This page presents an introduction to and analysis of the dilemma. It does so through the integration of real-world scenarios and case studies, examination of emerging economy contexts and exploration of the specific business risks posed by the dilemma. It also suggests a range of actions that responsible companies can take in order to manage and mitigate those risks.
"How does a company respect the right of workers to an adequate standard of living when operating in or sourcing from areas where there is limited access to adequate housing including related access to clean water, sanitation and other public amenities, and where the responsibility for and cost of addressing these wider requirements are beyond the practical scope of the business and are the responsibility of other actors like government partners or suppliers?"
Governments have an obligation to protect human rights. This includes taking progressive steps towards the achievement of all aspects of the right to adequate housing.1 A company is expected to respect the right to adequate housing by ensuring that their operations do not impact on this right (e.g. through pollution and other environmental impacts, in land transactions, etc.). Where a company provides housing to its workers, it must ensure that it is affordable, culturally appropriate and conforms to or exceeds local good practice.2
Given that a company has the potential to have a more direct impact on this right when directly providing housing to its workforce, there is the potential for the lines of state and business responsibility to blur.
For example, does a company have a duty to provide workers with adequate housing (in the form of company-provided accommodation) when setting up operations in remote areas that lack infrastructural development, or is this a state responsibility? This question becomes more pertinent when a company is operating in a country where the government has a reduced capacity to realise the right, certainly in the time scale of the business operations.
Companies might be uncertain about adequate housing requirements in terms of expense, size and quality considerations. The associated risk is that business partners or suppliers might not consider it their responsibility to adhere to international housing standards.
US toy company Mattel (with brands including Fisher Price, Barbie and Polly Pocket) operates a factory, Mabamex, in an export-processing zone near Tijuana, Mexico. Neighbouring the factory, many of the workers' homes are reported to have been made of scrap metal and lack running water.
According to Alfredo Hualde, director of research institute El Colegio de la Frontera Norte, although Mattel's factory is one of the best in Tijuana with respect to working conditions, the company would need to double workers' wages for them to be able to afford basic amenities, including sanitary drinking water. Audits found that workers were already paid above the minimum and prevailing wage.3
This case study highlights the challenge in defining the company responsibility with respect to worker housing, as well as the complex nature of due diligence in this respect i.e. should a company be expected to assess the housing needs of its workforce when operating in an established population centre?
In July 2008, an investigation4 by Australian television station Channel 7 alleged the exploitation of around 1,200 migrant workers at Hytex, an apparel factory in Kuala Lumpur, Malaysia. The factory, reportedly the largest in Asia, makes t-shirts for major apparel companies such as Nike.
According to the report, migrants from Bangladesh, China, Indonesia, Nepal, Vietnam and Myanmar were living in dormitories with overcrowded sleeping quarters (with around 26 workers per bedroom), unhygienic toilet facilities and poor kitchen sanitation. Nike investigations confirmed that the workers' temporary living conditions were unacceptable.
This case study elucidates the reputational risks embedded in the dilemma, as well as the due diligence challenges associated with auditing and monitoring an extensive supply chain, including with respect to worker housing.
In a November 2009 report, "Wal-Mart Standards Fail, Workers Suffer, Investigation Shows Five Suppliers Fail to Meet Basic Standards," NGO China Labour Watch (CLW) reported that living conditions at five of Wal-Mart's Chinese suppliers it visited were "uniformly poor." CLW alleged that supplier Dongguan Dashing Decoration Ltd, for example, provided "exceptionally poor" dormitories for its workforce. The facility lacked running water and the hygiene and sanitation standards in the canteen were also reported to be poor.
This highlights the risks associated with procuring from areas where company-provided accommodation is common (e.g. due to the significant numbers of migrant workers), yet national standards and enforcement are not necessarily as stringent as international law requires.
Types of worker accommodation range from temporary exploration and construction camps to permanent dormitories (see "Types of worker accommodation" in the background to the dilemma section). A company will generally offer housing to employees and their families where the number or type of workers required for specific business operations cannot be sourced from or accommodated within local communities. As a result, company-provided housing is often associated with the importation of an additional (often migrant) workforce into an area.5
Typical scenarios might include the following:
Responsible companies are most likely to encounter this issue among their business or supply chain partners (e.g. see the Nike example above, which demonstrates the due diligence challenges associated with auditing and monitoring an extensive supply chain and the associated risks of complicity in abuses of the right to adequate housing). This is particularly the case if it has limited monitoring ability over an extensive and complex supply chain.
