Mechanisms Currently Applied in the U.S. to Combat Child Labor: an Analysis of Various Types of Public and Private Policy Measures

Source: https://www.humanium.org/en/child-labour-definition/

Source: https://www.humanium.org/en/child-labour-definition/

The latest estimates by the International Labour Organization (ILO) found that 152 million children between the ages of 5 and 17 are subject to child labor around the world.[1] While there has been significant progress, between 2000 and 2012 the ILO found that child labor had fallen from 246 million to 168 million,[2] the current number of child laborers is still too high and experts in the field are “concerned that the pace of ending child labor has slowed decidedly.”[3] This brief will analyze some policy mechanisms currently applied in the U.S. to combat child labor as well as some new potential solutions.

Child labor is a subject that involves outrage and deep emotions, but besides its moral implications, it should be seen as a public policy priority. In fact, while “no single factor can fully explain the persistence of child labor”,[4] studies suggest that poverty and market forces in the globalized economy are the principal causes of child labor.[5] Thus, although the problem cannot be analyzed through the classical “market failure” lens it still warrants a definition as a public problem. It is, in part, precisely because the market is functioning well and exerting pressure to lower the costs of production as well as obliging businesses to adapt to fluctuation in supply and demand that child labor exists. In fact, employers in poor countries with a weak rule of law and a lack of good governance resort to child labor to lower costs and be able to compete with world prices.[6] By doing so they initiate and feed the vicious cycle of the ‘dynastic poverty trap’: children who labor will lack necessary skills and education as adults and therefore will only be employed in low-paid jobs.[7] Studies have also shown that “there is a high correlation between the prevalence of child labor and mortality among young adults”.[8]

Soft public measures: exerting pressure through public awareness and mediation

In 2008 Congress requested that the Department of Labor create and publish a list of goods produced by child labor and forced labor in order to increase awareness of consumers.[9] However, by not identifying specific companies or supply chains that resort to child labor[10] the list failed to distinguish between economic actors that tried to behave in a more socially responsible manner and the ones not doing any efforts. Thus, the list did not provide consumers with effective alternatives and had a very limited impact.

Other mechanisms such as the U.S. National Contact Point (U.S. NCP) for the OECD Guidelines for Multinational Enterprises[11] offer direct ways to hold specific companies accountable for human rights violations. The Guidelines are “recommendations addressed by governments to multinational enterprises operating from adhering countries. They provide non-binding principles and standards for responsible business conduct in a global context […]”.[12] National Contact Points are “agencies established by adhering governments to promote and implement the Guidelines”.[13] To exert their implementation function, NCPs will analyze grievances brought forth by individuals or NGOs alleging that a corporation has failed to behave according to the Guidelines in so-called “specific instances”[14] and will publish a non-binding “final statement”.[15] Essentially, this mechanism establishes a mediation procedure between victims, NGOs, and specific multinational corporations in cases of human rights violations that can include child labor, and exerts pressure on corporations by menacing them with bad publicity. However, its effectiveness in the fight against child labor is limited by various factors.

The first and most important one is the fact that multinational corporations rarely hire child laborers directly. The causal link between products sold in the U.S. and child labor is extremely stretched by complicated supply chain structures. Second, the mechanism is by its nature individual. It will only focus on the behavior of one specific corporation if the conditions are such that the victims or NGOs are able to bring forth a case. Child labor is a widespread phenomenon touching several different sectors. It is primarily concentrated in agriculture but is also present in the services and industry sectors.[16] Concentrating unevenly on reducing child labor in one sector, and even more so on reducing the child laborers used by one specific multinational corporation, only results in relocation of child laborers who usually find other occupations and end up in an even more precarious state.[17] It also seems inefficient from a cost-benefit standpoint since individual legal or semi-legal procedures are very expensive and, as explained, have a very limited impact on the global situation.[18] Finally, while it is true that the risk presented by potential bad publicity can be a strong incentive for corporations to behave in a more socially responsible manner, this incentive is strongly undermined by the fact that the U.S. NCP publishes very little information in its final statements, it merely proposes its mediation services but refuses to make a determination on whether the Guidelines were disregarded.[19]

