Modern slavery: Hidden risks to look for in your supply chain


By Samantha White

Modern slavery is generally perceived as something that occurs in emerging economies. But it happens in established economies, too. There are an estimated 10,000 to 13,000 victims of trafficking and forced labour in the UK, for instance, according to government research conducted in 2013.

“It can be prevalent in anybody’s supply chain in any type of business,” said Mark Heath, head of business change and development at the Gangmasters Licensing Authority (GLA), a public body that regulates the supply of temporary labour into the fresh produce sector in Britain. Suppliers of such labour for agriculture, horticulture, shellfish gathering, and associated processing and packing, or gangmasters, must be licensed.

Heath is keen to dispel the perception that modern slavery doesn’t happen in Britain.

“[Businesses] are really good at looking at ethical sourcing of product,” he said, “but very few have been looking at the ethical sourcing of people. We have not been asking the same questions about where workers come from, or whether they are paid properly. And that allows criminality to flourish.

“Legitimate businesses can be infiltrated by organised criminal gangs who will spot the opportunity to make money out of the workforce,” Heath continued.

The risk of modern slavery in your supply chain occurs wherever there is a low-paid, low-skill, high-turnover workforce, and is prevalent where agency or contract workers are involved. The longer and more complex the supply chain, the greater the risk.

The GLA currently regulates the agriculture and fishing and food packing and processing sectors. It has identified accommodation and catering; construction; care homes; wholesale and retail; and transport and storage as further at-risk areas. These will come under the GLA’s extended remit when it becomes the Gangmasters and Labour Abuse Authority later this year.

In 2015, the UK introduced world-leading regulation, the Modern Slavery Act, which sets out to tackle trafficking and slavery. A supply-chain transparency clause requires commercial organisations supplying goods and services in the UK with a global turnover of more than £36 million to publish a transparency statement detailing the steps they have taken to prevent and minimise risk.

“Businesses now understand that they have a responsibility and obligation to police their supply chains, look at them more closely and see where the risks of labour exploitation and modern slavery might be,” Heath said.  

In addition to the risk to a business and its reputation when slavery is present, there is an individual who is being exploited. Labour exploitation brings with it associated crimes such as benefit fraud, violence, and intimidation.

‘Audits don’t catch criminals’

Cases of modern slavery have been discovered in the supply chains of major retailers in recent years. In one case from 2015, a Yorkshire-based factory that made beds and mattresses for three retailers was found to have been using a trafficked, enslaved workforce. All three retailers had conducted regular ethical audits of the company, all of which failed to uncover the problem.   

“If you’ve got responsibility for a contract, or a relationship with, a company that supplies your labour, don’t just accept that the workers turn up at 8am and go at 5pm and don’t ask any questions. We all have a collective responsibility to examine what the labour supply chain looks like,” Heath said. “We encourage businesses to engage with their labour provider to see how they manage the flow of workers, what checks and balances they have in place. Do they take a robust approach to worker interviews?”

Structured interviews can identify this type of issue more effectively than audits. Heath encourages businesses to have regular conversations with individual workers.

“Is working in the UK what you thought it was going to be?” is a good opening question. If someone is not working in the circumstances that they expected, this could indicate a false promise was made to them by a trafficker.

Other potential red flags to consider:

  • Are workers withdrawn?
  • Do they look malnourished?
  • Do they seem nervous about their surroundings?
  • Do they rely on someone else rather than speaking for themselves?
  • Do they interact with other people?
  • Are they easy to engage with?

Other clues employers can look for can be found in a database, Heath said: Commonality of address details, bank account numbers, phone numbers, next of kin, or place of origin in the home country may indicate that individuals are being controlled by the same person.

One way legitimate businesses are targeted

The GLA has investigated a number of cases of criminal gangs operating in eastern Europe, targeting vulnerable individuals who are out of work and have little access to opportunity.

Having gained their trust, the criminal tells such individuals, “Meet me at the bus station, bring your ID, I’ll take you to the UK and find you work. You don’t need to pay me for your transport or accommodation until you start working.”

Once in the UK, the victim starts accruing debt for that transport and accommodation. Victims are often kept without work for several weeks to build up the debt and obligation. The criminal takes the victim’s ID documents, with the promise they will open a bank account for them and find them some work.

The criminal then sends victims to register with legitimate recruitment agencies. Victims are told what address, mobile number, next of kin, and bank account details to give – all of which is verifiable and legitimate information. However, the bank account (and thus wages for work done) is controlled by the illegal gangmaster. Gangs often move victims around different businesses through agency labour.

Victims are often kept in dangerous accommodation with minimal food and given a token amount of cash per week. They feel unable to leave as they are subjected to threats and intimidation, often don’t speak English, and have no ID documents or support network in the country.

Tackling the issue

Tackling modern slavery in the UK has to be done in partnership with business and the regulator, law enforcement, and nongovernmental organisations, Heath says. He encourages anyone who identifies an issue or risk in their supply chain to report it so the GLA can help them remedy it. “As a regulator, we will always encourage you to work with us if you’ve got a problem, not against us.”

The authority can then refer victims to the National Referral Mechanism, one of the systems in place to protect victims of trafficking and ensure they receive appropriate support.  

Samantha White (Samantha.White@aicpa-cima.com) is a CGMA Magazine senior editor.