The potential challenges associated with employer-provided housing include:
Examples of scenarios companies might face when operating in emerging economies include:
India: According to the 2001 government census, 82 million of India's total urban population of 285 million live in slums and other low income informal settlements. This statistic indicates that about 30% of the country's urban population has little or no access to adequate housing and basic amenities. The situation is worse in rural areas. The census also found that an estimated 50% of India's population lived in conditions of extreme deprivation. Those living in slums often lack durable housing, sufficient living area, access to improved water and sanitation, and secure tenure. The survey also found that there were 1,164,877 homeless persons in rural areas, and 778,599 in urban areas (around 100,000 homeless persons are found in Delhi alone).
Indonesia: The Jakarta Legal Aid Institute notes that in 2009 human rights infringements, including lack of access to clean water and adequate housing, were frequently reported in Jakarta. Moreover, in 2008 there were 50 reports of land disputes that impacted 1,800 landlords. The Institute reported 21 complaints related to housing as a result of forced evictions by the city’s government, highlighting problems of security of tenure among the urban poor.
Russia: There are reported concerns about migrant workers’ access to adequate living standards such as decent housing. Many live in makeshift housing provided by employers, such as containers or garages, which do not meet health and safety regulations.
In January 2009, for example, seven Tajik construction workers were killed in Moscow when a fire broke out in the underground parking garage used for illegal housing purposes. Workers revealed that more than 100 people were residing in the garage, which was situated under their employer’s building site.
South Africa: In its World Report 2009, Human Rights Watch (HRW) reports low wages and a lack of basic services and educational opportunities for farm workers and their dependents. Farm owners continued to evict workers legally and illegally. HRW notes that more than 14% of South Africans continue to live in inadequate housing, while over 20% do not have access to basic services.
In a February 2009 report, Sour Grapes, NGO War on Want reported that workers in the wine industry commonly receive low wages and lack other benefits such as housing.
Viet Nam: Increasing internal migration from rural to urban areas has largely resulted from high levels of unemployment in the rural sector and the promise of a higher wage in urban jobs.
According to the Friedrich-Ebert-Stiftung research institution, however, internal migrants lack formal rights to live in cities due to a household registration system. Migrant workers may therefore face higher housing, water and electricity costs as well as higher costs for medical treatment and education.
Infringement of the right to adequate housing carries a number of risks including:
Infringement of the right of employees to adequate housing can result in adverse publicity, including through sustained or high-impact NGO and trade union campaigns, local activism or negative publicity by journalists (see the Nike example above). The poignant and tangible nature of substandard housing can be a compelling tool for activists when conveyed as a symbol of the treatment of the work force in general terms. These sorts of press reports have the potential to tarnish a company's reputation, which can result in reduced sales and loss of market share.
For example, a July 2008 report, The Heavy Load,9 published by the Liberian NGO Save My Future Foundation (SAMFU - supported by the International Labor Rights Forum), alleged that rubber company Bridgestone/Firestone houses plantation workers in accommodation unchanged since it was built in 1930. The report alleged that the houses mainly consisted of a single room that lacks electricity, running water, indoor kitchens, toilets, living rooms and adequate roofing. Many are reported to leak when it rains.
SAMFU alleged that new accommodation built by the company to house some employees also lacked similar facilities. In the plantations, clean water is reported to be scarce, with an average of two hand pumps shared between 500 persons. Similar allegations were made about the same employee housing in TV reports by al-Jazeera journalists.10
In many cases there will be relevant local legislation protecting housing rights, and companies may face legal action and considerable financial and/or other impacts, including on the use of management time and resources, if they breach such laws. The consequences of legal action can include legal costs and substantial damage payments, as well as civil and criminal sanctions (for example where poor housing results in injury or death). Whether a legal case is successful or not, it can also result in the use of valuable management time and reputational damage for the company.
In September 2009, for example, Israel's National Labour Court rejected an appeal by the Nir Am Cohen Vegetables cooperative and its directors. The directors had been convicted for illegal employment of migrant workers under unsuitable working conditions and fined 1.46 million shekels (US$380,000). Accommodation provided to the migrant workers was reported by Israeli newspapers11 to consist of cardboard and wooden platforms covered in plastic, without a fixed structure, beds or bedding. No kitchen facilities, sanitation or lighting were provided.
A lack of adequate housing can lead to deterioration in the health of workers. For example, overcrowding and limited access to clean water and sanitation facilities can increase the risk of exposure to diseases, which is likely to result in heightened absenteeism and/or lower productivity. In November 2009, for example, it was reported by the Detroit News, in an article entitled "H1N1 Outbreak hits migrants,"12 that 216 farm workers at 10 labour camps in Michigan, US, became sick with the H1N1 virus. Overcrowding of housing facilities is said to have contributed to the outbreak.
