How to improve measurement of labour exploitation
8 November 2021
In April 2021, Shiva Foundation published a think piece on measuring labour exploitation. We wanted to revisit our research and offer some further suggestions for how we can better measure labour exploitation.
Exploitation is difficult to measure because of its hidden and varied nature. Businesses aren’t advertising their poor behaviour and exploitation exists on a continuum from employment rights abuses (e.g. failure to provide payslips) to modern slavery in the form of labour exploitation.
For modern slavery, the best estimates we have are from the Office of National Statistics (ONS). Instead of providing an overall figure of victims (which is not possible to do accurately), they have developed a set of indicators of modern slavery. These include:
- Police recorded modern slavery offences
- National Referral Mechanism (NRM) data on suspected cases of modern slavery
- The number of prosecutions and convictions
- The number of victims supported by UK charities through the NRM
- Modern Slavery and Exploitation Helpline data
There are limits to the ONS indicators too which almost definitely leads to underestimation of the issue. Some police forces are well-trained to record modern slavery offences, but others aren’t. Many businesses and members of the public will not be aware of the tools available to report suspected cases of modern slavery. And many victims do not come forward because they are afraid of the consequences.
But it is the best we have currently for modern slavery. And while it does not provide an overall figure of victims, it does provide us with a useful framework to measure modern slavery: via a set of unique but related indicators.
We commend this approach and think that it should be used to cover other forms of labour exploitation that exist on the continuum, providing greater insight into the difficulties faced by millions of workers in the UK.
Suggested indicators of exploitation
1. Underpayment of the minimum wage
This first indicator is the gold standard for measuring and reporting labour market non-compliance.
BEIS publish an estimate of minimum wage non-compliance each year, utilising data from the Office of National Statistics and HMRC. The Low Pay Commission subsequently publishes analysis on minimum wage underpayment, with policy recommendations for the Government. There’s room to improve of course – for example, there is currently no attempt to measure minimum wage non-compliance in the informal economy – but these reports and the underlying data are an excellent resource for academics, NGOs and policymakers.
Ideally, the following eight indicators would be measured and reported on with the same vigour.
2. Holiday pay avoidance
The Resolution Foundation used existing government survey data in a 2019 report to highlight such labour abuses and found that 5% of workers in the UK did not receive paid holiday. Everyone deserves a holiday.
3. Failure to provide a payslip
That same report by the Resolution Foundation found that 10% of workers in the UK did not receive a payslip. It is every worker’s right to receive a payslip and it helps employees hold firms accountable to paying the correct wage.
4. Inaccessible sick pay
FLEX uncovered a number of issues experienced at work in discussion with over 100 female, EEA migrant hospitality workers. Only 46% of those surveyed definitively have access to sick pay. This is particularly concerning in the context of Covid-19 where workers must choose either a loss of earnings or to work while ill and endanger others.
5. Dangerous working conditions
In the same study, 38% of those surveyed described being made to do dangerous or unsafe work. For hospitality, dangerous work is linked to workers not having proper equipment or training. It can be exacerbated by long working hours and heavy workloads.
6. Unpaid overtime
39% of those surveyed reported not being paid for overtime at least once. The intensification of hospitality work and subsequent heavy workloads can push staff to work more hours than they are paid.
7. Late wage payments
And there were 18% in the FLEX survey who said they were not paid on time at least once. For someone who has few savings to rely on, this can have destabilising effects.
8. Lack of breaks
Some labour enforcement abuses have been identified but not quantified at all. The Office of the Director of Labour Market Enforcement (DLME) commissioned research into ‘at-risk’ sectors, including warehousing and restaurants, and found further key issues in labour markets included a lack of ability to take breaks which workers have a right to enjoy.
9. Lack of written contract
This was another key problem identified by the DLME research. Contract deception is another indicator of exploitation and without a written contract, workers cannot be sure what kind of work they are agreeing to; that opens the door to exploitative conditions. At minimum, an employer must provide all workers (bar the self-employed) a document stating the main conditions of employment when they start work.
Improving measurement of labour exploitation
If a public agency regularly published a set of statistics on these nine indicators of labour exploitation via an accessible platform, then we would get a much better sense of the scale of labour abuses in the workplace. This type of data would help us get a better picture of the continuum of exploitation and could build intelligence for investigating modern slavery.
Given that the Immigration Act 2016 established an Information Hub within the DLME to ‘gather, store, process, analyse and disseminate information relating to non-compliance in the labour market’, it might be best placed to house these statistics.
But many of these labour market abuses will be impossible to accurately measure without additional investment. A report in 2019 commissioned by the DLME concluded that a worker survey accompanied by in-depth interviews or focus groups would be the most effective approach to fill information gaps associated with labour market non-compliance in the UK. But collecting this data will not be cheap.
We recommend that the Government:
- Recruit the next Director of Labour Market Enforcement, a position which has been vacant since January 2021.
- Fund the development of worker-focused research that can robustly measure the nine labour market abuses identified (excluding those covered by existing surveys).
- Publish publicly accessible annual statistics on the nine labour market abuses mentioned above via the DLME’s Information Hub.
These measures will help:
- the media and public to understand the scale of the problem,
- the Government to recognise the value-for-money proposition of investing further to tackle labour exploitation,
- policymakers to evaluate the impact of enforcement and policy changes on non-compliance, and
- encourage businesses to weed out exploitative practices within their operations and those of their suppliers.
And most importantly it will help prevent exploitation of workers.