New research reveals that the majority of UK SMEs2 (61%) would be in favour of reducing the annual turnover threshold for companies to comply with the Modern Slavery Act below £36m. Currently, many UK SMEs are not covered by the Modern Slavery Act 2015 as they fall under the reporting threshold which means they are under no supply chain or reporting obligation and controls, and one in five (20%) remain unaware of the Act, five years after it was implemented.
According to insights from Alcumus, the UK’s market-leading business for providing technology-led risk management solutions for small and large businesses world-wide, the data shows that these businesses do not currently have the policies, procedures and resources in place to uncover or combat Modern Slavery in their business or supply chain, but are calling for a change and need guidance to achieve it.
- 64% of UK SMEs do not have a company policy on their approach to Modern Slavery
- Over a third (35%) of SMEs do not consider Modern Slavery an area that is important to their business
- Over half of (56%) UK SMEs do not have dedicated resources on Modern Slavery
To empower the nation’s SMEs, Alcumus has partnered with anti-slavery charity, Unseen, to provide information and guidance to businesses on how to tackle the issue head on and help raise awareness around the different forms modern slavery can take in businesses and global supply chains to bring the risks and opportunities to the attention of the UK SME community.
Gemma Archibald, Chief Operating Officer, SME at Alcumus: “SMEs are showing a desire to addressing the issue of Modern Slavery but with the lack of guidance remain exposed to the risk of having Modern Slavery in their business or supply chain. While the onus of complying with the Modern Slavery Act, and therefore reducing the turnover threshold may not be in the best interest of SMEs, Government should provide a framework to ensure SMEs are equipped with the knowledge to proactively engage with the subject. This would help raise awareness and understanding of the risks around Modern Slavery and help small and medium sized firms to free up capital and resource to allocate towards this issue, so they can be effective in their endeavours to address it.”
Andrew Wallis, CEO of anti-slavery charity Unseen, adds: “Tackling Modern Slavery in business supply chains will make a massive difference to the global picture. For years we have been working with businesses to raise awareness of, and eliminate, forced labour and other forms of modern slavery in their supply chains and operations. Our experience is that companies are very willing to address any issues but are often not sure how to do this effectively, and the Alcumus research supports that view. We are working with Alcumus to change this state of affairs and bring about a step change in SMEs approach to Modern Slavery.”
There are a number of reasons why SMEs are not engaging with the topic of Modern Slavery. The vast majority of UK SMEs do not use sub-contractors or recruit staff for seasonal work/short-term contracts (72% and 81% respectively) which is often associated with loopholes for wrongdoing. Some businesses also highlighted that other areas, such as Covid, are taking priority for businesses (4%), particularly at the moment. Most prominently, though, there is a shortfall in feeling exposed to Modern Slavery.
Andrew Wallis, continued: “Globally, people think of human trafficking and forced labour when they think of Modern Slavery. In the UK, four areas are prominent: sexual exploitation, domestic servitude, criminal exploitation, but mainly labour exploitation. The UK Government estimated in 2014 that there are between 10,000-13,000 victims at any one time. This translates into a total cost to the economy for Modern Slavery in the UK in the year ending March 2017 of between £3.3bn and £4.3bn. But that is based on their conservative estimate of 10,000-13,000 victims. The sector believes the number is currently more than 100,000 potential victims – so potentially costing the UK economy £43bn annually. Modern Slavery is an issue and it’s all around us.”
- Currently, the majority of SMEs (78%) do not provide any training for staff to support their understanding of Modern Slavery
- Four out of five (82%) UK SMEs have taken no steps in the past 12 months to tackle Modern Slavery
- Only 14% of SMEs actively use technology to monitor their compliance to Modern Slavery
The current low level of engagement means that SMEs are not always considered for supplier contracts by large enterprises3 who are under the obligation to comply with the Act and monitor their supply chain, missing out on opportunities to strengthen and grow their business.
What can be done?
Often Modern Slavery violations have a significant criminal element attached to them, however, in cases such as these, simple acts of exploitation such as workers being paid low wages, can easily be missed and side-lined. Understanding the forms Modern Slavery can take in the UK is the first step in identifying incidences of exploitation. The research finds that UK SMEs are willing to uncover potential issues and take responsibility.
- More than half SMEs (53%) state that a higher civil financial penalty would encourage them to take modern slavery more seriously
- A third (33%) UK SMEs are in favour of businesses being liable to pay compensation to Modern Slavery victims
- The majority of SMEs (74%) say Government should fine companies that are not in compliance to Modern Slavery Act
Gemma Archibald, concluded: “SMEs are calling for change to be better companies, combat Modern Slavery and open opportunities for themselves in dealing with large enterprises. In the UK SMEs make up for 99.9% (6.0 million) of all businesses and the Government should listen to their concerns and demands. This is an issue that needs addressing at its core to help companies provide better, safer workplaces and supply chains. At Alcumus, we have made it our mission to provide companies with processes and technology that can help minimise their risks and help them become safer and more sustainable. We have supported 38,000 UK SMEs already in their endeavour to become better, more sustainable companies.”