Migrant Workers

Realising Ethical Recruitment by Remediating Worker-Paid Recruitment Fees

20 November 2017

By Nikhil Eapen, India Director, Equidem Research

Image: Flickr/ILO

At the end of November 2017, droves of company executives, human rights specialists, and diplomats from around the world will travel to Geneva to attend the UN Forum for Business and Human Rights. The theme of the conference this year is “Realizing Access to Effective Remedy”, and over three days, the Forum is expected to review progress, recognise successes, study gaps and put forward a roadmap for promoting policies and committed action to secure justice for affected rights-holders.

One of the main groups of stakeholders which participants attending this conference will seek to defend, are migrant workers vulnerable to serious exploitation and abuse, despite being at the heart of the global economy.

The Common Practice of Charging Workers for Jobs

                

Joseph Raj, a carpenter from South India borrowed 120,000 Indian rupees ($1850) from a money lender - approximately 40% of his annual salary in India - at a monthly interest rate of 6%, to pay for a job in the construction sector in Qatar. To repay his debt, Joseph was forced to remit home more than 85% of his monthly wage. He adopted a frugal lifestyle - always eating at the camp, not going out on weekly holidays and spending less time with friends. 

A major cause of forced labour in global supply chains today is the charging of recruitment fees to migrant workers. Recruitment charges to workers cover a range of costs: including the recruitment itself, travel, visa and administrative costs, and often other unspecified ‘fees’ and ‘service charges’. Workers are expected to pay some or all of these fees including substantial kickback payments to brokers and potential employers.

In order to afford these fees, workers are forced to take out loans at high interest rates, leaving workers in situations of debt bondage, a form of forced labour in which a person’s labour is demanded as means of repaying a loan, trapping the individual into working for little or no pay until the debt is repaid.The practice of paying for work represents the predominant business model of the recruitment industry in the global South, including within the supply chains of leading brands.

Leadership in Eradicating Worker-Paid Recruitment Fees

Leading global companies are working towards implementation of the Employer Pays model and the Dhaka Principles of Migration with Dignity, whereby the costs of recruitment are borne not by the worker but by the employer.

The Leadership Group for Responsible Recruitment has set the ambitious goal of eradicating worker fees within a decade, and the question of reimbursement of fees as an important aspect of remedy must be addressed urgently, alongside improved regulatory environment for the recruitment industry itself.

Leading global companies are working towards implementation of the Employer Pays model and the Dhaka Principles of Migration with Dignity, whereby the costs of recruitment are borne not by the worker but by the employer. 

A new IHRB report, Responsible Recruitment: Remediating Worker-paid Recruitment Fees, profiles five multi-national companies who have sought to address access to remedy by reimbursing recruitment costs to workers found to have paid fees. Each of the remediation programmes vary in size and structure and have been shaped by the local contexts in which these companies operate. Together, they have provided a form of remedy for thousands of workers amounting to millions of dollars in the last decade.

The Challenge of Remedying Worker-Paid Fees

The biggest challenge to implementing a remediation programme for recruitment fees is the indirect financial benefit that companies and suppliers receive when workers pay for their own jobs via recruitment agents.

The biggest challenge to implementing a remediation programme for recruitment fees is the indirect financial benefit that companies and suppliers receive when workers pay for their own jobs via recruitment agents. 

Suppliers and businesses are reluctant to absorb additional costs without a corresponding increase in the cost of their product or service.

An Interfaith Centre on Corporate Responsibility (ICCR) report found in 2016, one of Coca Cola’s primary suppliers reimbursed the recruitment payments of 165 migrant workers to a total amount of $894,000. For companies or suppliers with hundreds or thousands of workers who have paid these fees, the reimbursement cost could amount to millions of dollars.  

In environments where human rights enforcement is weak and charging workers for their jobs is an industry-wide practice, businesses claim that they have limited leverage to engage suppliers on ethical recruitment and remediation practices, particularly those that do not provide goods, services or labour exclusively to them.

Suppliers that find the burden of recruitment fee repayments to be too onerous, or are not required by other clients to remediate workers, are unlikely to adopt this practice.

Further, an absence of recruitment fee receipts, the threat of reprisals on the workers by brokers and others, and the ineffectiveness of company mechanisms means that recruitment debt often either goes undetected or cannot be adequately tracked down the supply chain.

The Value of Collective Approaches

Along with taking responsibility for their own value chains, businesses should adopt collective approaches that both incentivise ethical recruitment practices across their supply chains and make it more difficult for suppliers and recruitment agents to charge workers for jobs.

While remediating recruitment fees might represent an upfront cost, in the long-term, businesses that adopt the ethical recruitment model can expect that as time progresses the need to reimburse workers will fall and the costs of recruitment will fall in line with the true costs of recruitment.

Businesses themselves can help remediate recruitment fees directly by providing financial assistance and contributing towards worker remediation.

Remediation costs can also be better absorbed if they are amortised over the period of the worker’s employment. This can help suppliers spread the costs of recruitment over time.

          

Som Bahadur, a 29-year old Nepali plumber employed in the construction industry in Qatar, said that his experience as a migrant worker would have been far less traumatic had he not been made to pay a large recruitment fee. He took two years to repay his 90,000 Nepalese rupees ($865) loan from a money lender in his village. Som said, "I could not do anything with my salary as it took so long to clear my loan. My life here [in Qatar] would have been better, my family could have lived more comfortably, and I wouldn’t have been stressed all the time.”

While remediating recruitment fees might represent an upfront cost, in the long-term, businesses that adopt the ethical recruitment model can expect that as time progresses the need to reimburse workers will fall and the costs of recruitment will fall in line with the true costs of recruitment.

Over time the real cost of recruitment can be reduced.

No business can address these practices alone.

The most effective route to ethical recruitment is collective initiatives involving businesses directly in a leading role, with the support and guidance of governments, civil society, experts, and migrant workers themselves.

The UN Forum next week will present a grim reminder of the thousands of workers who continue to work in situations of debt bondage and an opportunity to right past injustices and effectively remediate indebted migrant workers.

The UN Forum next week will present a grim reminder of the thousands of workers who continue to work in situations of debt bondage and an opportunity to right past injustices and effectively remediate indebted migrant workers.

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