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24.03.2020

Coronavirus and the labour market: what this means for business

With large fluctuations in the labour market predicted, you’re right to expect changes in the way individuals are at risk of labour exploitation.

We know that periods of crisis and uncertainty have a tangible impact on levels of exploitation and human trafficking – and Covid 19 will be no different. Here’s what you need to know.

Short term effects

In the short term, we’re predicting four significant changes that will impact the risk of labour exploitation for businesses:

1. Sectors experiencing significantly high-demand will demand more from their workforce and might hire new temporary staff without asking questions.

Forcing staff to work overtime and extra shifts will not only undermine their workers’ rights, but might also put them a greater risk of contracting the virus. While, as these businesses struggle to find the extra workers they so desperately need, they are likely to source temporary staff from outside of their approved labour agencies. There is an increased risk that businesses will start to use less scrupulous providers without asking the necessary questions. The result could be exploitative labour conditions and modern slavery.

Across the economy, we’d expect to see this occurring in supermarkets’ supply chains, warehousing and logistics, social care, and medical manufacturers.

2. Sectors experiencing drastically low demand will make workers redundant, increasing their vulnerability to being deceived into labour exploitation.

With wide-reaching redundancies, unemployed individuals will be desperate to find new jobs in order to survive in this uncertain time. This shifts the balance of power to Gangmasters and unscrupulous employers, who are able to take advantage of their circumstances. We anticipate significant shifts of workforces from the struggling sectors, to the booming sectors mentioned above.

Across the economy, we’d expect to see this occurring in hospitality, retail, manufacturing, and travel and tourism.

3. The risk of labour exploitation will be exacerbated by labour enforcement agencies and auditing companies working from home.

The majority of staff will be working from home for the time being and not visiting premises to carry out audits and assessments. This means that at the very moment unemployed workers are forced into taking risks and employers are using labour agencies without asking questions, no one will be there to ensure labour standards are upheld.

4. As booming sectors struggle to meet demand, we expect to see a rise in counterfeit goods, which are closely associated with labour exploitation.

There’s already evidence of counterfeiting of products such as hand sanitiser and face masks, but as shortages of key goods occur, it will likely spread to other sectors. Counterfeit goods are typically produced by organised criminal entities, who often also run human trafficking rings. The two crimes go hand in hand, as one increases, so will the other.

Predictions for the next six months

In the medium term (end of summer/beginning of autumn), we’re predicting two impacts to the risk of labour exploitation for businesses:

1. Once the crisis starts to subside, sectors which were decimated will be eager to reopen as soon as possible and hence might recruit new staff without asking questions.

Businesses that were forced to make staff redundant during the crisis, will seek to re-recruit their entire workforce as soon as the economy starts to get back on track. During this rapid expansion period, we’d expect to see similar issues of labour agencies being used without the proper checks.

We’d expect to see this in sectors mentioned above as having low demand currently.

2. For the businesses that just about survived the crisis, we’re concerned that they won’t renew the ethical commitments and standards they made before the virus hit.

It’s clear that a large number of businesses are going to struggle to survive and, those that do, will take time to rebuild. We’re conscious that the crisis could force a backwards step in human rights protection, undermining the progress that has been made in key sectors in recent years. As businesses cautiously start to rebuild, they might choose cost-saving decisions that do not support the high labour standards we all seek to achieve.

What can you do?

As well as being aware of the risks we’re predicting, we’d recommend that you looked at the advice produced by GBI and EIRIS Foundation on how businesses and investors can follow responsible practices in this difficult time.

This is a difficult time for every business, but we ask decision-makers to be conscious of the actions they take and the human impact they can have. It has become the responsibility of all of us to curb the impact of Coronavirus, and to protect the vulnerable wherever possible.

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