How ethical recruitment is disrupting migrant worker exploitation

by Adrian | Mar 25, 2021 | Blogs

International labour migration systems exploit millions of migrant workers during overseas recruitment. Deceived and deeply indebted, migrant workers are highly vulnerable from the earliest stages of their migration journeys. There is growing demand for ethical recruiters like TERA, which offer innovative solutions to safeguard workers and eliminate labour trafficking. COVID-19 offers smart stakeholders unique opportunities to jumpstart progress in the overseas labour recruitment industry.

The global economy depends on migrant labour

From factories in Malaysia to construction sites in Dubai and farms in the United States, businesses rely on low-cost migrant workers. There are an estimated 272 million migrants in the world, and they are critical to filling global workforce needs. If current demographic trends hold, some of the world’s biggest economies are expected to increase their demand for migrant labour in the future.

Yet millions of these migrant workers are highly vulnerable to exploitation and forms of human trafficking. Recent headlines about the 6,500 migrant workers who have died in the build-up to the Qatar 2022 World Cup are just the latest example of longstanding exploitative migration dynamics. As Seefar’s field research has shown time and time again, migrant workers are vulnerable from the earliest stages of migration.

Paying for a promise

Migrant worker recruitment looks surprisingly similar – and exploitative – across different origin countries, migratory corridors and industries. Workers in villages in developing countries depend on an informal network of local brokers, unlicensed travel agencies and sub-agents to help them migrate abroad. These intermediaries promise migrants good jobs, decent wages, and fair treatment. In return, they demand payment from workers.

Coming from contexts of poverty and high unemployment, financing migration often requires families to go deeply into debt or sell property. Seefar’s research in India found that workers can pay up to USD 2,000 in recruitment fees, while our research in Southeast Asia found that migrant domestic workers paid USD 975 in recruitment fees, on average. Similar findings from research in countries such as Myanmar, Vietnam, Nepal and Kenya confirm the ubiquity of fees in the recruitment industry. Migrants often believe these exorbitant fees are a necessary cost to facilitate access to jobs with good wages.

Yet sub-agents rarely uphold their promise to workers:

• Wages and benefits are far lower than expected, while unexpected employer fees and deductions limit the ability to save and remit money to family at home;

• Contracts are substituted upon arrival to the destination country with worse terms and conditions. Passports are frequently seized and many workers cannot leave their employers;

• Workers are given tourist visas instead of employment visas, and in some cases they arrive in a destination country only to find that there is no job waiting for them;

• Workplace and accommodation conditions are hazardous, hours are excessive, and many workers are placed into situations of physical, emotional and psychosocial distress.

Trapped by exploitative recruitment

When workers realize that they have been deceived, they are often powerless to remedy the situation. Some recruiters suddenly abscond with recruitment fees, leaving workers stranded abroad. Many workers who are deeply in debt have no other choice but to slowly attempt to work off their recruitment debt in dangerous work situations abroad. Others face pressure from dependent family members at home, the shame of failed migration, or other psychosocial motivations that trap workers abroad.

As Seefar and others’ research has shown, the global labour migration system is hardwired for exploitative recruitment. At best, many migrants experience unmet expectations and worse financial situations; at worst, migrants systematically experience debt bondage, extreme distress and forms of human trafficking.

How can the international community disrupt exploitative recruitment?

Eliminating exploitation in recruitment is critical to safeguarding workers at home and abroad. This is not just theory: a forthcoming study from the University of Massachusetts-Lowell found that Vietnamese migrants with recruitment debt were 2.5 times more likely to be victims of labour trafficking than migrants with no debt. Seefar’s own research in Southeast Asia found a similar relationship, where exploitation in recruitment was highly predictive of forced labour abroad.

Achieving this kind of industry change requires meaningful investment in ethical recruitment. Ethical recruitment is an integrated solution to exploitation and human trafficking that commercially disrupts the existing migration business model. Along with better policies, stronger enforcement of existing regulations, private sector responsibility and grassroots awareness-raising, ethical recruitment holds tremendous promise to transform the overseas labour recruitment industry.

