How to Combat Forced Labor in Supply Chains?

Forced labor is a widespread yet often overlooked issue in global supply chains. The problem impacts millions of workers across various industries, including agriculture, manufacturing, electronics, and textiles. These abuses often take place deep within supply networks, where companies may unknowingly source products from suppliers that depend on forced labor.

Supply Chain Labor Crisis

Organizations face risks associated with forced labor that raise both ethical and business concerns. Governments are increasingly creating laws to stop forced and child labor in global supply chains. Examples include the U.S. Uyghur Forced Labor Prevention Act, the U.K. Modern Slavery Act, and Canada’s Modern Slavery Act. These laws require companies to comply with strict rules and impose heavy penalties on those found to be involved in such practices.

When forced labor is identified within a supply chain, a business may encounter serious operational and financial risks. The fight against trafficked labor requires coordinated efforts combining technology solutions, regulatory compliance, and proactive risk management approaches. This requires companies to implement strategies to identify, prevent, and eliminate forced labor throughout their supply chain operations. Find out what steps help to stabilize the supply chain!

Labor Trafficking: Statistics

The stark reality facing industrial leaders: 75 acts of labor misconduct go unreported annually for every 1,000 employees.

Child labor violations in the United States have surged by 70% since 2018. Companies now face greater regulatory pressure, with penalties reaching $6.6 million. These statistics highlight the urgent need for evidence-based strategies in managing labor within supply chains.

Forced labor represents one of the most pressing human rights crises affecting modern supply chains, with over 27.6 million people trapped in forced labor worldwide. This hidden crime generates billions in illegal profits while undermining fair competition and ethical business practices.

Source: https://www.ilo.org/

Globally, the International Labor Organization and Walk Free Foundation, in partnership with IOM, estimated that 40.3 million people were victims of modern slavery in 2016. There were 24.9 million people trapped in forced labor, out of which 16 million were in the private economy, another 4.8 million were in forced sexual exploitation, and 4.1 million were in forced labor imposed by state authorities.

As regulatory frameworks tighten and consumer awareness grows, businesses must implement comprehensive strategies to identify, prevent, and eliminate forced labor throughout their supply chain operations.

Understanding the Scope of Labor Trafficking in Supply Chains

Labor trafficking occurs when traffickers use force, fraud, or coercion to compel individuals to work against their will. Unlike voluntary employment, forced labor involves exploitation where workers cannot freely leave their employment due to threats, violence, debt bondage, or withholding of identity documents. The International Labour Organization estimates that forced labor generates $236 billion in illegal profits annually, with the majority occurring within legitimate business supply chains rather than criminal organizations.

Modern slavery manifests across multiple industries, with apparel and textiles accounting for 37% of labor violations, followed by:

• agriculture at 12%,

• electronics at 12%,

• and construction at 11%.

These statistics reveal that forced labor penetrates legitimate business operations, making supply chain risk management essential for preventing complicity in human trafficking. Workers in vulnerable situations often include foreign nationals on temporary work visas, individuals experiencing poverty, and those lacking proper identity documents or education about their workplace rights.

Source: https://www.everstream.ai/articles/2025-risks-forced-labor/

The complexity of global supply chains creates numerous opportunities for traffickers to exploit vulnerable populations. Supply chain operations spanning multiple countries make it difficult to monitor working conditions at every tier, particularly in the informal economy where oversight is limited. Suppliers may subcontract work without proper due diligence, creating blind spots where labor exploitation can occur undetected. This systemic vulnerability requires comprehensive supply chain risk management strategies that extend beyond first-tier suppliers to encompass the entire supply chain network.

Key Elements of Supply Chain Risk Assessment

Effective oversight begins with thorough risk identification and assessment across all supply chain operations. Companies must develop systematic approaches to identify potential risks associated with forced labor, including geographical risk factors, industry-specific vulnerabilities, and supplier performance indicators. Supply chain managers should implement comprehensive mapping processes that document the entire supply chain, including sub-contractors and suppliers operating in high-risk regions.

Supply chain risk assessment must evaluate both internal and external risks that could indicate the presence of forced labor. Internal supply chain risks include:

• inadequate supplier vetting procedures,

• lack of training for supply chain professionals,

• insufficient contingency plans for addressing violations.

External supply chain risks encompass:

• geopolitical instability,

• natural disasters,

• economic conditions that may increase vulnerability to labor exploitation in certain regions.

The assessment process should incorporate data analysis to identify anomalies in supplier operations that may indicate forced labor. This includes examining wage payment patterns, worker housing arrangements, recruitment practices, and documentation requirements.

Source: theconversation

Supply chain data analysis can reveal inconsistencies in employment records, unusual working hours, or restricted worker mobility that suggest possible labor trafficking. Regular supply chain risk assessment enables companies to proactively identify potential risks before they develop into serious violations.

Technology Solutions for Supply Chain Monitoring

For manufacturing, oil & gas, or logistics companies managing complex contractor networks, manual compliance monitoring is no longer sustainable—it's a liability.

