Financial Crisis and Human Trafficking

Rising Unemployment Leads to Greater Trafficking Vulnerabilities

Numerous international organizations have warned of the trafficking consequences of the ongoing global financial crisis. In its January 2009 global employment report, the ILO said the economic crisis is causing dramatic increases in the numbers of unemployed, working poor, and those in vulnerable employment. If the crisis continues, more than 200 million workers, mostly in developing economies, could be pushed into extreme poverty, according to the report.

In Asia alone, the ILO predicted a worst-case scenario of 113 million unemployed in 2009. And money sent home from abroad will also drop. Remittances from the region’s migrant workers slowed in late 2008, and the World Bank expects the decline to continue throughout 2009. In a March 2009 report, the World Bank revised its previous forecast on declining migrant worker remittance flows to a more negative 5 to 8 percent decline for 2009; this follows an 8.8 percent growth in remittances (to $305 billion) in 2008.

The forced labor implications of the financial crisis are particularly stark for Asia, a region identified with an existing high level of job insecurity. Seventy percent of unemployment in South and Southeast Asia is in the informal sector, according to the Organization for Economic Cooperation and Development (OECD). The region also has a high prevalence of existing forced labor; it is home to 77 percent of the world’s forced labor victims, according to the ILO.

The ILO’s May 2009 global report on forced labor found that migrant workers around the world lose more than $20 billion through the “cost of coercion” (the Report’s title)—and this cost of coercion could likely be exacerbated as the crisis continues and traffickers and exploitative employers prey on an expanding pool of more vulnerable and unprotected workers in this region. Among the causes is the recession in the United States, which accounts for significant sums of workers’ money sent to East Asia, the Pacific, and South Asia.

Other regions are also feeling the hit. According to a Gallup report, remittances represented more than 27 percent of Kyrgyz Republic’s gross domestic product in 2006. But a sharp drop in those funds resulting from the economic slowdown, combined with a surge in food prices and a stressed agricultural sector, led the UN World Food Program to provide emergency food aid in November for the first time in recent years.

More Supply for Human Trafficking

This growing poverty is making more people vulnerable to both labor and sex trafficking, boosting the supply side of human trafficking all over the world. For example, the current economic crisis has led to revenue losses in countries like Mongolia due to crashing copper prices and high inflation and has reduced real incomes significantly, slowing investment, and most probably costing jobs. The resulting pressure on the public is likely to cause more young women to seek work away from home or abroad and a corresponding increase in the risk of trafficking.

In Eastern Europe, international organizations and local authorities have already reported a rise in victims of labor exploitation. The global economic downturn is exacerbating this trend. In Belarus, more than 800,000 citizens are believed to be “missing,” presumed to be working—voluntarily or otherwise—in Russia. Workers earning low wages or losing their jobs are succumbing to offers for illegal work abroad. In Moldova, Europe’s poorest country, one-quarter of the population has migrated. In Ukraine, officials reported 53 criminal cases of labor exploitation in 2008, up from 23 cases in 2007 and just three in 2006—while the ILO’s May 2009 report on global forced labor trends notes that the number of identified victims of forced labor in Ukraine now surpasses that of sex trafficking victims.

Warning of the dangers of the ongoing economic crisis, the head of the ILO’s program against forced labor in May 2009 noted that “vulnerable workers—particularly migrants, including young women and even children—are more exposed to forced labour, because under conditions of hardship they will be taking more risks than before.”

While most of the world’s labor pool is already feeling the ill effects of the crisis, there are a few notable exceptions in which suppliers of transnational labor are benefiting temporarily from the crisis. Bangladesh and Nepal, both low on the wage and protection scale, appear to have benefited somewhat – at least initially – from the readjustments to the global labor flows brought about by the crisis. In the first two months of 2009, both Nepal and Bangladesh reported significant increases in the flows of workers leaving for work abroad and remittances coming back to bolster their respective economies; remittances in both countries account for more than 15 percent of gross domestic product. The March 2009 World Bank report acknowledged a surge in remittance flows to South Asia in 2008, but estimates a sharp slowdown in 2009.

More Demand for Human Trafficking

The global economic crisis is also boosting the demand side of human trafficking. The UN’s Office on Drugs and Crime published its second global trends in trafficking in persons in February 2009. UN officials said the worldwide rise in this form of modern-day slavery is a result of a growing demand for cheap goods and services. They expect the impact of the crisis to push more business underground to avoid taxes and unionized labor. And they anticipate increasing use of forced, cheap, and child labor by multinational companies strapped by financial struggles.

A rise in protests among migrant workers is a sign that the exploitation of workers is already reaching new heights. Employers facing a credit crunch are ceasing payments or coercing workers to accept less agreeable conditions. Chinese workers in some parts of Europe have experienced labor exploitation and may be vulnerable to forced labor as the crisis is prolonged. This has prompted an unprecedented official warning from the Chinese government in April 2009 that workers should avoid migrating to Europe because of the increasing threat of nonpayment or late payment and the potential for severe exploitation in the economic downturn. And press in the United Arab Emirates reported a 111 percent rise in complaints of nonpayment of wages among foreign workers in late 2008, compared with the same period in 2007.

In these and other countries, foreign workers also fear large-scale layoffs, which could increase the number of illegal foreign workers in the host countries. And loss of legal status makes migrant workers vulnerable to greater exploitation, including forced labor.

Calling such exploitation “the anti-thesis of development,” UN Secretary-General Ban Ki-moon stated at a meeting in the Philippines: “Only by safeguarding the rights of migrants, and ensuring that migrants are treated with dignity and respect due any human being, can we create the conditions which migration can contribute to development. In this time of financial hardships, we all need to be especially vigilant.”

The crisis is also affecting internal labor markets. In China, approximately 20 million of the 130 million migrant workers in the country had already returned home by February 2009 due to lack of work, according to official statistics based on a survey conducted by the Ministry of Agriculture. In addition, the ILO estimates 9,000 factory closures before spring and thousands more after. In the Philippines, economists and labor officials predict a loss of up to 800,000 jobs in 2009.

A Fraying Net

As more people become vulnerable to trafficking, fewer are likely to find local sources of assistance. Facing thin “safety nets” provided by their governments or the governments of labor-demand countries even in the best of times, workers now seem less likely to find services or legal recourse available to them when they face forced labor.

The tough times are also affecting the work of anti-trafficking NGOs, which often provide crucial services in the absence of adequate government or private-sector programs. Donors are tightening their belts, and organizations are finding it difficult to continue their operations.