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The Next Economy
Slavery, Labor Abuses in SE Asian Supply Chains Set to Spiral in Age of Automation

Drastic job losses in South East Asia resulting from the onset of robot manufacturing are predicted to lead to a dramatic increase in slavery and labor abuses in global supply chains, unless governments take early measures to prevent automation threatening millions of livelihoods, states a new report by Verisk Maplecroft.

The annual Human Rights Outlook outlines five issues identified as presenting significant challenges to the reputations, operations and supply chains of multinational companies now and in the future.

According to the report:

56 percent of jobs in SE Asia’s key manufacturing hubs are under threat

With the International Labor Organization (ILO) estimating that over the next two decades 56 percent of workers in the manufacturing hubs of Cambodia, Indonesia, Thailand, the Philippines and Vietnam (collectively known as the ASEAN-5) will lose their jobs due to automation, the risk of slavery and trafficking appearing in supply chains will spiral. This grouping of countries is particularly at risk due to the dependence of the workforce on low-skilled jobs and existing high levels of labor rights violations. All are currently rated as ‘high risk’ countries in Verisk Maplecroft’s Modern Slavery Index, but their rankings and scores are projected to deteriorate when the age of automation is upon us.

While the report stresses that South East Asia’s manufacturing hubs will not be alone in facing the challenges posed by automation, it highlights the projected impacts to the region due to its importance to the global supply chains of multinational companies operating in the consumer goods, retail, hospitality and ICT sectors.

“Displaced workers without the skills to adapt or the cushion of social security will have to compete for a diminishing supply of low-paid, low-skilled work in what will likely be an increasingly exploitative environment,” says Verisk Maplecroft’s Head of Human Rights, Dr Alexandra Channer. “Without concrete measures from governments to adapt and educate future generations to function alongside machines, it could be a race to the bottom for many workers.”

Agriculture, manufacturing, retail and hospitality among highest risk sectors

To investigate how automation will impact supply chain workers, Verisk Maplecroft applied its industry-specific labor risk indices to the ILO data across 21 sectors where jobs are at high risk of replacement by automation. The sectors where the risk is highest are identified as agriculture, forestry and fishing; manufacturing; construction; retail; and hospitality.

Women disproportionately affected in the garment, textile and footwear industry

Within the ASEAN-5, Verisk Maplecroft flags the garment, textile and footwear (GTF) industry — which employs 59 percent of all manufacturing workers in Cambodia and 39 percent in Vietnam, the majority of whom are women — as being at particular risk from automation. In both Vietnam and Cambodia, over 85 percent of GTF jobs are at high risk of automation, and over 76 percent of these jobs are held by women. That means roughly 2.6 million Vietnamese women and over 600,000 Cambodian women will lose their jobs and compete for work in an industry already exposed to a high risk of labor violations. Fewer women in work — or more women forced into slavery — will greatly impact these countries’ efforts to achieve their UN Sustainable Development Goals on gender equality.

“The adoption of automation technologies by companies will be gradual, but the unintended consequences for millions of workers in brand supply chains is likely to be severe,” Channer continues. “Responsible sourcing departments, in particular, need to identify and understand the adverse effects of automation on human rights, and work with civil society and governments to mitigate the impacts within their own supply chains.”

Along with Automation, the other issues identified in the annual Human Rights Outlook are:

  • Human rights defenders — businesses face growing pressure to protect campaigners
  • Compliance — Despite multiplying laws and standards, a common approach is emerging
  • Certification — Collaboration is key to make 4 schemes more effective and rebuild confidence
  • Social impacts — Investor community expects business to up its game

Perhaps proactively addressing these four issues could also help companies mitigate the predicted risks from the impending age of Automation.