Profits and Poverty: The Economics of Forced Labor

Profits and Poverty: The Economics of Forced Labor

Profits and Poverty: The Economics of Forced Labor

US$236 billion. This is the obscene level of annual profit generated from forced labour in the world today. This figure reflects the wages or earnings effectively stolen from the pockets of workers by the perpetrators of forced labour through their coercive practices. It represents money subtracted from the incomes of workers often already struggling to meet the needs of their families. For migrant workers, it is money taken from the remittances they send home to their families and relatives. For governments, these illegal profits represent lost tax revenue, because of the illicit nature of the gains and the jobs that generated them. More broadly, the profits from forced labour can incentivize further exploitation, strengthen criminal networks, encourage corruption and undermine the rule of law.

Understanding and stemming the illegal profits generated from forced labour is critical to wider progress against the phenomenon. This second edition of the Profits and poverty report1 was undertaken with this aim in mind. It provides a new estimate of the illegal gains generated through forced labour, building on the 2014 edition and the 2021 global estimates of forced labour.2 What the study reveals is alarming. Total illegal profits from forced labour are not only extremely high but appear to have risen dramatically over the last decade, as a result of both more people in forced labour and higher levels of profit being generated from each victim.

As in the previous edition, this study presents estimates of illegal profits from forced labour at global, regional and sectoral levels. While the core methodology remains the same, some important refinements have been introduced. Illegal profits from forced labour in the services sector are estimated separately for the first time, alongside estimates of illegal profits in agriculture, domestic work, industry and forced commercial sexual exploitation. Critical assumptions made for the 2014 estimates on wages and labour income shares have been relaxed and replaced with observational data unavailable ten years ago. The study also exploits better data to estimate the value added at the sectoral level. Yet even with these improvements, the profits from forced labour remain difficult to estimate with precision because of their hidden and illicit nature.

The remainder of this report is structured as follows. Section 1 provides a background discussion of the forced labour situation in the world today, drawing on the results of the latest global estimates of forced labour. Section 2 describes the methodology employed for the estimation of illegal profits. Section 3 presents the estimation results. Section 4 takes a separate look at an additional illegal profit source not included in the estimate of overall illegal profits – illegal profits arising from the unlawful recruitment fees and related costs that victims of forced labour must often shoulder. The last section concludes. An Appendix provides further technical detail on the methodology and the data used for the estimates of illegal profits.

To read the full report click here.