Has COVID-19 increased the risk of modern slavery in Asia?

By Lee Kah Whye
Singapore, September 14 : A recently published study revealed that the risk of modern slavery is higher than at any point since 2017 in manufacturing hubs across Asia.
The study was issued earlier in September by Verisk Maplecroft, a UK-based consultancy that specialises in working with multinational organisations on ESG (environment, social and corporate governance) and human rights risks. They have offices in the UK, the US, Canada and Singapore.
The report goes on to add that Asian manufacturing hubs have witnessed a significant increase in modern slavery over the last four years, and the risk is set to grow as the economic fallout from COVID-19 takes full hold.
In the latest annual edition of the Verisk Maplecroft Modern Slavery Index, among Asian countries, workers in Bangladesh face the highest risk of labour exploitation in Asia and is in 18th place globally. It is followed by China (20th position globally), Myanmar (23rd), India (25th), Cambodia (32nd), Vietnam (35th) and Indonesia (44th). All these Asian countries sit at their lowest point in the ranking of 198 countries since 2017. The index measures the risk to business of the possible association with slavery, trafficking in persons and forced labour in supply chains, operations and service providers.
For the first time, Bangladesh and India, key manufacturing countries for the apparel sector, have dropped into the 'extreme risk' category of the Modern Slavery Index. They join China and Myanmar in a group of 32 countries where populations face the highest levels of risk. The index identifies Bangladesh as not only seeing an increase in violations, but also a weakening of enforcement of labour laws over the last few years. In India, a notable decline in enforcement is largely responsible for its slip from 'high' to 'extreme' risk.
Reuters quoted the Clean Clothes Campaign pressure group reporting that Asian garment workers supplying global fashion brands lost up to USD 5.8 billion in wages from March to Mayas the COVID-19 pandemic led to store closures and cancelled orders. About 60 million people work in Asia's garment industry and falling sales have put many jobs at risk.
According to the index, the risk of modern slavery is highest in North Korea, Yemen, Syria, South Sudan, Iran, Somalia, Sudan, DR Congo, the Gambia and Burundi. However, it is the countries where a majority of retail goods and a swathe of raw materials are produced that will be of the highest concern for sustainable sourcing departments of companies, responsible investors and ethical consumers across the board.
The United Nation's International Labour Organisation (ILO) estimated that in 2016, at any given time, about 40.3 million people are in modern slavery, with 24.9 million in forced labour and 15.4 million in forced marriage. It means there are 5.4 victims of modern slavery for every 1,000 people in the world.
The ILO said that as a result of the COVID-19 pandemic, the earning capacity of an astounding 1.6 billion informal workers has been damaged. With more than 65 per cent of Asia's workforce employed in the informal economy with little or no access to labour protections, they will be increasingly exposed to the risk of forced labour. These risks also extend beyond the manufacturing sector to encompass construction, agriculture, services and hospitality.
Asian manufacturing has suffered from the fallout caused by the collapse in consumer demand as well as lockdown restrictions. With factory workers out of work due to companies going bust or downsizing, millions have little choice but to turned to the informal economy and more exploitative forms of work to stay afloat. This increases modern slavery risks in countries where labour protection is lacking.
The data from the study shows a key factor for the drop in ranking for many of Asia's manufacturing giants has been an increase in the severity and frequency of violations. Growth in such abuses has been witnessed across Bangladesh, Cambodia, China, Indonesia and Vietnam.
Of the Asian manufacturing hubs, Vietnam has recorded the greatest increase in violations in recent years. The fallout from the pandemic threatens to tip the country into 'extreme risk', particularly as more forced labour cases emerge. Cambodia has seen the largest fall in rankings, dropping 32 places in the last year, and 48 spots since 2017, due not only to an increase in violations, but to a significant deterioration in enforcement capabilities. Poor labour law enforcement is also behind China's worsening score.
The study was not optimistic about the labour situation even as countries emerge out of lockdown and make the slow transition to fully reopening their economies. It predicts that the heightened risks of modern slavery will linger and corporate exposure to slavery will expand due to continued uncertainty, particularly within procurement in countries that were previously already grappling with this issue.
As the world's manufacturing hub, Asia's heightened modern slavery risks will present an increasingly complex picture for corporates, especially when it comes to meeting mandatory modern slavery or other ESG-related reporting requirements.
The author of the report, Sofia Nazalya, Human RightsAnalyst at Verisk Maplecroft commented, "Travel restrictions have also left the ability of companies to carry out audits in their supply chains in disarray, meaning the reputational risks to brands from association with modern slavery are now higher than at any other time over recent years."