The Human Cost of Goods: Where Does Stuff Come from and Why Should We Care?
With online shopping becoming the new norm, the latest products and innovations are more accessible than ever before. Consumers can buy designer clothing, limited edition sneakers and the trendiest new toys for kids to obsess over in a matter of one click and no second thought.
But with economic woes and rising prices, there is more chatter around inflation rates and the inability to afford such standard goods than the wider human cost. So much focus is on inflation that much less attention has been paid to where the products come from and how they are processed. With every transaction rung through the checkout at the local store, customers are certainly not the ones paying the highest price.
Of the 27.6 million people who fell victim to forced labor in 2021, 3.3 million of them were children, according to International Labour Organisation (ILO) estimates, and the patterns don’t look encouraging. For years, both the African and Asian continents, in particular, have lacked both labor protections and sufficient oversight when faced with struggling to keep up with such extraordinary demand from abroad.
New retail trends fueled by consumer demand, such as fast fashion, also have made children more susceptible to the exploitative sweatshop-like conditions of textile manufacturing. And the lucrative business of extracting scarce raw materials for battery production has become a key battleground for exploitative labor debates as countries and global corporations race to fuel their clean energy transitions.
The Energy Might be Clean, but Transitions have Consequences
With regard to child labor, the African continent continues to be an area of particular concern. From electric cars to cleaner energy resources, the world is now moving into a more sustainable posture. For instance, the raw material cobalt is currently in very high demand since it is a critical component in rechargeable lithium-ion batteries. It’s helping to fuel all those Teslas we see out on the road today, and the lion’s share of it — about 75% — comes from Africa.
This has presented some considerable challenges. Energy transitions create new dependencies, and when high demand shifts and concentrates into a specific region, one where protections are minimal and local supply chains can be easily manipulated, exploitation is never too far behind. Consequently, much of Africa’s small-scale mining operations are carried out in artisanal makeshift mines that regularly use children as young as seven mining by hand.
Child labor is a concern that has only intensified in the wake of pandemic-related school closures. More than 40,000 children are currently working under hazardous conditions in the southern Katanga province, and global demand for cobalt is now expected to double by 2025. This problem is certainly not isolated to Africa. More than 4 million Bangladeshi children are still trapped under some of the worst forms of child labor. An example of this is the recent fire in the Rupganj province, where processing in a factory caused 16 child casualties.
The world has also seen fast fashion giant Shein increasingly called out for allegations of exploitative child labor practices in their Chinese-based operations, with reports of workers writing “help” on clothing tags.
Playing Catch-up with Regulation
While new well-intentioned regulations designed to quell the issue, from the UFLPA (Uyghur Forced Labor Prevention Act) to the EU’s Directive on Mandatory Human Rights, have been introduced in recent years in attempts to stop these inhumane practices, enforcing them has proven to be another matter altogether. Countries like France, Switzerland, the Netherlands and Norway are attempting to implement newer, stricter, regulations. These countries and even the state of California have recently passed due diligence laws, while the UN’s mandatory Human Rights Due Diligence Act came into effect in late January 2023.
It’s a positive sign off the bat that will hopefully compel companies to become more legally responsible over their own supply chains, but all these regulations will mean very little without the capabilities to identify when foul play has occurred. Currently, even the best-performing government checks still only inspect under 1% of all incoming goods, with the average seizure rates hovering at a lowly 0.04%.
Resources are also set to tighten in 2023 amidst an expected economic downturn alongside illicit operators continuing to find new ways to evade suspicion, which means the sector needs to seriously rethink how the gap between regulation and enforcement can be better met.
Turning the Tables
To turn the tables on this narrative, governments first need to become a much more inextricable part of the solution moving forward. A country’s customs authority serves as the gatekeepers to the protection of national interests, and it’s vital that it begins sharing the burden more effectively with the private sector, particularly with the evolution of smart technology and data analytics creating new opportunities to achieve greater visibility into the supply chain fog.
This fog in the supply chain is where the central difficulty has consistently come from, and it’s why seizure rates are at such low numbers. In the Democratic Republic of Congo (DRC), for instance, child labor can be easily concealed due to the informal nature of small-scale mining operations. Congolese artisan miners often own these mines in name only, with larger subsidiary companies (including many foreign-based companies) the true operators of the mines and their inhumane conditions. Since most customs checks lack the capacity to untangle these supply chain deceptions, they remain unable to challenge the status quo.
Closing the Gap with Greater Visibility
With the right application, technology has the power to help the retail industry see much more clearly and make sense of complex supply chains. For example, rather than relying solely on local, historical and domestic data in the DRC, technology helps to illustrate a broader and fuller picture by assessing every entity in the supply chain, reaching corners of the production journey that would not have been possible just a decade ago. Since it can perform endless manually laborious tasks automatically, it also embeds more assured real-time confidence through information that is fully up-to-date and accurate — a deceptively valuable asset.
All in all, it seems the quest for clean energy and cheaper goods has created new opportunities for manipulative operators to pounce upon and exploit the weaker aspects of our global supply chain. They have operated in a fog of confusion, enjoying impunity for too long. Authorities in the retail sector now have the means to act upon new contextual open-source approaches and smart digital technology, which gives the opportunity to turn the tables on the child labor challenge by illuminating supply chains that have been beyond our grasp for too long.
Convenient shopping is great, but not at all costs. Ending exploitative child labor must be the world’s primary responsibility.
Ram Ben Tzion is the CEO and co-founder of Publican, a digital shipment vetting solution powered by Ultra Information Solutions.