- May 27, 2015
- 3:05 am
- Serhat Cicekoglu
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Women and Risk Management: Causes and effects of slavery, human trafficking, and forced labor
Emily Erdman, now a senior student at Quinlan School of Business joins our blog as a guest author. Her blog has focused on gender discrimination and its effect on Enterprise Risk Management. This is her last post on this subject. Please join us with your comments.
Twenty-one million. That is the number of people who, as of 2013, were sufferers of forced labor. Although an archaic idea, slavery is still ‘alive and well’ in our modern day societies. The International Institute for Labor Studies stated that 98% of all sexually exploited persons and 56% of all economically trafficked persons are women. Slavery comes in the form of human trafficking, migration work, and others. In this final blog, I would like to discover the truths behind women in modern-day slavery and the effects this has on an economic level.
Sedex looked into this issue in depth in their report on forced labor in global supply chains: Modern Day Slavery Briefing: April 2014. To begin, human trafficking must be defined. To do so we use 3 main criterion: “1. Actions: The recruitment, transportation, harboring, and receipt of a person; 2. Means: The threat or use of force, deception, or the abuse of vulnerability and power; 3. Purpose: Exploitation, including forced labor or services, servitude and practices similar to slavery.” In such cases, workers do not give their services to the employer willingly. While the term human trafficking may be commonly conceived as solely sexual abuse, businesses worldwide are also abusing workers via unsolicited labor. Moreover, as stated above a large portion of these victims are females; both women and young girls are being exploited in the form of forced labor for economic gains of businesses.
As Sedex reports, Asia is not only the largest producer of manufactured goods, but also partakes in the most cases (about half) of human trafficking. Most of these workers are recruited through informal brokers. Asia, and other quickly developing countries, provide hotbeds for labor violations. With such a large need for labor, informal brokers make weak deals to exploit vulnerable populations. Human trafficking in businesses not only goes against our humanistic duties, however there is also economic risk in human trafficking
The International Organization for Migration (IOM) discusses the economic risks involved with this practice in their research on Economics of Human Trafficking. Vulnerable populations including lowly education and skilled persons who are looking for employment opportunities are preyed upon to fill the needs of the trafficker. These positions include prostitution, agricultural work, domestic work, factory work, mining, and many others.
IOM reports that around $32 billion of revenue is made annually from trafficked labor. While traffickers face high risk, they also find high short-term returns for providing human capital to employers. These employers make large monetary gains from cheap trafficked labor, which comes only at the cost of paying the human trafficker, housing and clothing for the workers, and possibly money for the police to ‘play the blind-eye’ to this illegal activity.
Not only is the practice of human trafficking ethically wrong, it is also detrimental for long-term economic and market effects. IOM explains the human trafficking market as a monopolistic competition marketplace. Traffickers are able to control their prices based on their output of human capital. As understood, these traffickers face very little barriers to entry in the market of human trafficking. While in legal markets money “flows relatively freely from business to households,” in illegal markets such as the one we are discussing, money movement is interrupted. With this illegal market comes little room for checks and balances, leaving a fully unregulated marketplace.
We thank you for giving us the opportunity to share with you a few of the current issues regarding women and risk management throughout this five blog series. As always we welcome your comments below.