We need more ethical recruitment startups

We Need More Ethical Recruitment Startups

  • Ethical Recruitment
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    Ethical recruitment is a high priority for GFEMS, as it is for many other organizations fighting modern slavery. Ethical recruitment is a solution that offers great promise to ensure that labor migration leads to successful outcomes, and not to exploitation.

    One in four victims of forced labor is an international migrant — nearly six million people. The vast, complex system of overseas labor recruitment is a key driver of outcomes for labor migrants. Transforming these systems requires a holistic approach, of which we believe ethical recruitment can be a cornerstone.

    Within ethical recruitment, we take multiple approaches that we see as complementary. We engage at the policy level, as our partners International Organization for Migration (IOM) and Blas F. Ople Policy Center are doing in the Philippines and International Labor Organization (ILO) in Vietnam. We engage at the industry level, as IOM and Responsible Business Alliance (RBA) have done in multiple geographies with us. We even engage at the individual and community level, to change perceptions and behaviors related to ethical recruitment, which our partner ASK India is doing in Uttar Pradesh and Bihar, for example. And we lead with evidence from start to finish, conducting prevalence estimation, worker voice studies, and synthesizing our learnings across academia, private industry, non-governmental organizations, and the public sector. 

    One approach the field needs to see more of is ethical recruitment startups, be they startup agencies or other relevant businesses. Social enterprises like these have tremendous potential for impact. They may not offer the same breadth as industry-wide engagement, but they offer direct, deep impact as well as second- and third-order effects that can drive industry-wide change (e.g., driving up market prices for employers, which leads to lower worker turnover). But to realize their potential, we need more social entrepreneurs to pursue these models, and we need more funding that is the right fit for them.

    An ethical recruitment startup can be many things. It can be a recruitment agency. Running a recruitment agency may sound unglamorous to some aspiring social entrepreneurs, but it offers direct, tangible impact and simpler models that may appeal to entrepreneurs whose strength is in management and execution. They also often have low startup costs and low barriers to self-sufficiency.

    GFEMS has already had some success with the startup approach. Fair Employment Foundation (FEF) and Seefar’s TERA are great examples of ethical recruitment agency startups. They demonstrate that an ethical recruiter can be an excellent business. It is hard to even call FEF a startup anymore, now that they have one of the leading agencies in Hong Kong and have influenced the entire market. Other pioneers and precedents are cause for optimism, too. Staffhouse, an ethical recruiter since before it was a named phenomenon, is the largest agency in the Philippines. Pinkcollar, a startup in Malaysia, was profitable less than a year after launching.

    Recruitment agencies are not the only path, though. Recruitment platforms, enterprise software, migrant worker engagement tools, and other non-tech service solutions all have the potential for profitable, impactful business models that give ethical recruitment a leg up on the unethical competition. These startups will appeal more to the entrepreneurs out there who are looking for novel models or who want to apply tech skills. For example, GFEMS partner Diginex Solutions (another example of an organization that has perhaps graduated beyond the startup nomer) is developing a range of digital tools that improve the cost-effectiveness of ethical recruitment, and similar thinking could inspire other products capable of supporting a social enterprise. Sama, a migrant recruitment platform, raised over a million dollars in 2020 and has the potential to reach a scale that dwarfs even the largest of agencies.

    The concepts have been proven. The precedents to believe in these approaches exist. What we need now is more. We need more social entrepreneurs entering this space. We need ethical agencies in every country of origin and destination, forming a global network of end-to-end ethical recruitment. We need an ecosystem of non-agency players who are equipping the agencies, if not offering fundamentally different models.

    Equally important, we need more funders fueling these social entrepreneurs. Prevailing modes of funding are not designed for these types of ventures.

    Commercially driven investors, including impact investors, are looking for the hockey-stick growth trajectory and exit timelines that do not fit the financial life cycle of an ethical recruitment agency, despite otherwise attractive economics. That could change if any of the current pioneers have breakthroughs that ignite investor attention, but we cannot wait for breakthroughs. We have to make them happen.

    More frustrating, ethical recruitment startups are too unconventional or too business-like for many grant-based funding mechanisms. They are generally set up to be run like businesses, not like typical NGOs. Grant-based funders need to overcome technical hangups, like trying to fit continuous business processes into project-based intervention frameworks, and recognize the potential for large-scale, sustainable, and deep impact at a low cost. Even foundations of modest means could kickstart an ethical recruitment agency that has immediate benefits for workers and long-term impact on a larger scale.

    Worth noting is that FEF, with the support of some forward-looking supporters, has launched what could be an elegant impact-investing solution that combines equity and debt to better match the needs of investors and ethical recruitment agency startups. Put this initiative in the ‘one to watch’ category (or the ‘one to support now’ category if you are a funder).

    The bottom line, though, is that the anti-modern slavery field should be motivating more social entrepreneurs to pursue ethical recruitment ventures and should be supporting them with appropriate financing to be successful. They won’t necessarily all be successful. And they won’t necessarily be enough to solve all the problems of labor migration. But they offer enormous potential impact that the field has under-explored for far too long.

    GFEMS looks forward to providing updates on this project and sharing our learnings with the anti-trafficking community. For updates on this project and others like it, subscribe to our newsletter, or follow us on Twitter and LinkedIn

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