Mitigating Risk of Labour Exploitation in the Hotel Industry

Transcription

1 1 Mitigating Risk of Labour Exploitation in the Hotel Industry

2 MITIGATING RISK OF LABOUR EXPLOITATION IN THE HOTEL INDUSTRY 2 1. Introduction On 26 September 2017, Shiva Foundation convened a roundtable discussion on Mitigating Risk of Labour Exploitation in the Hotel Industry. The attendees represented a range of professional backgrounds, including NGOs, trade unions and members of the hotel industry, bringing diverse knowledge of modern slavery, labour exploitation and non-compliance. In July 2017, Sir David Metcalf, the Director of Labour Market Enforcement published Informing Labour Market Enforcement Strategy 2018/19: Summary of Issues 1 with a call for consultation with relevant industries. The strategy seeks to improve enforcement activity around labour standards and exploitation and will provide recommendations for tackling noncompliance in the labour market. As part of Shiva Foundation s work examining the hotel sector s role in addressing modern slavery risks, we seek to ensure that any relevant guidance, regulations and policies reflect the industry s collective concerns and challenges. The purpose of the roundtable was therefore to provide an opportunity for key industry stakeholders to feed into the wider consultation. 2. Overview of the Director of Labour Market Enforcement role Sir David Metcalf was appointed in January 2017 to oversee a government crackdown on exploitation in the workplace by setting the strategic priorities for the government s three enforcement agencies, the HMRC s National Minimum Wage (NMW) enforcement team, the Gangmasters and Labour Abuse Authority (GLAA), and the Employment Agency Standards Inspectorate (EAS). Publishing his introductory report 2, Sir David set out how he would work with the government s enforcement bodies to: better tackle illegal practices by implementing labour market enforcement undertakings and orders, which came into force in November 2016 and carry a maximum 2-year prison sentence for serious or repeat offences; identify how best to ensure large employers supply chains do not breach labour market laws, particularly in the fashion, construction and cleaning sectors; and review the effectiveness of current labour market enforcement efforts. The consultation will feed into his Strategy.

3 MITIGATING RISK OF LABOUR EXPLOITATION IN THE HOTEL INDUSTRY 3 3. The issue Globally, there are 40.3 million people estimated to be living in slavery. In the UK alone, there are an estimated 13,000 people 3 living in exploitative conditions. For the hospitality sector, there is a lack of precise data. However, according to a recent study 4, there are more than 1.1 million victims of modern slavery in the European hospitality sector annually - over 4,500 are in forced labour in hotels. The hospitality sector accounts for 10% of the UK workforce (4th largest employer). However, many of these posts are seasonal, low-wage service jobs, which are often filled by migrant and agency workers. Due to various reasons, workers within the value chains of hotels can be vulnerable to such labour abuses as low wages, refused holiday pay, unjustified deductions from pay and little control over wages. Some of the issues that were discussed during the roundtable that give rise to such situations of labour abuse include: The issue The demand for the cost savings High demand Seasonality Business structure Lack of knowledge Lack of regulation Why? The cheapest supplier might be able to keep costs low by paying their labour force less than the legal minimum. Due to nature of the industry and type of workers, a high turnover of staff is often found in the hospitality sector. The hotel sector experiences busy seasons that require more staff to be recruited quickly for short periods of time. Such a transient job market can leave labour open to risks of exploitation. The layered structure of hotels (i.e. franchises) and the multi-tiered recruitment systems means that unscrupulous practices can be difficult to detect. When workers and employers are unaware of the proper and most recent standards of labour practice, they are unable to uphold or claim their rights. Lack of regulation, and therefore regular monitoring, means that abuses can go unnoticed. There are 1.1 million victims of modern slavery in the European hospitality sector annually.

4 MITIGATING RISK OF LABOUR EXPLOITATION IN THE HOTEL INDUSTRY 4 4. Challenges and potential solutions 4.1 Joint liability One of the identified problems in tackling labour exploitation within the hotel industry is that the sector suffers from a lack of joint-liability. The fragmented structure, with brands often franchising the development and management of their hotels to third parties, means that responsibility is often pushed down the chain where there is perhaps limited capacity to manage such risk. One solution that was discussed was the potential to develop a framework, whether through policy, industry regulation or otherwise, to address this issue. The idea being that businesses could then easily identify which suppliers were compliant and which were not, and suppliers could use the framework to ensure their compliance. 4.2 Licensing It was pointed out that, historically, there has been little regulation holding hotels to account in terms of their labour practices. While hotels are required to have a license to sell alcohol and to sell food, there is no such license for operating a hotel. In comparison, Ireland for example, requires all hotels obtain a tourism license. Having a license to trade would mean that if the licensee did not comply with set requirements, their authority to operate that business could be confiscated. Participants discussed the implications of introducing licensing into the industry both for hotels and for labour providers to the sector Would licensing work? Evidence from the GLAA demonstrates how successful licensing can be in tackling labour abuses across various industries 5. In fact, a government consultation 6 on the effectiveness of the GLAA model is what led to the expansion of its powers and remit in It would be important to bear in mind the practicalities of expanding the remit of the GLAA, who are currently already responsible for 1015 businesses, to include the wider hotel industry. On the other hand, it was suggested that, with the introduction of licensing, the number of labour providers to license would perhaps decrease, making it a more manageable task for the GLAA. This would, of course, have to be assessed in more detail before making such a recommendation. A more feasible alternative that was suggested included running a small pilot within the hotel industry to assess the practical impact Policing non-compliance for licenses An important element with regulation that was discussed was ensuring that those who are regulated are in fact acting in accordance with the agreed standard. This requires capacity and resource to police compliance. One participant shared that there have been instances in the past whereby those responsible for ensuring labour market enforcement have been sent reports of suspect activity and no action had been taken. With this in mind, it would be integral to ensure that any changes to regulation were accompanied by a well resourced policing arm. Some of the ideas that were discussed around this include: Funding as a form of tax where license providers could pass the cost of administration and policing to those able to pay in a means-test approach based on size of company. It would be important to ensure that this model doesn t become a way of purchasing a license without any enforcement. Extending government funding for a labour inspectorate that covers all sectors would ensure policing matched licensing 7. This approach puts the onus on the regulators to ensure standards are upheld and not on the employers which is where standards can become muddled and a potential cottage industry emerges where workers are left with no bargaining power. Adding education to the responsibility of the regulators. Traditionally, labour inspectors have had an educational element to their role to educate labour providers on how to operate in accordance with the set standard. It should be noted that the Director of Labour Market Enforcement is now emphasising the need to promote the work of the enforcement bodies by providing key information to workers, such as how they can get advice and support or where they can report non-compliance and abuse. Ensuring compliance across industries as it has been suggested that different labour providers may behave differently depending on the industry and whether or not it is regulated. 4.3 Pushing responsibility to brands The lack of joint-liability within the hotel industry is compounded by the complex business structure. Multiple entities are involved: brands often franchise their properties and franchisees often employ an external management team

