Informal Economy Perspectives on the Prevalence of Worst Forms of Child Labour in Bangladesh’s Leather Industry

The CLARISSA programme aims to understand the dynamics that are central to running a business in the informal economy in Bangladesh’s leather industry and explore how and why worst forms of child labour become a feature of business operations. This research paper explores the findings from semi-structured interviews with business owners operating enterprises involved in leather processing and production across three prominent neighbourhoods and business districts in and around Dhaka. A focus on the leather industry in Bangladesh is an opportunity to explore the demand side of the child labour issue in a situated way, with the intention of bringing the lived experience of business owners to pre-existing literature on poverty entrepreneurship, supply chain governance, and political economy. The paper details the risks and stressors business owners face, the relationships they have with other informal and formal enterprises in the supply chain system, and their rationale for hiring children. Business owners experience poverty and financial precarity, taking significant financial risks to sustain enterprises that are barely viable economically. Stuck in vicious operating cycles, on ‘produce now, pay later’ credit arrangements, enterprises respond by squeezing labour budgets. The need for cheap labour is amplified by price points at lower than the cost of production. To understand why child labour has been so difficult to ‘end’, an informal economy business perspective points to the economic dysfunction of complex supply chains, particularly mediated by downward financial pressures produced and reproduced by highly fragmented manufacturing processes in cost-driven markets. When poverty and precarity among informal economy business owners intersects with formal economy power, the result is business models that rely on children as cheap labour. The findings make clear the policy value of engaging business owners in the informal economy in efforts to reduce worst forms of child labour, especially given the insights they can offer about how, when, and why supply chain systems are at risk of depending on children for the provision of goods and services.