The provision of inadequate or excessively-priced worker housing also has the potential to undermine employee motivation and may induce poor worker/management relations. Acrimony in the workplace may result in reduced productivity, supply chain disruption (e.g. as a result of protests and strikes over living and working conditions), and a diminished ability to recruit and retain capable workers.
Compliance with relative standards can be achieved by carrying out human rights due diligence actions,13 including through the development of a company housing policy that aligns with international housing standards (as outlined in ILO Workers' Housing Recommendation (No. 115),14 General Comment Four15 of the International Covenant on Economic Social and Cultural Rights and the ILO Helpdesk's Factsheet No. 6: Workers' Housing).16
While the ILO encourages employers to help workers find independent accommodation, certain circumstances may require an employer to provide housing to its workers (e.g. when operating far from normal population centres). Employers are expected to provide accommodation in a manner that is consistent with the right to adequate housing, including accommodation that meets national health and safety standards.
A company housing policy can be augmented by regular site visits, impact assessments and a fully-operational grievance mechanism. These procedures should be geared towards ensuring compliance with company policies, as well as international and national housing standards.
Specific actions for responsible business might include:17
If a company or its suppliers frequently provide worker housing, it might consider developing and implementing a company-wide policy that addresses the right to adequate housing. When drafting a policy and plans of action, a company might contemplate engaging with UN and other experts on the right to housing.
The policy could emphasise commitments to:
Company housing standards could include guidelines on:
Human rights and housing policies should ideally be supported by a full suite of procedures, including in relation to management, monitoring and reporting. A company might, for example, identify key performance indicators against which the implementation of the policy can be measured, including in relation to the upkeep, improvement and modernisation of worker housing (if required).
Similarly, a company might wish to ensure that each housing facility has a written and comprehensive management plan that is consistent with company policy. This strategy could be overseen by a full-time accommodation manager at each accommodation site. If accommodation is run and managed by a contractor, a company could include adherence to the management plan as a part of the contract and integrate it into supplier codes of conduct.
If a company constructs new worker accommodation, it is advisable that its initial assessment20 includes consideration of the impact of construction (e.g. on local services, community cohesion and safety). Any assessment could be benchmarked against company policies, as well as the local and national standards (building construction, health and safety, water and sanitation etc.) at a minimum. The aim could be to develop appropriate mitigation measures to address any adverse impacts identified (e.g. company responses on health and safety, security, living conditions, grievance mechanisms etc.).
In assessing company impacts on the right to an adequate standard of living, even if a company is not a client of the International Finance Corporation (IFC), it could choose to follow the Guidance on Workers' Accommodation,21 developed by the IFC and the European Bank for Reconstruction and Development (EBRD). The Guidance includes a Checklist on Workers' Accommodation which provides assessment questions on, for example:
In order to ensure compliance with company policies and procedures, a company could consider setting benchmarks against which to assess the performance of the accommodation manager/contractor. Assessments can be made through regular inspections and monitoring, the results of which should ideally be recorded and made available for review. Third-party assessments might be considered where, for example, internal assessments have previously failed, resulting in negative publicity.
It is advisable that benchmarks meet or exceed the national or state regulations on housing, fire safety regulations etc. Where such standards are known to be lower than international standards, a company should strive to meet the international standard where possible. Site visits could be conducted to ensure that company-provided accommodation is clean, adequate, affordable, culturally appropriate, decently habitable and in a good state of repair.
Benchmarks might include:
In countries where the company has suppliers and business partners, but not an actual presence, or where conditions are thought to be particularly poor, it may consider hiring compliance specialists to oversee and improve housing conditions.
For a company to responsibly address the potential risks associated with the provision of worker accommodation, a company might require business partners, suppliers and contractors to comply with company human rights and housing policies as part of contractual or supplier obligations.
It might be advisable to set up appropriate reporting and monitoring mechanisms to ensure those who supply worker accommodation comply with company performance requirements. This process includes internal and independent site reviews assessed against pre-defined benchmarks based on the company housing policy, which are also in-line with international and national standards.
An additional measure to ensure compliance among business partners, including governments, joint venture partners and suppliers, could be to highlight the importance of the right to housing, of ILO Recommendation on Workers' Housing (No. 115),23 and their responsibilities with regards to their worker accommodation. Enhanced awareness can be accomplished through company-provided training based on its own policy and other best practice guidance. Where appropriate, companies could encourage business partners, suppliers and contractors to develop their own policies.
Where possible, a company should try to avoid charging fees for accommodation, food and transport, particularly where workers are provided with no alternative but to live in company-provided accommodation. Where the avoidance of imposing fees for rent, food and other services is unfeasible, a company could strive to ensure that fees are fair (e.g. equivalent to or less than the local market value), transparent and that workers are notified of them in advance (preferably during the recruitment process). Where possible, fees covering utilities should be set at a fixed rate. Written confirmation of fees charged and paid should also be provided to the worker.