Hard public measures: importing bans

One of the strictest mechanisms considered by the U.S. Congress was the 1995 Child Labor Deterrence Bill that aimed to prohibit the import of products made with the involvement of workers under the age of 15.[20] The bill was never adopted; however, it seems that the idea of such a regulatory measure has not been completely abandoned.[21] On first glance, it would seem that such a law could be a very effective tool to combat child labor because of its broad definition and the fact that it encompasses all sectors involved. A more in-depth analysis shows, however, some important implementation difficulties as well as negative side-effects. In order to assure compliance with the law, it would be necessary to establish a system permitting the monitoring of all imported goods and services to make sure that their production did not involve workers under the age of 15. Such a control mechanism would involve important costs for the government and by requiring companies to disclose, for example, the precise origin of their products and all their sub-components, can result in important price hikes for consumers and even unrealistic obligations for enterprises.[22] Most importantly, while such a law does not exclude any economic sector, the impact would be only on those sectors producing export goods and services for U.S. consumption. This excludes production of goods and services that are not exported or not exported to the U.S. market and would have as a consequence reduction of income in countries that already lack resources and displacement of child laborers to other occupations that greatly reduce their earnings and general well-being such as selling goods on the street and even prostitution. [23]
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Furthermore, by prohibiting the importation of goods involving the work of children under the age of 15 the law implicitly condemns very different forms of child work activities and fails to take into account local cultural aspects as well as local economic necessities. As one author points out “not all work for children is inherently bad”.[24] Many children in developing countries will need to work to some extent for economic reasons or because of family traditions. The ILO defines child labor as work that is “mentally, physically, socially or morally dangerous and harmful to children; and interferes with their schooling […]”.[25] It is clear from this definition that not all products involving the work of children under the age of 15 automatically use child labor. As demonstrated by James Scott, many schemes that try to improve the human condition fail because they do not take into account local circumstances and differences between countries.[26] It is not enough to imagine that policies towards child labor will have the same effects in developing countries as they do in Western societies. To effectively combat the phenomenon the measure needs to take into account family choices that are driven by local customs, traditions and market structures.

Market-based measures: certification and labeling

Another potential solution is the implementation of voluntary or obligatory labeling. Instead of a strict prohibition to import certain products, this option aims to inform the consumer and allow him to make a choice depending on his preferences. It can take the form of origin labeling (producer needs to disclose the origin of all the components or certain component of the product) or, for example, fair trade certification (a private organization monitors the production and supply chain of the product and certifies that it has been created without child labor and with a fair pay to workers). Establishing mandatory country origin labeling for food products was considered by the E.U. in 2011, albeit not only for purposes of combatting child labor but it was strongly supported by ONGs who called consumers to boycott products that were produced with raw materials imported from countries where child labor prevails.[27] Advocates in the field saw such a measure as essential given that the agriculture sector is by far employing the most children and submits them to very harsh conditions. However, because of the problems mentioned above (prohibitory costs and unrealistic obligations for companies), the E.U. decided that the indication of country origin was voluntary except in very limited cases.[28] In any way, boycotting a food product on the basis of it country of origin, would first need knowledge on the part of the consumer that child labor prevails in that country in relation to that specific product, and second, admitting that consumers could correctly use the information provided and decide to boycott the product, it would have the same devastating effects on the children employed as the importation ban.

Fair trade certification is advanced as being a very effective alternative to current strategies to eliminate child labor. While it is already applied in the U.S. and the E.U mainly for cocoa, coffee, and tea products, it has received “virtually no attention in the legal community”.[29] Advocates of this measure point out that it not only certifies that products are child labor free, but also that adult laborers receive a fair pay thus allowing them to generally improve their condition and eventually break the vicious cycle of poverty. It is different from origin labeling in the sense that it does not condemn indiscriminately products coming from a specific country but gives consumers full information on how a good is produced thus aiming to create pressure to modify production and supply chain structures. Because of its voluntary and private nature, there is no obligation for the government to establish a monitoring system and there are no public costs. The system relies essentially on private monitoring and market incentives.[30] While the costs seem low and the benefits promising should the U.S. support through public policy choices the fair trade movement?

