How counterfeit goods fuel forced labour across global supply chains

It starts with something ordinary: A phone charger bought for half the usual price at a metro station, seemingly ‘good enough’.

For many consumers, this is a small, everyday decision to save time or money. Yet that counterfeit charger may fail basic standards, damage a phone’s battery or pose a fire risk. Long before it reaches a consumer’s hands, however, it may already have caused far greater harm.

Behind many counterfeit goods lies a story rarely seen, one involving unsafe production sites, exploited workers and forced labour embedded deep within global supply chains. What looks like a harmless bargain is often part of a vast illicit trade network that fuels human suffering on a massive scale.

New evidence shows a strong statistical association between labour exploitation and the scale of illicit trade in counterfeit goods. 

Illicit trade in counterfeit and pirated goods is not a fringe issue. Counterfeit and pirated products account for an estimated USD 467 billion annually, or around 2.3% of global trade, moving through the same shipping routes, logistics hubs and online platforms as legitimate goods.

From fake medicines and food products to electronics, clothing and automotive parts, counterfeits pose serious risks, not only to consumers’ health and safety, but also to trust in markets and the integrity of global trade.

Legitimate firms experience losses in sales, brand value and returns on innovation. Governments lose tax revenues and face higher enforcement and public-health costs.

Criminals behind these operations operate outside regulatory and ethical frameworks. They avoid taxes, ignore product standards and deliberately bypass labour laws to maximise profits. 

Unlike legitimate businesses, counterfeit producers have no incentive to protect workers. Compliance with labour standards costs money—money criminal operators are unwilling to spend.

As a result, exploitative labour practices are widespread in illicit production, including child labour and forced labour, the use of vulnerable workers such as migrants and trafficked persons, unsafe working conditions, and excessively long working hours.

Recent analysis shows a clear link between labour exploitation and the scale of counterfeit trade. Put simply, where forced labour is more prevalent, counterfeit production tends to be higher.

A one-percentage-point reduction in forced labour globally (roughly 276,000 people) is associated with a decline of more than USD 35 million in the value of counterfeit trade.

Statistics can feel abstract, so let’s bring this closer to everyday life.

This translates into fewer fake goods entering markets, lower criminal profits and, most importantly, fewer workers trapped in exploitation. Even modest improvements in labour conditions can therefore deliver measurable economic and social benefits.

Reducing labour exploitation does not only protect workers, it directly undermines the business model of organised crime. 

Illicit trade and forced labour are often addressed separately, viewed either through a trade lens or a human-rights lens. In reality, they are deeply interconnected.

Countries more frequently identified as sources or transit points for counterfeit goods also tend to show higher prevalence of forced and child labour, greater informality, weaker labour rights and poorer occupational safety outcomes.

From another perspective, forced labour remains positively associated with the value of counterfeit exports even after controlling for income levels, export volumes and other structural factors.

Treating these challenges in isolation misses the bigger picture. Labour exploitation is not only a human-rights concern. It is a structural enabler of illicit trade, lowering costs, reducing resistance to criminal activity, and increasing the profitability of illicit trade. 

If counterfeit trade and forced labour are connected, policy responses must reflect this link.

Stronger operational co-operation across agencies: Customs authorities, labour inspectors and law-enforcement agencies need to work more closely together, sharing data and risk analysis.

Maximising impact with available resources: Combining seizure data with labour indicators helps target enforcement where counterfeiting and exploitation are most likely to overlap.

Strengthening responsible business conduct: Promoting due diligence, transparency and accountability in supply chains, especially in high-risk regions, helps close the gaps that criminal networks exploit. 

That cheap phone charger may seem insignificant. But multiplied across millions of purchases, consumer demand helps sustain an underground economy built on exploitation.

Progress does not need to be perfect. Improving labour standards, even incrementally, weakens counterfeit networks while protecting vulnerable workers.

When labour rights are enforced, illicit trade loses one of its strongest enablers.

Behind every product is a story. Ensuring it is not one of forced labour is a responsibility shared by policymakers, businesses, and all of us as consumers.

For more information on OECD work on illicit trade, visit: 

https://www.oecd.org/en/topics/policy-issues/illicit-trade.html