Accommodation should not be used by employers as a sole means of payment (or for speculative profit), but where accommodation is considered part of an employee's wages a responsible company might ensure that housing arrangements are included in the employment contract.
International standards state that workers in company housing should have security of tenure, including through clearly stated and fair contract terms. When a worker's contract of employment is terminated, for example, the worker should be entitled to a reasonable period of time to vacate the premises, in accordance with national law and custom.
In order to provide an opportunity for workers to voice concerns over their accommodation, a company should develop confidential and transparent grievance mechanisms (such as a whistle blowing hotline) through which employees can raise concerns over company-provided accommodation.
Grievance mechanisms should provide recourse to remedy for workers who have been housed inadequately by the company or one of its suppliers or contractors. In order to increase the effectiveness of grievance mechanisms as a means to identify and remedy problems before they escalate, a company should ensure that the process is available and communicated to all workers in the workplace, in company-provided accommodation and through other company communications channels such as the company intranet/wiki (including in multiple languages where necessary). Companies might also consider encouraging suppliers to implement similar procedures within their own operations.
The International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to "an adequate standard of living for himself and his family," including "adequate housing" - as does the Universal Declaration of Human Rights.24 Moreover, the right to adequate housing encompasses the provision of basic shelter and the right to live in security, dignity and peace.25 This includes not only the physical requirements for housing, but also a range of specific freedoms such as freedom from forced eviction, arbitrary interference, or restrictions on the right to choose where to live.
In addition to these negative freedoms, the right to adequate housing entails positive entitlements such as security of tenure, property restitution and participation in decision-making related to housing concerns.26
General Comment Four27 of the ICESCR defines the various elements of the right to adequate housing as:
According to the International Labour Organization's (ILO) Workers' Housing Recommendation (No. 115) (1961): "It is generally not desirable that employers should provide housing for their workers directly."29 Employers should use alternatives where possible. The ILO Guidelines nonetheless recognise that there are exceptional circumstances in which an employer may need to provide accommodation – for example where a facility is far from population centres or the nature of the employment requires that the worker should be available at short notice. In such cases, it notes that:
The ILO recommends that worker housing standards, which provide a good guideline for companies, address the following:
| Category | Subcategory/examples | Common characteristics | Sectors covered | Key issues |
| Rural workers' accommodation | Logging camp Off-farm accommodation | Permanent or seasonal Remote | Forestry Agriculture | Worker access Monitoring difficulties |
| Plantation housing | Worker village Off-farm accommodation | Permanent and long-term Families | Agriculture | Need to provide sustainable livelihoods Social Infrastructures Living conditions |
| Construction camp | Worker camp Worker village Mobile worker camp | Temporary Migrant workers Gender separation | Extractives | Relations with communities Remoteness Living standards Worker access Long shifts No rest periods |
| Mine camp | Company towns Dormitories Integrated within existing communities Commuter | Long-term Remote location Gender separation | Extractives | Relations with communities Remoteness Living standards Worker access Long shifts No rest periods |
| Factory dormitory | Permanent Urban Internal migrants | Garments/textiles Manufacturing - toys and electronics | Space Privacy Living standards Deduction of excessive rent from wages |
Other human rights that are typically associated with infringements of the right to adequate housing include:
Right to privacy (ICCPR, Article 17): Where worker accommodation is overcrowded, lacks adequate separation of the sexes or has inadequate access to sanitation facilities, employees may lack the right to privacy. This includes freedom from unreasonable interference in the enjoyment of one's private space.
Rights of minorities (ICCPR, Article 27): Members of minority groups may not be provided with accommodation that is culturally appropriate, including in relation to religious and other practices. This includes in the provision of acceptable food (e.g. kosher or halal meat) in canteens, as defined by religious custom. When designing worker housing, companies may consult with workers from minority groups to ensure it is culturally acceptable.
Right to a family life (ICESCR, Article 10): This right includes the ability of people to adopt a healthy work/life balance and to spend time with their family. This right is likely to be impacted if a company provides accommodation for a worker, but not for their family.
Right to health (ICESCR, Article 12): Poor housing conditions, including unhygienic and overcrowded accommodation with poor access to adequate sanitation and other facilities, can have a negative effect on worker health. For example, workers housed in these conditions are at particular risk of contracting communicable and air-borne diseases. A company may consider providing separate rooms for sick workers to prevent the spread of transmissible diseases.
Right to education (ICESCR, Articles 13 and 14): Where companies fail to provide housing to workers and their families within reasonable proximity to educational facilities (whether company provided or not), they risk infringing on this right. In circumstances where operations are located in remote settings, companies might consider providing internally-run educational facilities on location.
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