Source: visionify

Advanced technology plays a crucial role in combating forced labor within supply chains by providing continuous monitoring and early detection capabilities. Artificial intelligence and machine learning systems can analyze vast amounts of supply chain data to identify patterns indicative of labor trafficking, including:

• unusual payment structures,

• worker accommodation arrangements,

• and communication restrictions.

These systems process information from multiple sources to detect risk indicators that human analysts might overlook.

Blockchain technology creates immutable records of supply chain transactions, making it difficult for suppliers to conceal forced labor practices. This transparency enables better tracking of products from raw materials through final production, ensuring accountability at each stage of the supply chain. Smart contracts can automatically trigger compliance checks when certain risk thresholds are exceeded, providing immediate alerts when potential violations occur.

IoT sensors and monitoring devices provide real-time visibility into working conditions, including temperature, safety equipment usage, and worker movement patterns. These technologies enable continuous monitoring of facilities rather than relying solely on scheduled audits that traffickers can manipulate. Computer vision systems can detect safety violations, unusual working patterns, or signs of worker distress that may indicate forced labor situations.

Supply chain security platforms integrate multiple data sources to provide comprehensive risk intelligence. These systems combine government sanctions lists, media reports, supplier performance data, and worker feedback to create detailed risk profiles for each supplier. Real-time monitoring capabilities enable immediate response to emerging risks, while predictive analytics help supply chain managers anticipate potential issues before they materialize.

Building Strong Supplier Relationships and Due Diligence

Effective supplier relationships form the foundation of forced labor prevention programs. Companies should establish clear expectations regarding labor practices and provide suppliers with resources and training to meet these standards. Building strong supplier relationships involves collaborative approaches that treat suppliers as partners in preventing forced labor rather than adversaries to be monitored.

Due diligence processes must extend beyond first-tier suppliers to examine the entire supply chain, including subcontractors and labor agencies used for worker recruitment. This comprehensive approach addresses the reality that about 78% of forced labor cases occur at tier-2 and tier-3 suppliers where companies have limited direct oversight. Supplier assessment should include on-site inspections, worker interviews, and document reviews to verify compliance with labor standards.

Companies should implement supplier onboarding processes that screen for forced labor risks before establishing business relationships. This includes:

• reviewing supplier locations,

• examining recruitment practices,

• and assessing management systems for protecting worker rights.

Alternative suppliers should be identified for high-risk regions to ensure business continuity while maintaining ethical standards.

Ongoing supplier performance monitoring enables early detection of potential issues before they escalate into serious violations. Regular audits, combined with worker feedback mechanisms and grievance procedures, provide multiple channels for identifying problems. Companies should develop corrective action protocols that require suppliers to address violations promptly or face contract termination.

Worker Protection and Empowerment Mechanisms

Protecting workers requires creating channels for reporting violations and ensuring access to remediation when forced labor occurs. The National Human Trafficking Hotline provides confidential reporting mechanisms for victims and witnesses to report suspected trafficking situations. Companies should establish similar internal reporting systems that protect workers from retaliation and provide anonymous reporting options.

Worker education programs help vulnerable populations understand their rights and recognize signs of labor trafficking. Training should cover wage payment requirements, working hour limitations, document retention rights, and freedom of movement protections. Workers should understand that legitimate employers cannot confiscate identity documents or restrict their ability to leave the workplace.

Recruitment practices require particular attention since many forced labor situations begin during the hiring process. Companies should ensure that workers are not charged recruitment fees, receive clear employment contracts in languages they understand, and have accurate information about working conditions. Partnerships with ethical recruitment agencies can help ensure proper screening and placement of workers.

Grievance mechanisms must be accessible to all workers, including those who may face language barriers or fear retaliation. Multiple reporting channels, including hotlines, suggestion boxes, and worker representative systems, provide options for different comfort levels. Companies should train managers to respond appropriately to reports and ensure investigations are conducted by qualified personnel.

Strategies for Detecting Supply Chain Risks

Effective supply chain protection requires a multi-layered strategy combining advanced technology, regulatory adherence, and preventive risk assessment. Companies must implement robust due diligence processes that identify vulnerabilities before violations occur, reducing exposure to enforcement actions and reputational damage.

1. U.S. businesses should deploy comprehensive monitoring systems that track labor practices across all tiers of their supply networks.

2. Technology solutions such as blockchain-based verification and AI-powered auditing tools enable real-time visibility into working conditions.

3. Regular third-party audits and supplier certifications strengthen compliance frameworks while demonstrating good-faith efforts to regulators.

Risk management teams must establish clear protocols for responding to suspected violations, including immediate investigation procedures and remediation plans. Collaboration with industry groups and law enforcement agencies enhances detection capabilities and ensures alignment with evolving federal standards.

Companies that prioritize these preventive measures not only meet regulatory requirements but also secure more resilient supply chains, protecting both their operations and their workforce from exploitation.

Companies that implement comprehensive forced labor prevention programs not only fulfill ethical obligations but also protect themselves from significant legal, financial, and reputational risks while contributing to more sustainable and resilient global supply chains.