Why forced labour thrives in the UK

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Recent outbreaks of coronavirus in Leicester (associated with garment factories), food processing at Cleckheaton and a farm in Herefordshire have revealed the high risks faced by workers in some sectors of the economy. Similar outbreaks have occurred in other parts of the world including garment and meat-processing factories in the US, and meat factories in Germany. It is not solely a UK problem.

In all these cases lack of physical distancing coupled with lack of protective equipment and unsafe work practices are cited as the reasons for the outbreak. Poor sick pay and pressure on employee to continue to work rather than self-isolate if they, or a member of their household, have symptoms accelerated the spread of the disease. Common to all these production facilities is low pay, poor working conditions and largely immigrant labour.

In Leicester the coronavirus outbreak is not restricted to a single employer or location but spread across parts of the city. In these neighbourhoods there have been allegations of illegal working in small garment factories, often located in derelict or unsafe buildings and paying well below the minimum wage – between £3.00 and £4.50 per hour. According the Leicester MP, Andrew Bridgen, the working conditions in Leicester have been an open secret for many years and there may be as many as 10,000 workers in ‘slave labour’ conditions.

In 2014, the University of Leicester undertook extensive research into the workings of garment manufacture in the city. This was followed by a Channel 4 dispatches programme in 2017, a Financial Times investigation in 2018 and, in February 2019, a House of Commons Select Committee (HCSC) report. All reiterated the findings of the Leicester University study – significantly below minimum wage pay, very poor and unsafe working conditions, evidence of tax and benefit fraud and immigration violations. The HCSC report specifically mentioned Boohoo and recommended union representation and the adoption of international standards with compliance auditing by reputable auditors. The government responded to the HCSC report in June 2019 by rejecting every recommendation. Also in 2019, the government published its review of the 2015 anti-slavery legislation, which indicted that while the application of the legislation was improving, there was still some considerable way to go before the problem would be under control. There has been no information deficit behind which either the government or clothing manufacturers can hide.

In the 1970s much of the UK’s garment manufacture moved to the Far East where labour was cheap. A number of Leicester workers used their redundancy money to purchase sewing machines and set up their own small workshops. Some of those companies have grown and thrived as the demand for superfast fashion increased. The success of Boohoo, the fashion company at the centre of current allegations, is attributed to the low price of its products and the company’s capacity to get from design to sales within a few short weeks. A report by Labour Behind the Label estimated that (prior to the coronavirus outbreak) Boohoo accounted for 75 to 80 per cent of production in Leicester, with a market value of £4.6bn.

As profit margins have shrunk and the demands for cheaper more ‘disposable’ fashion have grown, less well-regulated firms and workshops have been able to undercut more responsible employers. As the HCSC report noted in 2018, the system “has created a bizarre micro-economy where larger factories using machines are out-competed by smaller rivals using underpaid humans”.

In Leicester there are hundreds of small workshops that change their locations and names in the constant search for cheaper properties or to avoid the law. They may employ no more than a dozen people and provide work only intermittently. Sara O’Connor, a Financial Times journalist, reported that the whole garment sector in Leicester operated with similar conditions of employment: “Labour law does not apply … it was a country within a country … operating out of old crumbling buildings … with blocked fire escapes, old machines and no holiday or sick pay … [with a] culture of impunity”.

The lines between poorly paid, exploitative, bonded or slave labour are not clearly drawn and are best understood as a continuum. At one end might be reasonably well paid salaried jobs with sickness and holiday pay, but with such long working hours that the worker is paid below the minimum wage. At the other end of the spectrum workers are effectively owned as slaves by those extracting work from them and their living might be at or below subsistence level.

The risk of exploitation also lies on a continuum. A British passport holder in unionised and regulated employment, whose command of English is good, is much less likely to be exploited than an undocumented immigrant lacking language skills. While violence or threats might be used to institute and maintain compliance, this can also be achieved through softer means such as withholding a passport or withholding wages. Within a marital or familial relationship emotional, filial and reputational ties can bind a victim to their exploiter. Control may not even be understood as coercion by those experiencing it.

The Leicester University research on garment factories noted:

There can be no doubt that these work conditions amount to exploitation, but who is being exploited and by whom, and where should the responsibility lie for stopping it?

Statutory responsibility for investigating labour practices lies with a number of bodies including HMRC, the police, the Gangmasters and Labour Abuse Authority, the Department for Work and Pensions, the National Crime Agency, the Home Office and the Employment Agency Standards Inspectorate. The Health and Safety Executive, the UK Borders Agency and local authority environmental health, trading standards and child protection services also have a role. Containing the spread of coronavirus has also created a role for Public Health England and other parts of the local authority.

Each agency, or group of agencies working together, has guidance on how to identify and respond to concerns about potential slavery or exploitation (I counted 22 different sets of guidance when researching this topic a few years back). The Leicester study shows that agencies are active (if not effective) in their scrutiny of businesses. It reported that all but one of the firms they surveyed had been inspected – 47 per cent by immigration, 37 per cent by tax and 27 per cent by health and safety authorities. Yet, according to government statistics of the 26 firms in the Midlands and East of England region (within which Leicester falls) found to be employing illegal labour from July to September 2019 (the latest period for which figures were available), not one was employed in a garment factory. The vast majority worked in restaurants, with a handful in retail.

Following the 2015 Anti-slavery Act, the government created a director of labour market enforcement (DLMO) to co-ordinate the efforts of HMRC, the Employment Agency Standards Inspectorate (EAS) and the Gangmasters and Labour Abuse Authority. Together with the local authority, the groups are working to reduce the incidence of exploitative labour in the garment industry in Leicester as part of the labour market enforcement strategy. This is one of only two specifically targeted initiatives the DLMO is taking, which indicates the concern about the size and nature of the problem.

