Risks to Workers

Worldwide, employers partner with recruiters to fill staffing needs. In theory, recruiters find workers for employers in exchange for a per-worker finder’s fee.

In practice, recruiters competing for contracts charge employers nothing, or even offer under-the-table kickbacks. Rather than charging reasonable fees to the employers, recruiters make more money by charging outsized fees to the workers themselves. To afford these fees, the workers must typically take out large, high-interest loans.

For most workers, this debt is a manageable expense—as long as they keep their job.  However, if they lose their job, the debt can destroy their families. Thus, indebted workers are willing to put up with a lot, even abusive working conditions, to keep their jobs.

Reputable companies tend to treat their workers well. However, most workers are hired by companies in the second or third tier of the supply chain, where abuses are common.  Workers typically have their passports confiscated, see their salaries cut, live in extremely poor accommodations, and are forced to work in dangerous situations.  Because of their debt, workers must accept these abuses. Ultimately, this leads to shockingly high accident and death rates—approximately 30 times as high as the death rate of workers in the United States.[1]

Risks to Employers

Legal Risks

The UN, the ILO, and the laws of several nations hold that it is illegal to require workers to pay recruiters or employers. Meanwhile, a growing body of law holds companies responsible for labor abuses in their supply chains, even abuses by subcontractors.  Courts and legislatures increasingly find that companies who do not pay their recruiters will inevitably end up with indebted workers who are vulnerable to abuse. Companies who take advantage of this system are thus liable for the abuses that result.

Reputational Risks

The high visibility of the 2022 World Cup has also led to increasing public awareness of abuses connected to indebted workers. More and more companies are suffering reputational damage, as well as direct actions such as boycotts and publicity campaigns.

Productivity Risks

Corrupt recruiters prioritize workers who can pay exorbitant fees over workers who have the best skill set. Employers thus end up with subpar employees. Indebted workers have low morale, high turnover, high absenteeism, and low productivity.

Safety Risks

Indebted workers who fear losing their jobs will not speak up when they see a safety issue; problems are thus allowed to fester, with catastrophic outcomes. In the oil and gas industry, for example, 80% of workplace safety incidents involve subcontractors.[2] This is a direct result of the worker debt inherent in the existing recruiting industry.

Principles of Ethical Recruiting

The following resources are valuable for understanding the international recruiting system and the relevant legal frameworks:

[1] ITUC 2015, US Department of Labor 2017
[2] Gordon Ballard, IOGP, 2018