Ethical recruitment sustainably eliminates recruitment fees

Seefar launched The Ethical Recruitment Agency (TERA) in 2018 with the mission to help workers benefit from migration while staying safe from exploitation. While there is no single definition or approach to ethical recruitment, TERA is part of a growing community of ethical recruiters like CIERTO, Pinkcollar, and Honest Jobs. There has also been an explosion of major labour recruitment initiatives like IOM’s International Recruitment Integrity System (IRIS), the ILO Fair Recruitment Initiative, and the IHRB Leadership Group for Responsible Recruitment. The rising interest in ethical recruitment from the private sector, governments, international organisations, social enterprises and civil society is driven by the growing recognition that addressing the earliest stages of migration are critical to protection throughout the entire migration journey.

While every ethical recruiter works differently, TERA’s approach serves as a useful example of how ethical recruitment is effective at safeguarding workers. TERA’s business model follows the Employer Pays Principle, where businesses pay for recruitment costs instead of workers. Data from TERA’s business partnerships show that when employers pay, the total cost of migrant worker recruitment drops by over 50% – in essence, taking revenue from exploitative sub-agents and traffickers and investing the savings into migrant communities and worker protection activities.

TERA operationalises its ethical recruitment approach through its Worker Welfare System based on best-practice guidance such as the IRIS Standard. This system is designed to meet private sector demand among the ever-growing number of global businesses that are committed to responsible recruitment. TERA’s commitments are backed by independent monitoring data and include:

1. Zero recruitment fees – migrant workers never pay recruitment fees or incur debt;
2. Direct recruitment – TERA does not work with sub-agents or brokers;
3. Full preparation – every worker TERA recruits undergoes bespoke Pre-Departure Training to ensure they understand their contracts and are prepared for life abroad;
4. Legal compliance – TERA complies with all legal requirements in destination and origin countries;
5. Ongoing welfare monitoring – TERA stays in contact with workers to ensure they stay safe and have a clear grievance procedure.

Ethical recruitment is one part of an integrated solution

Innovation in the overseas labour recruitment sector is naturally impacted by policy reform, enforcement, and market demand. Seefar’s research in the Middle East shows how these forces are mobilizing in the direction towards ethical recruitment – for example, stronger labour protections in GCC countries and rising modern slavery regulations on multinational corporations.

There are valid concerns about ethical recruitment that include cost, delivery and sustainability. Every ethical recruitment initiative confronts these challenges differently. Seefar’s recent research points to significant long-term return on investment for ethical recruitment and TERA itself was designed in part to demonstrate the sustainability of ethical recruitment agencies. Smart donors and social impact investors need to carefully consider potential ethical recruitment models in the context of specific geographies and industries before funding new activities.

Sustaining progress through COVID-19

Migrants and migration actors have been hard-hit with the onset of the COVID-19 pandemic. Large numbers of migrant workers were stranded abroad or forced to return home rapidly. Demand for international labour has plummeted and may take years to recover. Meanwhile, migrants at home continue to face recruitment-related exploitation – for example, many continue to pay recruitment fees for jobs abroad that are not available any longer.

Despite these challenges, stakeholders confronting exploitation in the recruitment industry have an opportunity for transformative change. With little or no business, even the biggest recruitment agencies are facing major cash flow problems and many smaller actors have shut down their operations. Many previously exploitative recruitment assets are now available at below-market rates to social impact investors. Launching new ethical recruitment agencies (or expanding existing ethical recruiters) to new migration corridors today can unlock new geographies and industries previously closed to ethical recruitment. With lower pressure for labour, businesses can re-examine their supply chain risks and explore new recruitment partnerships with ethical labour providers.

As the world recovers from COVID-19, many civil society actors are concerned that migrant worker recruitment will recover and a dangerous rush to redeploy workers will leave many in situations of human trafficking. Governments, donors and companies that invest in ethical recruitment today can kickstart meaningful change in how the world protects its most vulnerable migrant workers.

This article was published on 19 March 2021 on Network for Migration Matters.

