News & Insights

Exploitation in construction

A new report highlights the modern slavery risk in the construction sector.

The Modern Slavery Act 2015 (MSA) requires large commercial organisations above £36 million to publish a slavery and human trafficking statement, setting out steps they have taken to prevent modern slavery in their business. The government is looking to update part of the MSA, including a government run registry for modern slavery statements and an enforcement body. The government is also looking to publish updated guidance including best practice approaches.

So, a recent report, published by the Independent Anti-Slavery Commissioner (IASC) Dame Sara Thornton, on 29 April 2022, comes as a timely spotlight on the modern slavery problems in the construction sector. The report analyses Operation Cardinas, a major police investigation looking into a Romanian organised crime group (OCG) and identifies some of the work already being done in this area.

An estimated 300 to 500 Romanian victims were placed onto commercial, residential and demolition projects by the OCG between 2009 and 2018. At least 33 companies unknowingly paid sums ranging from hundreds of pounds to hundreds of thousands of pounds into the accounts of the OCG. It is believed that the companies identified in the investigation represent only a fraction of those impacted by the OCG.

Construction is one of the largest and most important economic sectors in Great Britain, with a value of over £100 billion. In 2020 there were over 340,000 VAT/PAYE registered construction firms operating in the industry across Great Britain and a total of 2.1 million workers. However, the government has identified the sector as a priority risk area in its modern slavery statement of 2020 and it has been cited by successive Directors of Labour Market Enforcement as having a high risk of labour exploitation.

A high turnover of workers on building sites and the heavy reliance on temporary and migrant workers, as well as the complex network of subcontractors and labour agencies, make it challenging for contractors to process and monitor individuals and to be able to control worker conditions. A skills shortage and falling supply of workers from the EU post Brexit has only added to the challenges.

Having interviewed over 15 organisations the report also covers evolving best practice. This includes the following:

  • Building internal capability

Directly employed workers are less vulnerable to exploitation than temporary or agency workers. However, a shift to more direct employees would represent a significant cultural change and it is likely that construction sector clients would have to lead the agenda on this. In addition, contractors have started to form internal working groups to tackle the issue along with providing regular education and training for specific roles.

  • Working with suppliers

This can include an effective and thorough onboarding and vetting process as well as training suppliers. Build UK, a industry body, launched a common assessment standard in March 2021 to improve efficiency and reduce cost in the prequalification process. Additionally, streamlining labour providers and audits as well as site visits and worker engagement can be used to reduce modern slavery risks.

  • Implementing an ethical management system

Some large organisations are using management systems to address critical aspects of ethical labour, spanning due diligence, audits, worker interviews, worker representation committees and grievance mechanisms as well as training and site visits.

  • Multi-stakeholder initiatives

As an example, a new ethical business worker group, Archilles, was formed in 2021 aiming for continuous improvement through shared data and collaborative working. Members agree to ethical audits, worker interviews and receiving data from their supply chains. Results of individual audits will be uploaded to a platform and will be visible to all Achilles clients. However, suppliers choose how much information they wish to disclose.

  • Influence of clients

The interviewees pointed out there is a difference between those clients experienced in commissioning new buildings and those less experienced as they have a lower awareness of labour risks. However, social impact considerations are starting to gain ground. For example, central government departments are increasingly using MSAT (the Modern Slavery Assessment Tool) for risk identification and management, but other organisations might take a more tick-box approach.

The report can be found be read in full here.

While best practice is still evolving in this area, it is clear that there are various actions which can be taken to tackle modern slavery and, as with so many areas of compliance, it tends to be those organisations which embrace the need to make progress who are the eventual winners.

If you have any questions on the topic of modern slavery whether within the construction sector or any other business area, you can contact our commercial and technology team at [email protected].