WASHINGTON — The electronics manufacturer HP has announced a series of landmark policy changes on labor practices throughout its global supply chains, becoming the first U.S. information technology company to halt the common use of recruitment agencies for hiring foreign migrant workers among its suppliers.
Recruitment agencies, which often hire poor workers in one country for employment in another, have for years been criticized for a range of practices that can facilitate forced labor and slavery. Advocates thus see requiring the direct employment of migrant workers by suppliers of multinational corporations as a key opportunity to crack down on bonded labor and other rights abuses in the international economy.
“Workers who are employed by labor agents are more at risk of forced labor than those employed directly,” Dan Viederman, the head of Verité, a Massachusetts-based NGO that worked with HP to develop the new recruitment policies, said in a statement.
“HP’s standard requiring direct hiring will remove a key obstacle to ethical treatment of migrant workers. The standard sets a new bar and will likely result in substantial financial benefit to foreign migrant workers in HP’s supply chain, and we hope other companies will adopt similar policies.”
HP’s new Foreign Migrant Standard was released in mid-November. Beyond the direct hiring requirement, suppliers will also need to pay workers directly. In addition, HP has explicitly banned several problematic hiring practices that watchdog groups say have become common in filling labor need among global supply chains.
The company’s suppliers, for instance, will not be allowed to charge fees to workers for a position — an almost universal practice among recruitment agencies that often results in migrants working significant extra time just to pay off these new debts.
Suppliers will also not be allowed to take away a migrant worker’s passport or other important documents, a practice that has long been criticized as giving companies inordinate and even illegal leverage and control over workers.
In September, Verité released major research on the electronics industry in Malaysia, finding that almost a third of foreign migrant workers were working in conditions of forced labor. The analysis, which noted that this estimate was likely conservative, found that the industry’s dependence on recruitment agencies constituted a key factor in this situation.
“Forced labor is linked to recruitment fee charging and the indebtedness that follows.
Recruitment fee charging of foreign workers was found to be pervasive in the study sample, and fees were often excessive,” the report found.
“Ninety-two percent of all foreign workers surveyed paid recruitment fees in order to get their jobs. The recruitment fees that workers paid for their jobs often exceeded legal and industry standards equivalent to one month’s wage.”
Opaque networks
HP’s policy changes on the issue will be noticed throughout the industry. The company says it has one of the most extensive international supply chains of any in the technology sector.
“There are constantly evolving risks in any international supply chain, and we work with hundreds and hundreds of suppliers across the world,” Bob Mitchell, HP’s global manager for supply chain responsibility, told MintPress News.
“HP has been looking at issues of forced labor for years, and in 2009 we put new standards in place. As we continued to monitor, however, we understood that what’s been put in place was not doing enough to prevent those conditions conducive to forced labor from occurring.”
Mitchell says there were no broad industry models for HP to follow, though extensive work has been done by civil society groups, including Verité. In addition, other sectors – the apparels industry, for instance – have already moved ahead in terms of consolidating best practices around hiring and recruitment.
Other technology companies, too, have started to make piecemeal policy changes, and HP was able to bring together and build upon some of these. Apple, for example, has taken steps to eliminate “excessive” fees in recruiting, and carries out regular bonded labor audits in countries considered high risk. Yet none had come out with a comprehensive public approach to the issue.
“Some of the differentiators here come in trying to address this very opaque recruiting network,” HP’s Mitchell said.
“The use of subcontractors makes it extremely difficult to understand the conditions under which workers are being recruited. We feel these new standards will not only go a long way towards ensuring stronger conditions for workers but also help to influence others in the industry.”
The company is currently putting together extensive directions aimed at helping suppliers implement this new guidance. Critically, the new initiative will also place a high priority on regular monitoring and follow-up.
Mitchell expresses optimism on this point. During conversations with stakeholders in Asia, he says, suppliers were quite open to stronger standards on recruiting.
“Many of the suppliers were … looking for guidance to push them towards what’s considered the best standard,” he said.
“In many cases the suppliers may not even be aware of the conditions these migrant workers are under, so this makes it easy to meet the high standard. With it out there now, that’s something they can point to and the customer can demand as a basic standard of doing business.”
Facilitating corruption
Others, too, are keenly watching for the ripple effects from HP’s announcement.
“If you’re fighting modern-day slavery, this is at the base of the modern-day slavery. Recruitment has not been addressed in corporate policy by very many companies, even though it’s very important,” Valentina Gurney, an associate program director with the Interfaith Center on Corporate Responsibility (ICCR), told MintPress.
“There are a number of companies that have taken important steps – Wilmar, ADM, Coca-Cola, Unilever – but what we’re looking for is a comprehensive policy specifically on recruitment. We feel this is the most direct way of targeting this specific problem.”
Gurney is the head of an ICCR initiative called No Fees, which began in January and advocates for multinational companies and suppliers to drop any costs associated with migrant workers taking jobs.
She says that dependence on recruitment agencies has not only fuelled rights abuse but also facilitated significant corruption. In sectors that are highly dependent on labor brokers – including the food and agricultural industry, as well as the electronics industry – these brokers are also typically in charge of making payments.
“What that means is the company issues a weekly paycheck to the recruiter, who can make illegal deductions,” she said.
“In my research, foreign workers in Thailand, for instance, were able to show payment slips detailing the payment amount – as well as a deduction written in pencil. That is the final amount, and it can be any amount less than what they signed up for.”
While such concerns have been known for years, Gurney says company executives are increasingly discussing these concerns behind closed doors. Still, many are wary about taking strong public stances, she notes, in part due to the complexity of ensuring compliance.
“It’s great to see a company like HP taking that leadership leap forward and showing that it’s possible to see through these types of policies,” Gurney said. “Someone has to pave the way to show how they made these changes, and then eventually other companies will eventually pull up.”
Government laxity
It’s not only multinational corporations that are struggling with the complexities and ethics of modern global recruitment policies.
The U.S. government has a “zero tolerance” policy regarding conditions that facilitate human trafficking, and these policies have been incorporated into all federal sourcing contracts since 2007. Yet in a new report, a federal watchdog agency warns that these policies appear to be laxly enforced more than a third of the time.
“[O]n the contract employing the largest number of foreign workers in the sample … more than 1,900 foreign workers reported paying fees for their jobs,” the Government Accountability Office found in a report released Wednesday.
“Some [Department of Defense] and State [Department] officials said they were unaware of the relevant acquisitions policy and guidance for combating [trafficking in persons] and did not clearly understand their monitoring responsibilities.”
The investigation notes that the Defense Department has agreed with a recommendation to tighten its definition of what constitutes a recruitment fee. The State Department and USAID, the country’s main foreign aid arm, say they will soon be prohibiting all such fees.