5 MITIGATING RISK OF LABOUR EXPLOITATION IN THE HOTEL INDUSTRY 5 to run the day-to-day operations. The complex supply-chain structure and the distance between brand, owner, manager and labour provider can mean that responsibility is pushed down the chain. Because of franchise agreements, where a hotel operates under a brand, is owned by another organisation and may even be managed by a third, the brand is no longer responsible for issues such as minimum wage. A proposed counterbalance to this fragmented liability structure would be to push brands into the limelight and make them responsible, at least in part, for their franchisees actions. With public spotlight comes reputational risk and a potential impact on revenue. Should there not be an effect on the share price, there could be an impact on Director s bonuses. This proposed type of joint liability works towards a change of behaviour, which is fundamental to changing exploitative practices. 4.4 Public procurement Participants discussed how the public purse can often be a stronger lever than public opinion. Government is powerful not only in the legislation or policy changes it creates, but it is one of the largest clients for suppliers, including, as it was pointed out during the roundtable, for the hotel industry. UK Government procurement amounts to 20% of the country s GDP 8. There is an argument for the government to use this leverage and to use public procurement to push for labour market compliance. As a major client for many suppliers, the state can direct its capital towards companies that are effectively tackling labour exploitation. And while there will be no change for businesses with robust human rights due diligence processes and responsible practices, the remaining companies will have to take action to tackling the issue within their supply chains to secure lucrative government contracts 9. CASE STUDY In the UK, there is no nationwide labour enforcement regime encompassing all industries. Instead, labour market enforcement is fragmented across several agencies: GLAA, EAS, and HMRC, all with varying remits. In comparison, in The Netherlands, there is one body responsible for all employees working conditions and socio-economic security. The Inspectorate SZW 10 (Ministry of Social Affairs and Employment) is in charge of the supervision of compliance with regulations and investigation or detection of fraud, exploitation and organised crime within the chain of work and income, including labour exploitation and human trafficking. This creates better internal communications and a more coordinated approach. The introduction of the Director of Labour Market Enforcement in the UK was in part to foster a more unified approach across the agencies. 4.5 Additional suggestions Without moving towards industry-wide regulation there are other steps that were discussed to address some of the issues leading to labour exploitation in the industry. The problem Low wages, cramped housing arrangements, lack of holiday pay, or unjustified wage deductions. Problematic systems within the industry keep workers with little pay. High expectations for productivity mean long hours with no breaks. Language barriers mean that workers are not able to claim their rights. Options for strengthening compliance measures Industry-wide change with regards to trade unions was discussed. It was pointed out that there is not a single trade union recognition agreement with any hotel or contractor in the UK and that there should be direct correlation between trade union and organisations across sectors. Participants pointed to the TRONC system and loopholes therein which need to be addressed. As it stands, where the system is in place, a service charge on a bill for hospitality staff goes directly to the employer and tips are then handed out based on a points system in the hands of the employer. It was suggested that this was an unfair system that needed review. For housekeeping, for example, it was suggested that consideration should be given to how many rooms should be cleaned per hour. Alternatively, contracts should not focus on a per-room indicator of productivity and should instead focus on an agreed amount of hours to be worked. To address this issue, it was suggested that all organisations include payslip information in different languages. This information, for those who need help or advice on wages, recruitment abuse or any other issue, can include a link to allow them to learn about their rights. While employers upholding labour market standards will not worry about such an addition, dishonest employers could be concerned. It was also suggested that organisations could provide English lessons for their staff and pay for them.

6 MITIGATING RISK OF LABOUR EXPLOITATION IN THE HOTEL INDUSTRY 6 5. List of attendees Thank you to the participants of this roundtable, listed below, and to the Director of Labour Market Enforcement for hosting the consultation. If you would like to input on this conversation, please feel free to contact Shiva Foundation on info@shivafoundation.org.uk. Anti-Slavery International Chartered Institute of Building COMBAT Hotels Security Forum International Tourism Partnership Shiva Foundation Shiva Hotels The Ned Unite the Union WGC Limited Endnotes