Perspectives in Responsible Sourcing

Guest Worker Programs: Panacea for Workforce Shortages or Path Toward Modern-Day Human Trafficking?

Advocates of the U.S. H-2B guest worker program can spew out a laundry list of its inherent merits. For starters, they contend that this initiative provides an important life-line to industries which are frequently suffocated by workforce shortages during seasonal peaks—namely hospitality, construction and agriculture. They also boast about the program’s pivotal role in reducing costs and enhancing flexibility for businesses.

On paper the H-2B guest worker program appears to be a win-win situation for companies and laborers, alike. In practice, however, a growing number of human trafficking experts warn that it could inadvertently be ushering in a wave of modern day slaves into the US.

The debate is reaching a fever pitch, thanks in part to a recent report from the US Government Accountability Office. The report highlights instances where guest workers, holding H-2B Visas, were targets of fraud and abuse. Some of the most egregious violations in the GAO report include: 

• A South Dakota hotelier who confiscated workers’ passports and threatened workers that they would be sent home in a “box” if they disobeyed orders
• Workers from India paid at least $20,000 for H-2B visas to enter the USA but the workers were never employed by the construction company 
• Conspirators fraudulently obtained H-2B certifications for over 3,800 idividuals, leased workers to undisclosed businesses not listed on the visa petitions, defrauded the government for $7.4 million in payroll taxes never remitted to the Internal Revenue Service

“Critics argue that guest worker programs are very one-sided,” explains Vanessa Lanza, Outreach Program Coordinator, at the Coalition to Abolish Slavery and Trafficking (CAST). “It is a relationship in which recruiters and companies hold all of the cards.”

The way guest worker programs function is by allowing companies to sponsor temporary laborers for up to three years. During this time, companies must guarantee salaries that meet the legal minimum wage. And, depending on the visa type that was issued, they may also need to provide housing and meals. So where is the downside for laborers?

Critics note that guest worker programs create an unnatural degree of dependency on a single employer. That’s because guest workers are not free agents during their tenure in the US—they must remain with the company that sponsored them. Human trafficking experts say that this inextricable bond makes them too scared to report if they fall prey to exploitation.  

Some are calling for strong action. “The nation would do fine without any H-2B program at all; the only ‘cost’ would be that some marginal employers would have to increase their wages a bit to attract workers to their jobs,” blogs David North, Fellow at Center for Immigration Studies—an independent think tank. In his popular blog, North sites that companies and recruiters who take advantage of foreign workers face penalties that are largely slaps on the wrist. Most disturbingly, North says, is that federal benefits continued to flow to many of the offending firms, despite the court actions.   

Regardless of the benefits—and pitfalls—embedded in the H-2B guest worker program, there is one important element that often gets overlooked: the will of the workers. They remain largely voiceless in this vicious tug-of-war. The truth is, they want to come to the US to escape abject poverty and forge a better life for their loved ones. And they should be given this opportunity, particularly because there is a business need that they can fill. But it should be done under the right circumstances.

There were 44,847 H-2B visas issued in 2009, according to statistics from the State Department. What has been the fate of these workers? Have their employers upheld their end of the labor contract? Is their life as a guest worker in the US an improvement over the hardships that they faced in their country of origin? These questions will go unanswered for a big chunk of this group.

It is definitely time to re-examine the H-2B program. Not to discontinue it, but to ensure that the unintended consequence of human trafficking is eliminated. To guarantee that these workers get treated with dignity and respect. And to ensure the exploitative companies and recruiters don’t cheat the system. 

A Moral Case for Corruption?

According to Transparency International’s 2010 Global Corruption Barometer, 6 out of 10 people believe corruption has increased over the last 3 years. Surprisingly, this view is most prominent in North America and Western Europe. This disturbing development may, in part, be explained by a view expressed recently by a logistics expert in an article titled The dilemma of bribes: to pay or not to pay on BBC News: “There is no moral obligation for anyone to refuse to pay bribes. But there are moral obligations to make sure that workers have work to do and that they are not starving. It is very easy to stand up and cast your moral vote against corruption, but that doesn’t help anyone get a job, it doesn’t help them survive.”

But there are those who think differently: In its Anti-Corruption Paper the Bond Anti-Corruption Sub Group, a working group made up of some of Britain’s leading NGOs finds that “Bribery is not a victimless crime nor a regrettable but unavoidable cost of doing business abroad. Bribery undermines the rule of law and the principle of fair competition and entrenches bad governance.”

Corruption has been on many companies’ agendas due to the US Foreign Corrupt Practices Act (FCPA) which prohibits the paying of bribes to public officials and most businesses are sincere in seeking to comply with the law. However many campaigners are quick to point out that the problem of corruption is not limited merely to bribery. Wikileak-ed documents and cables on Uzbekistan, Kazakhstan, Russia and many other countries have been painting a clear picture of how corruption distorts international development and trade efforts and damages whole countries. A 2007 study estimated that corruption costs African countries $148 billion per year, i.e. 25% of the continent’s GDP. The number is staggering, especially when the case is made that much of the development aid paid by donor countries would not be needed if holes were properly plugged. Global Witness has provided consistent research and studies into the effects of corruption on resource-rich countries and a key recommendation they and others have made is for the public disclosure of multinational companies’ basic payments for resources to a state (see for example the Publish What You Pay campaign).

The UK’s new Bribery Act, expected to come into force in April 2011, is a first attempt to set a higher and more comprehensive standard. The Act brings national legislation up to par with international law and raises the bar globally on anti-bribery measures. Importantly, it criminalises both the giving and receiving of a bribe – whether it involves public or private actors and it extends liability to companies for failing to prevent the payment of bribes by their employees. The Act’s application is very wide and the corporate offence will apply to corporate bodies and partnerships both incorporated and formed within and outside of the UK which carry on their business or part of their business in the UK. Controversially, the Bribery Act’s definition of bribes includes euphemistically titled facilitating payments, i.e. payments made for the purpose of expediting or facilitating the performance by a public official of a routine governmental action, a practice permitted under the FCPA. How the new law will affect the business landscape and whether it will be appropriately enforced remains to be seen.

As companies undertake efforts to become more sustainable corruption is clearly an area to be addressed. A first step for many companies will certainly be to ensure compliance with the new British requirements. However, in the absence of further compelling legislation like the Bribery Act they should be in no doubt that both the moral and the business case argue against corruption and in favour of increased transparency.