What industries are most affected by forced labour?

Manufacturing, agriculture, construction, fishing, mining, and domestic work consistently rank among the highest-risk sectors according to ILO data. Activities involving low-skilled work, seasonal employment, and complex subcontracting arrangements present elevated risks. However, forced labour can occur in any industry, making comprehensive risk assessment essential regardless of sector.

What is the Sedex Forced Labour Indicators Tool?

The Forced Labour Indicators (FLI) tool helps Sedex members interpret risks of forced labour identified in SMETA audits. It generates a score (0–10) for each site based on the number, severity, and recurrence of forced labour-related non-compliances, using issue titles from SMETA audits.

How do I start identifying forced labour risks in my supply chain?

Begin with supply chain mapping to understand your suppliers across multiple tiers, then conduct risk assessments considering country, sector, and supplier-specific factors. The Sedex Platform provides integrated mapping and risk assessment tools (the forced labour indicator report for example) that flag sites according to severity for prioritised investigation.

What support does Sedex provide to members?

Sedex members have access to: The FLI score and data sheet Risk assessment tools combining sector and country risk SAQs and MSAs to assess management systems Guidance, training, and eLearning on forced labour indicators The guidance document “Interpreting Forced Labour Indicators in SMETA Audits” (2025)

Introduction: What is Forced Labour, and Why Does it Matter to Businesses? 

Letizia La Sorte

Solutions Expert

4 Sept 2025

About 8 mins

4 Sept 2025

About 8 mins

What is forced labour?

Forced labour is one of the worst forms of exploitation and refers to situations where individuals are coerced into working against their will, often under the threat of punishment or negative consequences. The International Labour Organization (ILO) defines it as “All work or service which is exacted from any person under the menace of any penalty for which said person has not offered himself/herself voluntarily.” This can include non-payment of wages, loss of rights, threats, or physical violence.[i]

Forced labour statistics

The ILO estimates that around 27.6 million people globally are trapped in forced labour situations. These abuses are present across industries and regions from manufacturing and agriculture to logistics and cleaning services often hidden deep within complex, multi-tiered supply chains. Vulnerable populations, including migrant workers (who are three times more at risk of forced labour), women and girls (who make up 39.4% of victims), and Indigenous communities, face the highest risk. [ii] [vi]

Forced labour can occur anywhere in the world and in any part of a supply chain, making it a critical issue for companies looking to manage risk, safeguard their business, and protect workers.

Why addressing forced labour risks matters for businesses

Forced labour, including in supply chains, presents a critical risk to companies’ operational, financial and reputational health. It’s essential to address this, for several key reasons:

1. Legal compliance: Many countries like the UK, the US and Australia have laws against forced labour, and non-compliance can result in severe penalties. For example, under the US UFLPA, companies can face product seizures at borders, with over $1 billion worth of goods detained in 2023 alone. [vii]

2. Reputational protection: Preventing forced labour protects a company’s reputation with investors, consumers, and other stakeholders. Based on a global survey by PWC found that 83% of consumers consider ESG factors, including human rights, when making purchasing decisions. [v]

3. Operational protection: Managing forced labour risks helps companies avoid fines, operational restrictions, and other legal consequences. Beyond UFLPA seizures, the EU Forced Labour Regulation (effective December 2027) will ban products made with forced labour from EU markets entirely, potentially cutting off access to the world’s largest single market. Companies may also face supplier boycotts, contract cancellations, and increased scrutiny from business partners.

4. Ethical responsibility: Following the UN Guiding Principles on Business and Human Rights establish that businesses have a responsibility to respect human rights and provide decent working conditions throughout their operations and supply chains. Failure to meet these internationally recognised standards could result in regulatory penalties, and exclusion from major procurement processes.

What is an indicator and what is an example of forced labour?

Forced labour is notoriously difficult to identify and evidence given it is a criminal activity. It is against international human rights and many national laws. Instances of forced labour, and sometimes particular practices associated with higher risks of it, are driven underground. Serious abuses may occur several tiers down the supply chain. Guidance and recommendations therefore often set out “indicators” of forced labour which acts as red flags when trying to detect instances.

An indicator is a sign or signal that suggests the presence of a particular condition or risk. In the context of forced labour, indicators are practices or conditions that may signify severe exploitation.

Example: The retention of identity documents is an indicator of forced labour. When employers control workers’ access to their passports or ID cards, it can be a sign that workers are being coerced or controlled, limiting their freedom of movement and their ability to leave a job.