For such a system to function it is necessary that consumers care about such issues and take them into account when making their purchasing choices. In September 2016 three consumers in California filed a class-action suit against Hershey, Mars, and Nestlé, arguing that if they had known the products were tainted by child labor they wouldn’t have bought them.[31] Free trade advocates point out that consumers are “willing to purchase products at a premium if they were aware which products results from child labor”.[32] However, other studies find that at best “U.S. public-opinion data reveal mixed views regarding the importance to consumers of labor condition around the world.”[33] Most importantly, data advanced in favor of free trade is based only on what consumers say they are willing to do and not on actual consumer behavior.[34]

Besides the fact that consumer support is uncertain, there are other important negative aspects. First, critics argue that international certification mechanisms weaken local governments because of their paternalistic nature.[35] Second, there are important monitoring costs that, while not supported by the government, are paid by the companies and inflate product prices.[36] The resources spent in this way only cover monitoring and administrative activities carried out by the certification agencies and the companies and do not directly contribute to increased wages or better conditions. Finally, because the fair-trade certification market is not regulated or controlled it is difficult for consumers to know which certifications agencies are credible and which are only ‘selling’ their labels. While it would be possible for the government to establish public mandatory or voluntary certification initiatives or to require external monitoring of private certification agencies this would involve heavy bureaucratic structures and important costs.

Direct financial contribution: development aid

A final solution that has been tested is establishing social programs that reward parents financially when they send their kids to school.[37] Developed nations wanting to combat child labor can support such measures financially directly through granting development aid to local governments or in cooperation with local NGOs. Such a measure addresses directly the root of the problem and allows to take into consideration the specific local situation of each country or region as well as existent customs and traditions. While there are administrative and monitoring costs, these do not seem to be excessive. A study found that in general such programs have administrative costs of less than 10% of the budget. [38]The rest is distributed to families directly.

While experts tend to agree that these social programs are cost-effective and the most efficient way to combat child labor,[39] local governments, lobbied by local businesses, are not necessarily motivated to establish them without some degree of public pressure. For example, it wasn’t until the Bangladesh government and garment industry came under intense public scrutiny during the discussions around the 1995 Child Labor Deterrence Bill that local NGOs, UNICEF, and the ILO were able to negotiate a Memorandum of Understanding with employers to slowly eliminate child labor and establish a social program that would grant money to parents who send their children to school.[40]

Conclusion

Strict measures such as an import ban or mandatory origin labeling can appear intuitively to be an effective tool to combat child labor but, as demonstrated, they involve heavy costs, present important implementation difficulties and seem to only displace the problem and have devastating consequences. The real impact on child labor of voluntary certification procedures is at best uncertain and these measures also involve important bureaucratic and administrative costs that do not directly benefit affected populations. In my opinion, the U.S. should focus primarily on direct financial assistance to help promote social programs that incentivize parents to send their children to school. While these programs also involve bureaucratic and administrative costs and require a minimum level of monitoring to assure that the money is used for the intended purpose, they attack the root of the problem directly. However, a minimum form of pressure on countries affected by child labor and businesses using child labor needs to exist in order to create a negotiation climate that is open to such programs. Public soft policy measures aiming to publicly name and shame companies that use child labor are cost-effective ways that create this necessary pressure and should be used. Currently available soft mechanisms could be adapted to fulfill this purpose. Additionally, voluntary certifications procedures can help in creating such pressures if consumer sensitivities continue to evolve. The U.S. should analyze cost-effective ways in which it can support these private initiatives and assure that agencies are credible and transparent.

Samantha Bloch is a LLM student at the University of Denver Sturm College of Law and outgoing Business & Events Editor on the Denver Journal of International Law and Policy.

[1] ILO, 40 Million in Modern Slavery and 152 Million in Child Labour Around the World, ILO Newsroom (Sep. 19, 2017) http://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_574717/lang–en/index.htm.

[2] Child Labor Coalition, Child Labor Coalition Statement on New Estimates of Child Labor (Sep. 22, 2017), http://stopchildlabor.org/?p=4443.

[3] Id.

[4] U.N. Secretary-General, Status of the Convention on the Rights of the Child, U.N. Doc. A/64/172 (July 27, 2009).

[5] Shima Baradaran & Stephanie Barclay, Fair Trade and Child Labor, 43 Colum. Hum. Rts. L. Rev. 1, 13-17 (2011).

