KARA researcher Eshanee Singh shows how global value chains and multinational enterprises (MNEs) do far more than “buy” from countries like Bangladesh; through their demand for ever‑cheaper, faster production, they help design business models in which child labour becomes a built‑in cost‑saving strategy rather than a rare abuse or “cultural practice.” Drawing on work like Michael Nielsen’s study of corporate responsibility in the Bangladeshi garment industry and the CLARISSA programme’s findings that almost every small enterprise in key supply chains employs at least one or two children, she traces how weak state enforcement, subcontracting, predatory credit, and fragmented “produce now, pay later” contracts all shift risk and pressure downward—onto small informal businesses and, ultimately, children, while powerful brands and shareholders capture the profits at the top. For more information on this topic, hit the Deep Dive button on the lower right corner of the page.
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This is part three of Eshanee Singh’s
international reporting on child labor
You can see part one here.
The state is ultimately responsible for creating and enforcing laws to combat child labour; however, the ILO’s 1997 rapid assessment found that the laws have little impact on the actual conditions of employment of children, as they are not effectively enforced. A 2005 Canadian research paper from the Journal of International Affairs, by Michael E. Nielsen states that there is a normative change in the way responsibility for employment conditions in the ready-made-garment industry is distributed. He states that enforcement is shifting from the nation-state to other societal actors, most notably corporations in the form of corporate social responsibility. This corporate responsibility is further shifting from condoning activities that are illegal, under national and international laws, towards emphasizing regulatory compliance. The paper states that the Bangladesh Department of Labour and Inspectorate of Factories was said to be lacking in sufficient resources, staff and logistical support to adequately perform the task of monitoring child labour law compliance. It also states that the Bangladeshi garment industry is heavily dependent on overseas markets, with production and the global commodity chain being heavily dominated by US and European buyers.
This leads to the question of the power multinational corporations have in shaping the laws and policies of the countries in which they operate or dominate. It is possible that the prevalence of child labour in Bangladesh’s garment industry and the lack of willingness, on the part of the Bangladeshi government and commerce/retail executives, to address child labour is a direct response to the multinational enterprise need for cheap labour to serve the high demands and high profits of the fast fashion industry. The paper states that the norm and practices of corporate responsibility in relation to child labour may be characterised in terms of tacit acceptance of ‘that’s just the way things were done over there’, viewing child labour in the garment industry as a lesser problem and more of a positive social and employment potential.
The CLARISSA study found that child labour is designed into the business model of enterprises; rather than lots of children working in a few unregulated enterprises, which they state could be characterised as outliers or particularly bad hot spots, every enterprise has at least one or two children working in it. The study states that they were unable to find child labour interventions in Bangladesh that focused on the business drivers or business models for hiring children.
The study analyzed necessity-based entrepreneurs. These included individuals who were once child labourers who may take over running a leather processing business, for example, once other family members become too sick to work. Their focus is centered on how to keep the business going, which may drive them to take loans from NGOs and microcredit organizations. But the payment schedules of these loans and credits increases how much their business needs to turn over on a daily and weekly basis in order to meet principle and interest requirements. This forces them to look for new strategies to minimize operating costs.
The study also looked at production-based contracts, which work on a produce now pay later system. In this system processors and producers wait many months to be paid in full and there is no uniformity in the length of time corporate buyers and enterprises must pay. This runs the problems of revenue shortages to pay for labour and raw materials that have been sourced on credit and are themselves perishable. Another factor that may increase pressures to lower production costs is if buyers refuse to pay the original contracted price or rejects some produced work.
The study states that in a competitive marketplace with rising costs of materials, producers and processors of all types frequently take commissions close to or less than the cost of production, a decision likely based on poverty and constrained economic circumstances. The study also states that as manufacturing processes become more fragmented, meaning there are more and more processors and producers for every micro step of manufacturing, the number of informal enterprises in operation, and the number of individuals in precarious circumstances, increase. But the profit margins for completing a micro step in the manufacturing process are diminishing because buyers’ price points do no increase to accommodate more actors in the system nor the increase in price of materials.
