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Sat December 04 2021

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Major contractors complicit in worker exploitation

14 May 18 Procurement practices at the top of the supply chain are enabling criminals to infiltrate major construction projects undetected, the Chartered Institute of Building is warning.

The CIOB's report
The CIOB's report

A new report from the Chartered Institute of Building (CIOB) says that the construction industry is failing to root out worker exploitation, despite recent legislation. Lowest cost tendering, abuse of the retentions system and late payment are pricing ethical practices out of the industry.

It also alleges that blacklisting has not completely gone away.

Since the introduction of the Modern Slavery Act in 2015, many companies have introduced immigration checks on their workforce but have failed to go beyond this and tackle the systemic employment abuses that remain prevalent.

The CIOB is urging UK contractors to face up to the significant human rights risks in their supply chains, with the launch of a new report that finds both British and foreign workers at risk of exploitation.

Its report, Construction and the Modern Slavery Act: Tackling exploitation in the UK, is published as the Gangmasters & Labour Abuse Authority (GLAA) and National Crime Agency (NCA) jointly lead a national enforcement campaign involving police forces and other agencies aimed at tackling labour exploitation. NCA analysis has identified construction as one of the most common sectors for labour exploitation in the UK.

Criticising the industry’s slow response to the Modern Slavery Act, CIOB’s report highlights the aggressive business models that are creating an environment for unethical procurement and recruitment practices, and the systemic auditing failures that are allowing criminals to infiltrate major projects.

Problems start at the top of supply chains with lowest cost tendering, abuse of the retentions system and late payment pricing out ethical practices. The situation is creating an imbalance of power that leaves all nationalities vulnerable to exploitation. Illegal activities such as blacklisting are also believed to be continuing, despite recent high profile court cases, it says.

Major contractors in construction typically have long and fragmented supply chains, with little visibility beyond tiers one or two. They are also heavily reliant on temporary migrant labour, a significant indicator of risk. Nevertheless, the report found examples of complacency and disbelief that major projects were vulnerable to criminal infiltration and human trafficking. This contrasted with incidents of modern slavery being found on major UK infrastructure programmes, PFI hospital projects, power plants, recycling centres, renovation projects, demolition sites and local authority schemes.

CIOB chief executive Chris Blythe said: “It’s time to get real about the challenges facing UK construction. Contrary to public perceptions, modern slavery is not confined to small illegal operators. Criminals are attracted to big business because of the greater profits that they can earn. Unscrupulous labour providers, operating in the grey area of the law, are also creating misery for thousands of British and foreign workers.”

The report highlights:

•          How industry is conflating immigration checks with modern slavery checks. This is ineffective because many people trapped in modern slavery have a legitimate right to work in the UK.

•          Severe weaknesses in commercial auditing models, with auditors disincentivised to report problems to the police

•          Poor transparency in supply chain reporting standards, with many eligible companies failing to produce a modern slavery report in the first annual reporting cycle. A significant number of published statements do not follow minimum legal requirements, including being visible on the company homepage and being signed off by a board director.

•          A tendency for companies to water down their modern slavery statements to remove mention of risk, against the spirit of the Modern Slavery Act

•          Examples of sharp practice, with major players defaulting to legal compliance exercises that push responsibility onto their less well-resourced suppliers. This is also against the spirit of the legislation.

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The CIOB’s report, written by Emma Crates, explores the legal, investor and social pressures for driving change. It also highlights examples of industry best practice as well as platforms for information sharing, such as the GLAA’s construction forum. 

The CIOB is calling for contractors to acknowledge that every supply chain is at risk and collaborate more widely to combat crime. It is launching a Routemap to Fair Business which sets out steps for raising standards for all workers and suppliers, encouraging a new approach to tackling systemic issues.

Chief executive Chris Blythe said: “We need to change the conversation that we have with clients, our peers and the media. Suppliers and labour agencies should be rewarded for finding and reporting problems, contractors need to promote fairer business models and clients need to be more explicit about their ethical expectations. This goes to the heart of professional leadership. We need to empower everyone working in this industry to act, share and collaborate for the greater good.”

Independent anti-slavery commissioner Kevin Hyland said: “This new report from the CIOB builds on its previous good work highlighting the issue. It provides clear ways for responsible companies to tackle slavery and ensure their labour supply is protected. I hope to see many construction businesses taking up its recommendations and making real changes, so that it can set an example to other high risk sectors.”

Roger Bannister, interim chief executive of the GLAA, said: “There are huge profits to be made for those unscrupulous enough to exploit vulnerable workers and the building industry is extremely lucrative for them. We have carried out operations targeting those who traffic migrant workers into the UK and then force them to work on construction sites, often with false IDs.

“The protocol we developed in the autumn with the construction industry was a step in the right direction with some big names committing themselves to share information and play their part in tackling exploitation. We’d like to see more companies put their name to it and work with the GLAA in helping eradicate slavery altogether.”

The GLAA published its own report on the issue last week that said the widespread use of self-employment as the preferred contracting arrangement in construction provided a direct link to exploitation. [See our previous report here.]

Andrew Wallis, CEO of anti-slavery charity Unseen, which operates the Modern Slavery Helpline, said: “The exponential growth in calls to the UK’s Modern Slavery Helpline since its launch in October 2016 clearly shows that the scale and complexity of the problems faced in this country are much greater than originally thought. Over 72% of potential victims indicated through the Helpline in 2017 were because of situations of labour exploitation or forced labour with 58% of victims identified as male. The construction sector represented the third most prevalent type of forced labour exploitation cases reported. Economic abuse and isolation were the most common forms of control by the enslavers.

“The fundamental challenge the construction sector faces is that its default business practices facilitate forced labour exploitation. An extractive profit model, based on a repeating subcontracting framework, has created the conditions for illicit traders in human beings to flourish. When added to the fact that many companies are not proactively engaging with the spirit of the transparency in supply chain legislation, the perfect environment exists for people to be exploited.

“Unless there is a wholesale review of current ways of working, we should not be surprised that we continue to have problems in this sector. Tinkering around the edges will not deliver the freedoms victims deserve.”

Roy McComb, deputy director at the National Crime Agency, said: “Slavery is not a thing of the past. It’s a very real crime that seeks out vulnerable people and exploits them for criminal profit. It affects all types of communities across every part of the United Kingdom.

“Labour-intensive sectors like construction, where temporary and irregular work are common, are high-risk sectors for exploitation. Tackling modern slavery is a priority for UK law enforcement but everyone has a role to play in spotting and reporting this crime.

“We welcome this report and hope that it acts as a reminder to all employers within the construction industry that labour exploitation does exist and they are responsible for ensuring their supply chains are compliant with modern slavery legislation.”

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