Construction is second only to domestic work for the prevalence of forced labour © PA Images
Construction is second only to domestic work for the prevalence of forced labour © PA Images

Construction business model 'driving slavery'

Will Green is news editor of Supply Management
14 May 2018

Construction business practices including lowest cost tendering and late payment are driving modern slavery in the sector, says industry body.

In a report the Chartered Institute of Building (CIOB) has attacked the industry’s slow response to the Modern Slavery Act (MSA) and its “aggressive business models that are creating an environment for unethical procurement and recruitment practices”.

“Major contractors in construction typically have long and fragmented supply chains, with little visibility beyond tiers one or two,” said the report. “They are also heavily reliant on temporary migrant labour, a significant indicator of risk.

“Nevertheless, [we] found examples of complacency and disbelief that major projects were vulnerable to criminal infiltration and human trafficking. This contrasted with incidents of modern slavery being found on major UK infrastructure programmes, PFI hospital projects, power plants, recycling centres, renovation projects, demolition sites and local authority schemes.”

In 2016 the value of new construction work hit a record high of more than £99m and 55,000 new jobs were created. However, the report said construction was second only to domestic work for the prevalence of forced labour.

The Better Buying scheme, under which apparel firms are rated by suppliers on their buying practices, could “possibly” work for the construction sector, said CIOB. It said if the scheme was adopted by the public sector, which accounts for roughly half of construction procurement in the UK, it could “force a step change in buyer behaviour”.

“By flipping the power relationships within procurement, Better Buying, or something like it, would give procurement teams a far better understanding of how their behaviour impacts companies lower down the chain,” said the report.

The report quoted a construction supplier who said: “Procurement managers are under so much pressure to save money, they’ll do anything to save their jobs.”

Chris Blythe, CIOB chief executive, said the industry’s response to the MSA had been “lukewarm” and called for a new approach and “rebuilding our business models”.

“The constant pressure on prices is forcing out ethical players,” he said.

“Abuse of the retentions system and late payment are everyday occurrences. Some SMEs complain that they struggle to pay wages on time. It is small wonder that the sector has such an abysmally high insolvency rate.”

Andrew Wallace, CEO of anti-slavery charity Unseen, said: “The fundamental challenge the construction sector faces is that its default business practices facilitate forced labour exploitation. An extractive profit model, based on a repeating subcontracting framework, has created the conditions for illicit traders in human beings to flourish.”

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