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The Business Case for Ethical Recruitment and Fair Labour

Highlights from ‘Less than one Percent: Low-Cost Responsible Recruitment in Qatar’s Construction Sector’

There are many reasons for companies to engage with the fair labour. Beyond respect for fundamental human rights, there are legal, reputational, and financial incentives for doing so. This article will explore some of the financial benefits of pursuing ethical recruitment and fair labour principles.

New York University Stern Center for Business and Human Rights (NYU Stern) has recently published a study entitled ‘Less than one Percent: Low-Cost Responsible Recruitment in Qatar’s Construction Sector’. It concludes that, not only is the cost of ethical recruitment nominal to overall project cost, it can actually be more cost-effective for companies to practice responsible recruitment.

The study, published in April 2019, was based on the analysis of QDVC, a contracting and construction company that undertook a responsible recruitment drive for work in Qatar in 2015-2016. By analysing factors such as visa costs, permits, tests, agency fees, and length of tenure, NYU Stern found that the cost of responsible recruitment amounted to less than one percent of the overall project cost.

This finding is significant as it challenges the common perception amongst contractors that ethical recruitment adds a prohibitively high layer of cost to their operations. It shows that a shift towards a more legally and ethically compliant model does not necessarily require disruptive changes to commercial modelling.

However, it remains the case that, unless there is a ‘level playing field’ amongst contractors regarding the ringfencing of recruitment costs into bids for contracts, as well as subsequent monitoring of their labour supply chains, it will remain difficult to change the status quo ante of the ‘employee pays’ model.

The common practice of agents charging large recruitment fees (in reality, bribes) to recruits can be a result of recruitment costs not being included in contract bids. In turn, this is driven by; (i) the highly competitive nature of contract selection, where price is usually the determining factor and, (ii) the widespread market assumption that the ‘employee pays’.

As the NYU Stern report highlights, when workers are selected for their willingness to pay bribes rather than on merit, the result is often a poorly trained and motivated workforce. This has a knock-on effect on quality and productivity outcomes, which act as a drag on commercial performance for contractors.

Importantly, the study found that workers who did not have to pay bribes as part of their recruitment were more satisfied with their jobs. This led to an increase in worker retention from an average of 3.2 to 4.2 years. Longer tenure for workers can positively impact businesses by decreasing in the amount of time and resources a company needs to dedicate to hiring new workers. More experienced workers are also likely to be better trained and skilled.

Fair labour practices are directly linked to job satisfaction and increased retention. QDVC, is known to provide workers with decent conditions such as good quality housing and healthcare. As a result, 94% of the company’s employees say they would recommend the company to other workers.

While there are many reasons why ethical recruitment and fair labour practices are essential for every business, this report emphasizes that there can be significant financial incentives for companies to do so. The Fair Labour Alliance is a network thought leaders and business leaders, working together to help implement practical and innovative solutions to challenges found within labour supply chains.

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