How smart E&C businesses can stay ahead in a challenging environment

by Adrian | Sep 17, 2020 | Blogs

Between a global pandemic and fierce industry competition, Engineering & Construction businesses are facing critical challenges that threaten their futures. A new research study from The Ethical Recruitment Agency (TERA) offers solutions. By embracing disruptive technologies, building strong relationships with prime contractors, and adopting modern labour policies, companies can win new business and strengthen their workforce. 

COVID-19 has disrupted businesses worldwide and the Engineering & Construction (E&C) sector has been particularly hard hit. The pandemic has sped up long-standing challenges in the sector, especially in Gulf Cooperation Council (GCC) countries. These challenges include fewer projects, conservative decision-making, tougher competition and lower margins. Today, E&C companies of all sizes across the GCC are facing disrupted supply chains, liquidation and investment shortages, and an often idle or immobile workforce. 

These challenges affect companies and their workforce alike. Low-skilled migrant workers from South Asia experience challenging welfare conditions even in the best of times. As E&C companies face unparalleled pressure to reduce costs, some view migrant workers as a source of savings – for example, by passing along labour recruitment costs to workers. Many E&C companies are facing difficult decisions ahead that will deeply impact their workforces.

A new study from The Ethical Recruitment Agency (TERA) offers companies a way forward. Prepared with support from the Norwegian Agency for Development Cooperation (Norad) and the Global Fund to End Modern Slavery (GFEMS), Profitable Ethical Recruitment draws on interviews with industry experts, current research, and emerging data to examine how E&C businesses can strengthen their bottom lines while also improving employee welfare. The study also aims to support a diverse range of stakeholders working with the private sector to strengthen labour standards and promote ethical recruitment.

The research finds that trends in the E&C business landscape are accelerating the need for change among small and medium construction firms (SMCs). From the United Arab Emirates to Saudi Arabia, new labour laws are eroding the employer-sponsored visa, guaranteeing worker wages and increasing penalties for noncompliance. Qatar, for instance, just announced labour reforms that will eliminate the No-Objection Certificate (NOC) and raise minimum wages. Other industry trends include:

• Intensifying investor attention on Environment, Social and Governance (ESG) issues is changing how multinational corporations (MNCs) do business. Up to a quarter (25%) of global investor funds are now held by ESG-conscious investors.
• MNCs are responding by flowing stricter requirements down their supply chain. In TERA’s research, key informants at MNCs were already telling subcontractors to reform labour practices or lose contracts.
• Increasing technological disruption in E&C is saving companies money and making low productivity business models unviable.

According to industry insiders, businesses that carry on as usual by passing costs onto workers, ignoring labour laws and disregarding new technology are sacrificing their long-term competitiveness. Short-term financial gains from these tactics are more than outweighed by financial, reputational and legal consequences over the next 1-5 years. 

But for agile businesses, these dynamics offer new opportunities. TERA’s research identified clear steps that businesses can take to not only survive these changes but also grow their business, productivity and brand. The study’s recommendations include:

1. Start recruiting migrant workers professionally and ethically. Using professional recruiters gives companies a more productive workforce and stands out to prime contractors that are scrutinising their supply chains.
2. Mitigate rising costs with new technology. Smart technology can streamline project management, avoid costly delays, and support long-term planning. 
3. Prepare for disruptive visa and labour reforms. Adapting to new regulations today builds a strong brand, motivates workers, and avoids costly penalties.

The recommendations and other key findings are summarised in a two-page pull-out for SMCs that reviews the practical steps they can take. TERA has also launched an online tool that models corporate investments and gains. These tools are simple, direct, data-driven, and ideal for managers and operational staff in both SMCs and MNCs.

The study concludes that businesses that invest in change will pull further away from those that do not. Investing in better recruitment, labour standards, and technology will improve business outputs and productivity while also supporting migrant workers. While industry challenges are daunting, with the right kind of support even the smallest contractors can remain competitive.

Posted by Evline Meshreky

Evline Meshreky is a Business & Research Officer with TERA. She supports TERA’s research, analysis and engagement to help businesses find innovative workforce solutions. Prior to joining TERA, Evline managed large-scale international projects for commercial clients and nonprofit organisations.