Low-skilled labor shortages contribute to forced labor

Abstract

Corporate efforts to end forced labor in global supply chains have focused more on mitigating business risk than on preventing harm. This research sheds new light on the potential of proactive market-based interventions to prevent labor exploitation. Leveraging 2018-2020 datasets on Myanmar-Thailand low-skilled labor recruitment and worker-reported abuses, we find that an inability to efficiently alleviate unexpected mismatches in demand and supply of low-skilled labor significantly worsens worker-reported abuses; an increase of one standard deviation in low-skilled labor shortages leads to a 34.5% or higher increase in worker-reported abuse in the following 2-4 weeks. Stressed labor markets are also simultaneously more prone to unexpected shortages and abuse. Reducing mismatches in demand and supply of low-skilled labor, and strengthening worker reporting mechanisms that provide near-real-time information about workplace labor abuse, are important operational avenues to eliminating forced labor in global supply chains.