Child’s play no more: the implications for businesses in Africa of EU regulations affecting child labour

Regulatory moves in Brussels matter in [Congo] Brazzaville.  

The EU’s impending regulations on forced labour, which include child labour, could place some African businesses that export to the EU in a sticky mix of law, culture, and human rights. Unlike previous voluntary guidelines, some of these new regulations will establish legally binding standards for worker protection.

Despite an increase in intra-African trade and closer ties with China, the EU still remains Africa’s largest trading partner with around 33% of Africa’s exports going to the region. This includes exports from indigenous African companies as well as multinational companies operating in Africa with parent companies in the EU. 

If businesses operating in Africa are to safeguard their trade ties with the EU, they must monitor and respond to the EU’s evolving regulatory landscape with actions on the ground.  

To preserve the goal of the new standards, which is to promote decent work worldwide:

• the final regulations must be smart about the context of child labour; and 
• companies must get creative about solutions to the challenges on the ground. 

There have been various efforts by governments, NGOs, and businesses to address the issue of child labour. But progress has been limited. According to the International Labour Organisation (ILO) 160 million children – 63 million girls and 97 million boys – are still in child labour globally. 

What impact, exactly?

Over the last decade, the EU has introduced a number of regulations aimed at addressing the issues of child labour (as part of forced labour) at both the national and bloc level. 

For example, the Norway Transparency Act (2021) and the German Supply Chain Due Diligence Act (2023) have a common objective which is to mandate companies to conduct comprehensive assessments of their supply chain and ensure responsible operations by upholding human rights and promoting fair working conditions. 

But two new proposed pieces of EU regulation stand out. 

The first is the proposed Forced Labour Regulation. On 14 September 2022, the European Commission presented a proposal for the Forced Labour Regulation to prohibit products made using forced labour – including child labour – on the (EU) market. Although the proposed ban is largely seen as aimed at China because of the country’s forced labour camps in the Muslim-majority region of Xinjiang, it would have wide-reaching implications.

The regulation would apply to all companies that import or export into or out of Europe – no matter the size of the business or number of products. By default, it will also include all businesses that form any part of the supply chain of a larger company that imports into Europe. This is most likely where African businesses will be affected. 

If authorities determine that a product has been made using forced labour, in any segment of the supply chain, they have the power to prevent the product from being imported or exported into the EU market. In case the product has already entered the market, they can mandate a recall of the product, and the company is responsible for destroying the product. Non-compliance with destruction orders may lead to penalties and fines.

The second piece of EU regulation is the Corporate Sustainability Due Diligence Directive (CSDDD), which is likely to be adopted by the end of 2023. This requires companies to identify and, where necessary, prevent, end, or mitigate adverse impacts of their activities on human rights and the environment across the full value chain.

The rules will apply to European companies as well as non-EU entities with 500 employees or more with a turnover of at least 150 million euros. In addition, in high-risk sectors such as the textile and leather industries, agriculture and forestry, fisheries, and mining, the requirements of the directive must be met by organisations with 250 employees and a turnover of 40 million euros. This new EU regulation also contains a possible civil liability for managing directors of companies so those affected can sue for damages in European courts.

In addition to their own direct operation, the companies that are affected by the regulation must fulfil their corporate due diligence obligations along their supply chain by identifying actual or potential negative impacts on human rights and the environment. They must then take appropriate measures to prevent, mitigate and remedy them. Companies must also integrate due diligence into company policies and management systems, establish a procedure for complaints, and release transparent publicly available information on their due diligence efforts. This regulation goes beyond forced and child labour to also include freedom of association, equal pay, and discrimination in employment.

Both these regulations require companies to carry out due diligence to examine and assess their entire value chain. This means that African companies, no matter their size, that directly or indirectly supply European companies will face increased scrutiny and demands for assurances and data from their buyers. 

For example, a clothing brand operating in the EU may need to:

• examine the working conditions in textile mills where the cotton used for its clothes is turned into fabric, and in dyeing factories where the fabric is coloured;
• investigate the working conditions of cotton farmers from whom these textile mills and dying factories source their cotton; and
• assess the factories where the clothes are produced and the conditions under which the goods are transported. 

If any of the workers along this supply chain are subjected to forced labour or are children, the entire product could be considered tainted.