[6] Id. at 16-17.

[7] Roland Pierik, Fighting Child Labor Abroad: Conceptual Problems and Practical Solutions, in The Ethical Dimensions of Global Development 47, 47 (Verna Gehring ed. 2007).

[8] Fernanda Estevan & Jean-Marie Beland, Mortality Risks and Child Labor (Centre d’Etudes et de Recherche sur le Developpement International, Working Paper), http://cerdi.org/uploads/sfCmsContent/html/199/Estevan.pdf.

[9] Solidarity Center, Labor Dept.: Steps Made in Fight Against Child Labor (Sep. 30, 2016), https://www.solidaritycenter.org/labor-deptartment-says-steps-made-fighting-child-labor/.

[10] Baradaran & Barclay, supra note 5, at 38.

[11] OECD, OECD Guidelines for Multinational Enterprises, 2011 Edition (Oct. 19, 2011), available at http://www.oecd.org/daf/inv/mne/48004323.pdf [hereinafter the Guidelines].

[12] Id. at 3.

[13] Id.

[14] Id. at 68.

[15] Id. at 73.

[16] ILO, supra note 1 (remarking that the agriculture sector accounts for 70.9% of child labor, the service sector for 17.1% and the industry sector for 11.9%).

[17] Pierik, supra note 7, at 48-49.

[18] Baradaran & Barclay, supra note 5, at 37-38 (explaining in more detail the limiting impact of random prosecution on the child labor problematic).

[19] Samantha Bloch, The US and Corporate Social Responsibility in International Business Transactions: has Anything Changed?, The View From Above (May 5, 2018), http://djilp.org/7237/the-us-and-corporate-social-responsibility-in-international-business-transactions-has-anything-changed/.

[20] Pierik, supra note 7, at 48.

[21] Baradaran & Barclay, supra note 5, at 34.

[22] Olivier Nieburg, West Africa Boycott Needed for Slave-Free Chocolate, Says Consumer Group, Confectionery News (Dec. 8, 2014), https://www.confectionerynews.com/Article/2014/12/08/West-Africa-chocolate-Child-labor-origin-labeling (remarking that the European Cocoa Association pointed out that “mandatory origin labeling of cocoa products is pointless and could lead to a 30% price hike in consumer chocolate prices because separate sourcing for specific origins and increased storage capacity would be required. It [also] argues that it is unrealistic for companies to label coca origins because beans are regularly blended from various origins and manufacturers often change sourcing practices to secure a better price”).

[23] Pierik, supra note 7, at 48 (the author writing in 2007 estimates that businesses that export goods only employ 5% of working children).

[24] Id. at 48.

[25] ILO, Child Labor, https://libguides.ilo.org/child-labour-en.

[26] James C. Scott, Seeing Like a State (Yale Univ. Press, 1998).

[27] See, e.g., Nieburg, supra note 22.

[28] Elena Bertolotto, The indication of the place of production on the foodstuffs labels: the Italian proposal, Lexology (Oct. 23, 2015), https://www.lexology.com/library/detail.aspx?g=e82b6031-c7ff-4a9e-bee3-f201f07e8260.

[29] Baradaran & Barclay, supra note 5 at 1.

[30] Id.

[31] Brian O’Keefe, Inside Big Chocolate’s Child Labor Problem, Fortune (Mar. 1, 2016), http://fortune.com/big-chocolate-child-labor/.

[32] Baradaran & Barclay, supra note 5, at 39.

[33] Gary Gereffi, Ronie Garcia-Johnson & Erica Sasser, The NGO-Industrial Complex, 125 Foreign Policy 56, 59 (2001).

[34] Baradaran & Barclay, supra note 5, at 46.

[35] Gereffi, Garcia-Johnson & Sasser, supra note 33, at 56.

[36] Id. at 60.

[37] Pierik, supra note 7, at 52-53.

[38] Id. at 53.

[39] Eric V. Edmonds & Maheshwor Shrestha, You Get What You Pay For: Schooling Incentives and Child Labor (NBER Working Paper No. 19729, Cambridge MA, Aug. 2013), http://www.nber.org/papers/w19279.

[40] Pierik, supra note 7, at 53.

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