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GCM Guiding Principles*

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Sustainable Development Goals (SDGs)

Dates

2021 - Present

Geographic scope

Geographic Scope:

Global

Summary

Designed to bridge the gap between commitment and implementation of the Employer Pays Principle (EPP), Verité’s Recruitment Cost Calculator (RCC) is a web-based tool intended to help estimate the amount an employer should expect to pay when hiring migrant workers. The Calculator provides accurate, up-to-date, sector- and country-specific data on Recruitment Fees and Related Costs, helping employers gain visibility of their labor supply chain and factor the cost of ethical recruitment into their business model. The RCC is a purpose-built tool that can aid businesses build mechanisms to cover a more accurate cost of recruiting workers into contracts with buyers, clients, suppliers, and labor providers. After the user inputs basic demographic information about the workers an employer is seeking to hire, the Calculator provides itemized lists that detail fees and costs with associated legitimate market values. The items and estimated ranges can then be used dynamically by employers to verify they are covering all costs and fees for which the employer is responsible and confirm they are paying reasonable market rates for each. By confirming they are covering all costs and fees associated with recruitment as well as confirming the adequacy of the amounts being paid, employers ensure no employment costs are passed on to the workers themselves. This way, the Calculator becomes a key best practices-aligned ethical recruitment tool supporting labor supply chain due diligence practice and increasing the capacities, at the employer level, of implementing principles and standards that guarantee decent work. When used by labor and recruitment agents, the Calculator is useful to show clients (employers) realistic market rates and legitimate professional agent service fees. It helps the agent provide visibility into costs in the country of origin (“first mile” expenses) incurred by agents or other labor intermediaries at the point of pooling and selecting applicants which is commonly overlooked by clients of recruitment service providers. The RCC is also thought for buyers and other downstream stakeholders as a tool to implement the Employer Pays Principle and other ethical recruitment practices to meet industry and international standards as well as to exercise Human Rights Due Diligence and cascade worker protections and commercial obligations to lower tiers of the supply chain.

Organizations

Main Implementing Organization(s)

Verité

Benefit and Impact

The RCC is proving to shift business norms around ethical recruitment at the employer and labor recruiter level. The tool is designed in response to employer feedback that they lack reliable data on recruitment fees and costs to effectively implement EPP and engage with labor recruiters to require ethical recruitment practices in commercially-enforceable service agreements. Up until the launch of the RCC, employers were faced with the challenge of quantifying and incorporating recruitment fees and related costs into their operating costs and labor recruiter agreements-many for the first time with very little support or guidance. Best-case scenario, the employer is aware of administrative costs paid on official paper-work and legally required documents and is able to pay for this directly to a corresponding government agency or through a recruitment agent. However, in most cases, the employer is unable to verify if they are effectively covering other costs since they lack a reference to confirm whether that is a legitimate cost and if the amount is within the market rates. This has created a significant barrier for employers to ensure they cover all costs of recruitment. The RCC is effectively removing this barrier to implementing EPP and other ethical recruitment practices in the sectors and corridors that it covers since it guarantees reference data for employers that is later used as part of labor recruiter contracting, ensuring clear enumeration of the fees that should not be charged to workers or that the employer is committed to paying. The RCC is also expanding the possibility for uptake of EPP and other ethical recruitment policies beyond the influence of brand or buyer-driven sustainability programming, by promoting the institutionalization of the EPP and associated worker protections as a business norms at the employer level.

Key Lessons

Project is still on early implementation phases. Verité will start gathering key lessons learned by end of 2024.

Recommendations(if the practice is to be replicated)

Recruitment cost estimation requires a whole of society approach methodology that takes into consideration multiple data sources reflective of the complexity of the recruitment industry. While a lot of attempts have been made to provide estimations on recruitment costs, this do not reflect accurately and in an easy-to-use way all the information. Other attempts also focus exclusively in one type of cost (usually easy to account costs such as legally required documents) and sometimes provide other associated costs such as transportation without a proper examination of the recruitment process and worker mobilization dynamics that takes place in the communities and countries of origin. All attempts should also ensure to follow the International Labor Organization's (ILO) Definition of Recruitment Fees and Related Costs (2016) to guarantee all legitimate costs are presented to a user.

Innovation

For the first time since the adoption of the Employer Pays Principle and subsequent definition of Recruitment Fees and Related Costs (RFRC) by the ILO in 2016, an organization is using technology to transparently and accurately provide recruitment cost data in the labor market. Drawing from stakeholder interviews and research, the RCC organizes RFRC according to the employer industry of a selected migration corridor, making it available for all public in a dynamic way.
Greater transparency and accuracy of recruitment cost data for specific corridors and specific industries enables employers to operationalize the Employer Pays Model. Having this information publicly available creates pressure for companies to pay the full cost of recruiting their workers. In addition, employers must legally cover vary according to each country’s legislation, which can create confusion and hinder EPM implementation. The RCC provides detailed information about which types of recruitment fees and related costs are legally required to be paid by employers under national laws as well as mandatory human rights due diligence legislation.
More and more employers are responding to international pressure to eliminate worker-paid recruitment costs with programs to reimburse recruitment costs to workers. Reimbursement serves as a practical remedy to Worker-Pays recruitment models, and can be a crucial step towards operationalizing an Employer Pays Model. The accuracy of amounts reimbursed to workers in such cases can be compared against the RCC calculations. With this tool, companies can better evaluate whether current labor providers are engaged in good practices or, if they are directly overseeing recruitment, if adequate resources are being allocated to cover recruitment costs. This way they ensure workers are not covering the cost of their own recruitment. Employers can use the RCC data to compare against the amount paid for EPM recruitment; with greater access to accurate recruitment cost information, employers and recruiters in a labor supply chain are held to greater accountability. Publicly available recruitment cost information can capture how costs are inflated by labor intermediaries and can stimulate recruitment cost charges based on actual market-rates.
The RCC is leading to the standardization of Recruitment Fees and Related Costs in specific migration corridors by mapping the recruitment industry and providing visibility into the myriad costs incurred in the recruitment of Foreign Contract Workers.

Additional Resources

Information sheet: Recruitment Cost Calculator

Recruitment Cost Calculator

Additional Images

Date submitted:

11 July 2024

Disclaimer: The content of this practice reflects the views of the implementers and does not necessarily reflect the views of the United Nations, the United Nations Network on Migration, and its members.