When people hear “forced labor”, they often picture chains, dimly lit factories, or workers physically restrained in faraway locales. These images, while rooted in historical contexts, do not necessarily reflect today’s reality.
Modern forced labor is insidious. It hides in plain sight across legal industries and global supply chains. From deceptive recruitment to debt bondage and passport confiscation, exploitation is often systemic. And without visibility, even well-meaning organizations can be exposed.
This disconnect between perception and reality perpetuates myths around forced labor, which can make it harder to address root causes. Below, we demystify some of the common misconceptions surrounding forced labor, as well as highlight how Moody’s is helping organizations – from large corporates to law enforcement agencies – to tackle this persistent, global challenge.
Myth No1: Forced labor is rare
The International Labour Organization (ILO) defines forced labor as “all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily.” In 2022, the ILO estimated that 27.6 million people, including 3 million children, are trapped in forced labor worldwide, generating $236 billion in illegal profits each year. Given its scale, it’s no surprise that forced labor has quietly infiltrated supplier networks.
Myth No2: legitimate companies couldn’t knowingly be associated with forced labor
While the links between forced labor and organized crime are well-documented, even well-meaning organizations can face significant risks when supply chain visibility is low and due diligence is reactive.
Human trafficking doesn’t only happen in illegal industries; it thrives in legal sectors too, from agriculture and construction to manufacturing, logistics, and the food industry.
For large organizations, visibility across every tier of the supply chain is critical. Take, for instance, a recently reported case that several global electronics brands had been using a component supplier in Malaysia, which was engaging in wage theft, recruitment-fee debt bondage, and passport confiscation.1 Despite its workers being classified as “legal employees”, the coercive conditions to which they were subjected highlights the need to look beyond legal status and focus on lived realities.
Myth No3: victims of forced labor will instantly report it
Victims of forced labor may be psychologically manipulated or economically dependent on their employers. Many are young and vulnerable, making them especially fearful of escape or retaliation. Other underreported causes – such as forced marriage or domestic servitude – can further hinder a person’s ability to report abuses.
Myth No4: forced labor is always out of sight
Not always: while invisibility is often a core characteristic of forced labor, it can also hide in plain sight. In 2024, Brazilian authorities uncovered “slavery-like conditions” at a car factory construction site in Bahia. Over 160 Chinese workers – whose passports had been withheld – were working excessive hours and living in degrading conditions.2 This was happening within a global clean-tech supply chain, which suggests that forced labor isn’t always hidden; it can be overlooked.
Myth No5: forced labor only happens in faraway places
Forced labor isn’t limited to distant countries or unfamiliar industries. It’s happening in local communities – often in ways that are harder to recognize.
In economically-advanced countries, there are instances of children being coerced into criminal activity, including drug running – whereby vulnerable persons are exploited through manipulation, threats, and financial grooming.3 This form of exploitation, known as forced criminality, is especially insidious because it blurs the line between victim and perpetrator. Children, in particular, can be easier to manipulate and lack the resources or support to escape or speak out.
Forced labor isn’t only a supply chain issue. It’s a community issue, a financial crime issue, and a human rights issue. And it’s happening closer to home than many realize.
Forced labor is a complex and evolving risk; one that requires more than vigilance. In today’s global supply chains, exploitation can be obscured by fragmented ownership, limited disclosures, and legal legitimacy. Without proactive oversight, these risks may lead to potential human rights violations, reputational harm, operational disruption, or regulatory scrutiny.
Moody’s offers data, tools, and intelligence that organizations can use to strengthen their third-party risk management programs. These resources support customers in identifying potential areas of concern and responding to emerging risks with greater confidence.
Tools to support better visibility
Organizations can apply a range of measures to their due diligence and compliance efforts, including:
Moody’s platforms provide global coverage and data-driven insights. For example, Orbis includes entity-level data on more than 600 million companies worldwide, supporting risk assessments even when disclosures are limited.
Moody’s forced labor risk assessment model is designed to help customers screen for common red flags and risk types. But screening isn’t a one-time event. Ongoing monitoring can generate dynamic alerts on material changes – supporting timely responses and informed decision-making.
Moody’s solutions help organizations gain greater visibility into their supply chains and build a unified approach to third-party risk management. The result? A smarter, data-driven strategy for supplier due diligence, know your customer (KYC), and anti-money laundering (AML) programs.
Ready to take the next step? Contact the team – we’d be more than happy to help.
[1] https://www.business-humanrights.org/en/latest-news/panasonic-sony-and-daikin-vows-probe-into-forced-labour-claim-against-malaysian-contractor/
[2] https://www.econotimes.com/BYD-Factory-in-Brazil-Faces-Investigation-as-Chinese-Workers-Found-in-Slavery-like-Conditions-1697738
[3] https://www.nationalcrimeagency.gov.uk/what-we-do/crime-threats/drug-trafficking/county-lines