In spite of all these oversight bodies, many of which are active in Leicester, workers remain exploited and their employers undetected. There are a number of reasons why this is so. As with any illegal activity, participants have developed various means to keep their activities hidden or have contingency plans should they be caught or a raid or inspection is suspected. But the primary reason for government agencies failing to make much headway on the problem is that the responsibilities and mind-set of each of the relevant agencies gets in the way of addressing the problem in anything other than a scattergun and intermittent way. Enforcement agencies may disrupt activities for a while but they also contribute to their continuation, longer term.

The legislation and the publicity accompanying it constructs modern slavery as criminal gangs exploiting the most vulnerable – trafficked Vietnamese workers, Alabanian women prostitutes, homeless alcohol dependant British men held in unspeakable conditions and unable to flee. The focus is on detection, prosecution, deterrence and punishment. The working model is the division of participants into victims to be protected or villains to be arrested. Those that may be both, such as exploited illegal immigrants, are referred to the National Referral Mechanism to determine their category. If, many months later, they satisfy the criteria for being labelled ‘victims’, support may be provided but, if deemed to be an illegal immigrant they will be detained and deported.

Inevitably, those of uncertain immigration status, or those whose papers have been taken from them by their employer or have been trafficked, may have little confidence in the government’s capacity to protect them and so are driven further underground. By failing to work with government agencies, those who were once ‘trafficked’ victims of a crime become ‘illegal immigrants’. The Home Office, which has responsibility for the National Referral Mechanism, knows that its systems are neither protecting victims nor reducing the incidence of slavery or undocumented immigration.

Conversely, exploitation by paying below the minimum wage is constructed as a minor violation to be dealt with non-criminally by HMRC, with the complainant having to approach HMRC and collate all the necessary evidence to prove their case prior to action being taken. If the case goes to an industrial tribunal, the worker will be liable for legal representation costs and the tribunal fee before the case can proceed. If an employer is found to have paid below the minimum wage, HMRC allows them time to pay back the arrears and there are rarely sanctions. While the workers in Leicester’s garment factories are clearly paid below the minimum wage, they are not in a position to refer themselves to HMRC. They are not unionised, cannot afford to pursue a case, may lack the language skills to do so and would lose their jobs. With no system in place whereby statutory agencies can prosecute low pay, and while companies such as Boohoo strongly resist unionisation, exploited workers are left unprotected.

The problem is extensive. The Low Pay Commission’s (LPC) annual report estimated that 22 per cent of those entitled to the minimum wage do not receive it. Most of those who are underpaid work in childcare, while workers in retail, hospitality, cleaning and maintenance are also significantly underpaid. As the informal economy is not included in the LPC’s remit, much of the excessively low pay in Leicester remains excluded from the figures. Only 7.5 per cent of 10,000 textile workers were noted as being underpaid and this was lower than for any other sector.

Following the implementation of the Modern Slavery Act in 2015, large companies were required to audit and report on their supply chains. A review of the Act in 2019 found that “a number of companies are approaching their obligations as a mere tick-box exercise, and it is estimated around 40 per cent of eligible companies are not complying with the legislation at all”. Although the Act enables the secretary of state to seek an injunction against non-compliant companies, this power remains unused and no penalties have been imposed on non-compliant organisations.

Boohoo was one of the companies that did produce a statement in August 2019. Its approach to suppliers is comprehensive and there is evidence of regular inspections. But as the company itself notes, it has yet to identify its “second and third” tier suppliers: those companies to which Boohoo’s suppliers further contract the work. The Leicester University study considered that it was in these factories, way down the supply chain, that the risks of fraud, breach of employment, tax and social security regulations were greatest. As small workshops with exploited labour increase, better employers are undercut and they too join the downward spiral and reduce their employment standards, or resort to secondary contracting in order to make a profit.

Priti Patel has blamed racism for letting factories go unchecked or failing to take enforcement action, suggesting that enforcement agencies might be too concerned about being labelled ‘racist’ if they intervened. There is considerable evidence to suggest that racism (and sexism) has played a part in the current situation, but not perhaps in the way that she suggested. Much of the responsibility for the high number of exploited workers lies with the Home Office.

The hierarchy of exploitation so clearly demonstrated in the Leicester University report is a racial and gender hierarchy underpinned by government policies. Undocumented or poorly documented immigrants are highly vulnerable to exploitation. This includes those who came to the UK as a member of the ‘Windrush generation’, people born in the UK but who have not secured British citizenship, and illegal immigrants or asylum seekers who have not been given leave to remain or have been given leave but are not eligible for any support from the public purse.

Without the option of mainstream employment or welfare benefits, insecure workers have few options other than to work in the shadow economy or resort to prostitution or crime. Those who have a right to be in the UK but require paperwork to prove employment or residence over a long period of time, such as EU citizens, are also vulnerable to exploitation and may have to exchange receiving less than officially recorded pay for getting paperwork from an employer. The Home Office’s ‘hostile environment’ is highly conducive to a racist application of employment practices and once employed in exploitative work, it is almost impossible to escape.

The two prior conditions for slavery and exploitation are a strong market for the service or product and the high cost of labour. It is for this reason that most exploitative labour is in occupations associated with women – childcare and care for older people, cleaning, domestic work, making clothes and prostitution. There is a societal reluctance to pay properly for the work women do for free in the home, yet there is high demand for those services. And consumer indifference to the conditions in which those providing services work, supports exploitation.

The complexity, cost, duplication and opacity of the systems set up to tackle worker exploitation renders them ineffective for the modern economy with its mix of highly capitalised mechanised production at one end and an increasingly poorly paid mobile and peripheral workforce at the other. The protective measures fracture and combine to create gaps through which exploitative employers can thrive like weeds in crazy paving.

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