to increasing public and stakeholders’ scrutiny.

Australia is in the list of countries taking most action on modern slavery, along with the Netherlands, USA, UK, Sweden, Portugal, Croatia, Spain, Belgium and Norway.[6] Australian businesses can lead in the fight against modern slavery, not simply because of compliance but because it is the humane thing to do. Commit to not tolerate exploitative labour practices and click here for Deloitte’s 5 steps approach to prepare for the Australia modern slavery legislation.

For more information, contact Deloitte Sustainability Services:
Partner Paul Dobson
Principal Dr Leeora Black

Supporting footnotes

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