How profitable is the exploitation of people? Sadly, extraordinarily so.

The profits made from the exploitation of the 21 million men, women and children trapped in forced labour in today’s private economy is cause for alarm and immediate action.

Article | 28 May 2014
The global integration of economies, including labour markets, has brought many opportunities for workers and businesses. However, the growth in the global economy has not been beneficial for all.

There are 21 million men, women and children trapped in forced labour in today’s private economy. Forced labour – situations in which people are coerced to work through the use of violence or intimidation – takes different forms, including debt bondage, trafficking and other forms of modern slavery. The victims are the most vulnerable – women and girls forced into prostitution, migrants trapped in debt bondage, and sweatshop or farm workers kept there by clearly illegal tactics and paid little or nothing.

And despite international action, well-developed standards and legal frameworks along with an increasing awareness of this unacceptable violation of human rights, modern forms of slavery continue to exploit people in every part of the world.

One major reason for this on-going nightmare might be profitability: $150 billion in profits yearly.
Yes, that is billion. $150 billion every year.

You may be surprised to know that these profits, as stated in the media, are higher than what is earned by U.S. banking (estimated at $141.3 billion) and by large oil and gas companies (estimated at $120 billion). Furthermore, if these profits were measured against countries GDP, forced labour profits would make it the 56th largest country in the world.

Globally, almost two thirds of the profits from forced labour were generated by forced sexual exploitation, amounting to an estimated US$ 99 billion per year. In calculating the profits, it is assumed that wages and intermediate consumption make up about 30 per cent of the total earnings of forced labour victims in forced sexual exploitation.

More than one third of the profits – US$51.2 billion – are made in forced labour exploitation, including nearly US$8 billion generated in domestic work by employers who use threats and coercion to pay no or low wages.
The profits are highest in Asia (US$ 51.8 billion) and Developed Economies (US$ 46.9 billion), mainly for two reasons: the high number of victims in Asia and the high profit per victim in Developed Economies.

Annual profit per victim is highest in the Developed Economies (US$34,800 per victim), followed by countries in the Middle East (US$15,000 per victim), and lowest in the Asia-Pacific region (US$5,000 per victim) and in Africa (US$3,900 per victim).

In addition to the victims, the main financial losers from forced labour are the countries where forced labour originates or where forced labour occurs. The victims usually lose much of their earnings due to wage retention, debt repayments and underpayment of wages. They work under strenuous conditions but receive little or no pay. The countries where they work lose revenues from non-payment of taxes due to undeclared incomes or the illegal nature of the jobs concerned. For the countries of origin, remittances are severely affected by the very low wages of forced labourers. For developing countries, this cut in remittances tends to result in a heavy reduction in investments and a lack of improvement in income inequality.

Finally, it is estimated that private households employing domestic workers under conditions of forced labour save about US$8 billion annually by not paying or underpaying their workers. Those savings were calculated based on the difference between the wage that domestic workers should receive and the actual wages paid to domestic workers in forced labour. Based on information in the 2012 Global Database, it can be estimated that forced domestic workers are paid on average about 40 per cent of the wage they should receive.

To combat this insidious practice, it is essential to use the power of legal pressure, both nationally and internationally, against those who still use or condone the use of forced labour. National legislation needs to be strengthened to combat forced labour and penalties against those who profit from it need to be strictly enforced.

However, a better understanding of and action to eradicate the socio-economic root causes, as well as enhanced political will in support of prevention efforts and protection of victims, are essential in bringing about long-term change.

Forced labour thrives in the incubator of poverty and vulnerability, low levels of education and literacy, a complex global migration process alongside other factors. We must continue to increase our knowledge base to develop better responses and expand policies and programmes to not only stop forced labour where it exists, but prevent it before it occurs.