With no end to labor shortages in sight, risk management strategies must continue to adapt

Child labor violations have nearly quadrupled in the United States since 2015, according to U.S. Labor Department data (1). ELEVATE’s proprietary data platform, EiQ, identified for users the growth in child labor found in U.S. audits over the last 2 years. Even so, the NY Times (NYT) article in February, Alone and Exploited, Migrant Children Work Brutal Jobs Across the U.S. took the industry by surprise. Since that time, there have been numerous conversations across the industry: where companies are getting stuck is with what they should do next.

A key challenge that companies are grappling with is that best practice, the UN guiding principles on business & human rights on access to remedy, means that there is a responsibility to ensure that any actions taken for impacted stakeholders (children in this case) do not put them in a worse position. The NYT and Washington Post have reported that following the investigations and press, there have been (perhaps unintended but nevertheless damaging) negative consequences – such as children dismissed from their jobs but now working in other local meat plants, children not in school, and in some cases, their families have been exposed to child-abuse charges (and may be serving jail time) and/or potential deportation. For those of us that have been around these challenges for a long time, this is reminiscent of the exposé of child labor stitching soccer balls for the World Cup in Pakistan in the 1990s. Reminiscent due to the subject matter (child labor), the systemic nature and the immediate aftermath of the exposure.

As an industry, we focus on the importance of the root cause of problems. In this case, it is generally accepted that the root cause is a labor shortage. In fact, to address labor shortages, some US states are rapidly proposing legislation to loosen child labor protections. Already in 2023, eight bills to weaken child labor protections have been introduced in six Midwestern states (Iowa, Minnesota, Missouri, Nebraska, Ohio, and South Dakota) and in Arkansas, where a bill repealing restrictions on work for 14 and 15-year-olds has been signed into law. Ten states have introduced, considered, or passed legislation rolling back protections for young workers in just the past two years. In some cases, these laws may not be in alignment with companies’ codes of conduct, which generally align with ILO conventions on child labor. Furthermore, this new legislation is incongruent with pressure not just related to the recent press, but also incongruent with human rights due diligence legislation being passed around the globe.

Looking back again to the exposé on soccer balls, there is an opportunity to learn from the success of industry efforts at that time to protect human rights and provide access to remedy. At that time the industry initiative with ILO and UNICEF had 3 key components:

(i) to prevent and progressively eliminate child labor through workplace monitoring,
(ii) to provide social protection to the affected children
and (iii) to strengthen the Pakistani government and NGOs to prevent and progressively eliminate child labor.

In 2023 such monitoring needs to include a combination of site assessments (including night-time surveillance audits), labor agency assessments, and grievance mechanisms. While many companies already assess their US sites, labor agency assessments are not yet the norm and there is not an industry-wide Grievance Mechanism (GM) that can act as an early warning system for industry and a safety net for workers. Including labor agencies in the scope of a responsible sourcing program requires effort and resource, but a crucial part of the answer. GMs can be profoundly effective – take, for example, ELEVATE’s Amather Kotha in Bangladesh, a sector-wide GM established after the collapse of Rana Plaza. In operation for 10 years, it receives 3,000 calls per month which are then followed up on and remediated appropriately. For GMs to be effective, they should follow the UNGPs. But to do this effectively and at a reasonable cost, this requires scale – and hence collaboration.

Providing social protections to children could include identifying and working with local NGOs and legal aid partners already trusted by the immigrant population. My view is that collaboration with NGOs and legal aid groups for the implementation of an industry GM could be incredibly powerful.

The third pillar, engaging with and strengthening government, is one of the most interesting but also probably most provocative areas because in this case, it is the U.S. government.

The U.S. state bills mentioned above are often supported by local industry and business associations comprised of global companies (2) that are simultaneously strengthening their human rights commitments. In some cases, these laws may not be in alignment with codes of conduct or the general direction companies are taking their human rights programs, including alignment with UNGPs and ILO conventions. Therefore, a first step could be strengthening internal collaboration and alignment of the governance processes between human rights and government affairs teams. Indeed, a key component of the UNGPs is integration across the business.

But secondarily, is now the time for government affairs teams to ensure that advocacy is compatible with commitments to the workforce? Government affairs teams have typically been focused on trade or business access, but – as we learned through the pandemic, supply chain resiliency is massively affected by the workforce. We need to ask whether we have reached a point where we need to engage differently. Last year, for example, prior to launching guidance at the CBP conference in June related to U.S. labor agencies, the USDOL/USAID reached out to retailers for endorsement. Perhaps it is time for legal or government affairs divisions to attempt to shape such guidance before they are ready to be published or to consider whether they want to support bills designed to support labor shortages such as the now-defunct Farm Work Force Modernization Act. The latter, of course, companies will shy away from, but ultimately there needs to be a way to address the root cause of labor shortage that suppliers are continually voicing.

1) Child labor unravels one immigrant family, company faces no criminal charges – The Washington Post, March 3, 2023
2) see for example: Board of Directors | Iowa Association of Business and Industry (iowaabi.org), see also https://members.nebgrocery.com/member-directory/FindStartsWith?term=%23%21

These blogs are written by ELEVATE staff members or associates and the views and opinions expressed are not necessarily those of ELEVATE.