Key indicators of forced labour

The ILO outlines 11 operational indicators used to detect signs of forced labour.

Sedex also recognises an extra indicator: management systems failure, which refers to the absence of adequate internal controls, policies or governance that allow forced labour conditions to go unchallenged.

These indicators are:

Abuse of vulnerability
Retention of identity documents
Deception
Withholding wages
Restriction of movement
Debt bondage
Isolation
Abusive working or living conditions
Physical or sexual violence
Excessive overtime
Intimidation or threats
Sedex: Management systems failure

These indicators are crucial for identifying potential forced labour practices. While they are not definitive proof, multiple indicators at a single site suggest a higher risk that requires further investigation.

(Source: International Labour Organization [iv])

Why companies must act now

Forced labour is illegal across major markets (EU, UK, US, Australia), and governments worldwide are strengthening legislation around it. The EU Forced Labour Regulation, set to be enforced from December 2027, prohibits the sale or export of any products linked to forced labour, regardless of where it occurs in the supply chain.

Similar laws such as the US Uyghur Forced Labor Prevention Act (UFLPA), the UK and Australian Modern Slavery Acts, and the Canadian CFLA,

impose significant regulatory, reputational, and operational risks on companies that fail to act.

These regulations require companies to identify, assess and address forced labour risks in both their own operations and supply chains through systematic human rights due diligence. This includes mapping supply chains, conducting risk assessments, implementing monitoring systems, and taking corrective action when issues are identified.

Companies must also demonstrate their efforts through regular reporting and transparency measures, showing stakeholders and regulators that they are taking concrete steps to prevent and address forced labour risks.

Beyond legal compliance, addressing forced labour is essential for responsible business conduct. Companies that fail to act face increasing pressure from investors demanding ESG compliance, consumers choosing ethical alternatives, and business partners requiring supply chain transparency. The reputational and financial costs of forced labour incidents, including legal fees, remediation costs, and lost business far outweigh the investment in prevention systems.

Assess your global supply chain with the Sedex Forced Labour Indicators Tool

The Sedex Forced Labour Indicators Tool, part of our risk assessment tool, uses data from a company’s supply chain to highlight where these operational indicators of forced labour have been identified.

The tool also provides additional information to help businesses understand the level of risk, such as the risk of forced labour within a site’s country and sector, or the presence of more vulnerable groups of workers. It helps companies prioritise where to investigate further and take action where the risks of forced labour are highest.

The tool offers:

Prioritised risk alerting highlighting sites with strong or multiple indicators – enabling procurement teams to focus attention and resources where it’s needed most
Contextual awareness factoring in country, sector, and worker vulnerability
Actionable insights supporting targeted audits, supplier engagement, and remediation plans using SMETA, SAQs, dashboards, and more

Learn more about our Forced Labour Indicators Tool

What you can do next:

Taking action to address forced labour risks requires a systematic approach. Here’s how you can start addressing this using the Sedex tools:

Map your global supply chain using the Sedex Platform to identify all tiers of suppliers and understand where vulnerable worker populations and high-risk sectors intersect with your sourcing.
Conduct comprehensive risk assessments that combine country and sector intelligence with supplier-specific data to prioritise your due diligence efforts effectively
Deploy audits at high risk sites. Sedex has recently introduced a number of features to better detect issues such as recruitment fees and to understand the management systems in place at a supplier site that prevent forced labour through SMETA 7. Audits can be used to help understand working conditions at high-risk sites and ie identify forced labour indicators.e identify forced labour indicators.
Review flagged indicators in context where individual or several indicators may signal the need for deeper investigation and immediate action
Engage with suppliers proactively to close policy and oversight gaps, providing training and capacity building that helps them understand and prevent forced labour risks in their own operations
Implement systematic monitoring through integrated dashboards that track remediation progress and provide audit-backed reports aligned with regulatory expectations
Demonstrate compliance to stakeholders and regulators with comprehensive documentation that shows your ongoing commitment to preventing forced labour throughout your supply chain
Build ethical, resilient supply chains that protect both workers and your business from the operational, legal, and reputational risks associated with forced labour

Even if your company isn’t currently subject to forced labour legislation, proactive action provides significant business advantages. Early movers gain competitive advantage by building robust systems before regulations expand, securing preferential treatment from increasingly ESG-focused customers and investors, and avoiding the costly reactive scramble when new laws inevitably reach their sector or market.

Companies that wait often face higher implementation costs, limited supplier cooperation, and potential exclusion from business opportunities as partners increasingly require demonstrated human rights due diligence as a prerequisite for collaboration.