Finessing regulations – the role of EU officials

For many people, the term “child labour” conjures up an image of children working in dangerous and hazardous conditions. The International Labour Organization defines child labour as “work that deprives children of their childhood, their potential and their dignity, and that is harmful to their physical and mental development.” But not all labour by children looks like this. As a report by the Cocoa Initiative shows, “children’s working conditions and overall situation vary greatly, with different consequences”. 

In Africa, many children who work are not in an employment-type relationship with a third-party employer but instead work on family farms and in family enterprises. Some of this work can be seen as a non-hazardous way for children to support their families and learn the family trade.

It is also important to understand family reliance on child labour. It is proven that poverty and inequality force parents in many parts of the world to rely on the additional labour of their children. The African Union for example prevents work that interferes with children’s development, but unlike the UN and the International Labour Organisation (ILO), the African Union also recognises that “every child shall have responsibilities towards their family and society.” Indeed, Save the Children Kenya identifies a form of “decent child work” that does not affect children’s health, schooling or personal development and that contributes to the wellbeing of the family. 

It goes without saying that the worst forms of child labour require urgent action, but a policy position that focuses on harmful child labour rather than a blanket ban would be more productive. Instead of a complete “zero-tolerance” approach, EU policymakers should develop a contextually sensitive understanding of child labour. 

The role of multinational companies in supporting suppliers  

Multinational companies and their board members should not see this new era of EU regulation purely in terms of more auditing for suppliers and risk mitigation. Instead, they should think about what else they can do to support their suppliers to put in place appropriate and affordable ESG best practices. 

It would be self-defeating for large multinationals to place the compliance burden solely on the shoulders of suppliers on the ground, many of whom may have limited capacity – human and financial – to address the issue head-on. 

As we have mentioned above, the main causes of child labour in Africa – or any labour by children -  are poverty and inequality. This is a fact sometimes acknowledged by the big brands, but it is also a fact that stands in juxtaposition with the current climate in which buyers are driving prices down. 

A Financial Times article in March this year pointed out that when buyers drive down prices suppliers often struggle to maintain ethical standards – especially with the cost of production rising rapidly. Therefore, rather than large companies simply reacting to the problem, the issue should be addressed by examining how the business model itself contributes to the problem. 

If we look at the cocoa industry in Côte d’Ivoire and Ghana, estimates suggest that three-quarters of the 3 million cocoa farmers live below the poverty line. The precariousness of farmers’ lives is further enhanced by their vulnerability to fluctuations in the price of cocoa on the global market. In March 2021, for example, the farmgate price of cocoa in Cote d’Ivoire fell 25%. Drops in prices have huge implications for farmers – pushing their incomes even further below the poverty line and continuing the cycle of child labour.

Regrettably, it is near-impossible to completely eradicate child labour in the current cultural, economic, and social context, but the cocoa industry demonstrates that multinationals can do a lot to tackle the problem. Some of the biggest brands in the business work within the International Cocoa Initiative to implement its Child Labour Monitoring and Remediation System (CLMRS) in countries where they source their cocoa. This strategy is aimed at raising awareness about the negatives of child labour, identifying child labour risks and incidents along the supply chain, and implementing remediation and prevention activities. 

The role of African businesses and governments

Conversations such as this one about external policies and regulations often focus on the impact on African businesses rather than the proactive role African businesses and their governments can and should play. The role starts with being aware of the conception of these policies and regulations rather than when they are fully baked, so to speak.  

African governments, through the trade ministries and trade departments in their embassies, and African businesses through their trade and business associations (national and bilateral) need to try and find a way into the rooms and around the tables:

• where policy and regulatory decisions are being made in order to provide the required context and nuance to shape these policies and regulations, and 
• where companies are making decisions on what to do and how much to spend on supporting their suppliers.

We say “try” recognising that it may not always be possible. But if you don’t ask for something, you will surely never get it.

But before making any such approaches, they must come to decisions about the best way forward around their own African continental tables. As the saying goes “No one can whistle a symphony. It takes a whole orchestra to play it."

It will therefore take an African collective focus to ensure that these new regulations achieve their goal whilst taking into account the legitimate cultural and real economic needs of businesses on the continent.  

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