It can be argued that the pressures faced by enterprises in the informal economy of Bangladesh to cut costs and produce high volumes may be a contributing factor to the prevalence of child labour. The CLARISSA study states that precarious contracts and heavy reliance on foreign loans and credit, a reliance driven by deep poverty, forces entrepreneurs in the Bangladeshi business environment to focus on what they can control, costs reductions and working long hours, thus relying on child labour.
It can be argued that the Bangladeshi government’s lack of response to the informal economy is due to the country’s heavy economic reliance on an export-oriented strategy and foreign buyers. The shift to regulatory compliance, rather than condoning and prosecuting illegal acts and enforcing child labour laws, may be a tactile shift in order to attract corporate buyers and foreign enterprises in search of low-cost manufacturing and production. Other incentives are used by the government, such as favourable tax breaks and financial compensation for business relocation, which benefits the formal economy, such as foreign corporate buyers, multinational enterprises and domestic middlemen corporations, while disadvantaging the informal economy of smaller subcontractors. While this may be a positive strategy for the overall GDP and economic growth of the country, it comes at a cost of relying on child labour as a cost cutting measure. It can therefore be argued that corporate acceptance of ‘that’s just the way things are done over there’ is not an accurate statement; child labour is not a culturally accepted business practice but is relied upon out of necessity for many small informal economy entrepreneurs. The CLARISSA study states the fragmentation creates a cascade of commissions into activities that are smaller in scope and revenue, but which are accepted by people whose business survival and household survival are tightly intertwined.
This raises the question of the extent of corporate responsibility for the prevalence of and reliance on child labour. A state may be economically dependant on precarious employment practices and conditions in order to attract and keep economic activity, but corporations do not have an excuse for using child labour in their production and manufacturing process. Corporations benefit from child labour and low labour costs, but such benefits are not necessarily passed on to the consumer nor to the people of the country in which they operate. The benefits are passed on to shareholders through increased profits. The CLARISSA study states that complex supply chain fragmentation is academically and politically labelled as a reason why child labour is difficult to identify and prevent, rather than viewing it as something which is causally linked to child labour; but the capitalism business model of multinational enterprises, operating through complex structures of subcontractors and subsidiaries, creates the conditions which enables the use of child labour. Child labour is not an inherent concept within countries which corporations have no control over. Transparency and technology are assumed to be the solutions to the issue, but both nation-state and corporations play a role in addressing and preventing the causes of child labour.
Action plan for concerned readers
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Change how you buy
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Prioritize fewer, higher‑quality clothes and goods from brands with independently verified, transparent supply chains (for example, those participating in credible multi‑stakeholder initiatives, publishing full supplier lists, and reporting factory audits and remediation, not just glossy “sustainability” claims).onlinelibrary.wiley
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Avoid ultra‑fast fashion and “shockingly cheap” items, which almost always rely on the kind of cost pressures CLARISSA links to embedded child labour in informal factories and workshops.clarissa+1
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Use your voice with brands and retailers
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Email or message customer‑service and public sustainability contacts asking for: (1) full disclosure of their suppliers beyond the first tier, (2) specific child‑labour due‑diligence steps in informal sectors, and (3) what they are doing to change payment terms and pricing so suppliers are not forced to use children to survive.academic.oup+1
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Support campaigns and petitions (from worker‑rights and anti‑child‑labour NGOs) that target named brands and demand living wages, fairer contracts, and enforceable remediation plans when children are found in supply chains, rather than quiet dismissals that push children into even more hidden and dangerous work.ids.ac+1
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Back organisations working on the structural drivers
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Donate to or volunteer with groups that work directly with children and small businesses in high‑risk sectors—especially those using long‑term, community‑based approaches like CLARISSA’s “cash‑plus” social protection and participatory action research, which tackle the poverty and business pressures that make child labour feel inevitable.bigd.bracu.ac+1
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Look for programmes that help small producers access fair credit, negotiate better contracts, and diversify their income, since Singh’s and CLARISSA’s evidence shows that debt, delayed payments, and razor‑thin margins are central drivers of children entering hazardous work.bigd.bracu.ac+1
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Push for stronger laws where you live
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Urge your elected representatives to support mandatory human‑rights and environmental due‑diligence laws for companies, including liability when they profit from child labour in their global supply chains instead of treating abuses as distant “accidents.”academic.oup+1
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Advocate for trade and public‑procurement rules that require importers and government suppliers to meet strict labour‑rights standards, and for development aid that strengthens labour inspectorates and child‑protection systems in exporting countries, so states are not left to bargain from a position of weakness with powerful MNEs.academic.oup+1
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Stay informed and help others connect the dots
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Share accessible summaries, graphics, or short videos that explain how global value chains, subcontracting, and predatory contracts create the conditions for child labour, so people stop seeing it as an inevitable feature of “poor countries” and start recognizing the role of brand and investor decisions in rich ones.clarissa+1
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When talking with friends, students, or community groups, emphasize that child labour is not just about “bad parents” or “local culture”; it is engineered by a global business model that can be redesigned—but only if consumers, citizens, and investors insist that profits cannot come from children’s stolen childhoods.
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Organizations and platforms you can support
or use to push for change on child labour in global value chains:
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International Labour Organization (ILO) – Child Labour & Child Labour Platform (CLP)
The ILO leads global efforts to eliminate child labour, runs targeted programmes on child labour in supply chains (like ACCEL Africa), and convenes the Child Labour Platform, which brings companies, unions and NGOs together to tackle child labour in key sectors. You can engage via campaigns like Alliance 8.7 and World Day Against Child Labour.
ILO – Child Labour – ILO – Tackling child labour in global value chains / Child Labour Platformilo+1 -
UNICEF – Child Labour and Business & Human Rights
UNICEF works directly with governments and communities to get children out of hazardous work, and also produces guidance for companies and investors on ending child labour in supply chains (for example, its tools for clothing and footwear brands).
UNICEF – Child labour – UN Global Compact / UNICEF – Addressing Child Labour in Business Operations and Supply Chainsunicef+1 -
Global March Against Child Labour
A worldwide network of trade unions, teachers’ associations and NGOs campaigning to end child labour, with specific work on garments, agriculture and global supply chains; they coordinate advocacy, research and public campaigns you can join or support.
Global March Against Child Labourglobalmarch -
Stop Child Labour (Child Labour Free Zones)
A coalition that promotes “Child Labour Free Zones” and works with local partners and brands to remove all children from work in specific communities and sectors, including garments and textiles; they have also helped shape national covenants on child‑labour‑free supply chains.
Stop Child Labour Coalitionstopchildlabor+1 -
UN Global Compact – Business actions to eliminate child labour
The UN Global Compact provides specific tools and action checklists for companies and investors who want to drive child‑labour‑free supply chains; these are useful leverage points when you contact brands as a consumer or shareholder.
Business Actions to Eliminate Child Labourunglobalcompact+1 -
Alliance 8.7 (Global Partnership to End Child Labour)
A multi‑stakeholder alliance under SDG 8.7 that coordinates governments, UN agencies, business and civil society; individuals and organizations can plug into their thematic groups and country‑level “pathfinder” initiatives focused on supply chains.
Linked from the ILO’s “Get involved!” section: Alliance 8.7 Global Partnershipilo -
UNICEF USA and national campaigns on supply chains
In the U.S., UNICEF and partners run public campaigns and advocacy to end child labour in supply chains, with concrete actions for consumers and citizens.
End Child Labor in Supply Chains: It’s Everyone’s Businessunicefusa -
EU / ILO / OECD / IOM / UNICEF joint work on due diligence
These institutions jointly promote stronger due‑diligence laws and practices for businesses and governments, including guidance you can cite when pressing policymakers or companies.
Ending child labour, forced labour and human trafficking in global supply chains – joint report (see links to the ILO–OECD–IOM–UNICEF report)
