One of the main issues in the world today, especially in developing countries like the Philippines, is child labor. Child labor is defined by DOLE Order No. 04 as hazardous work and activities by persons under eighteen years old and work that lasts more than 40 hours, by children between 15 and 17 years old. According to the International Labor Organization, up to 160 million children worldwide are working instead of going to school.

Aside from missing the chance to get an education, many are exposed to severe health risks in the workplace. Understandably, they often have no choice but to work to put food in their stomachs. However, many companies exploit them through low wages, backbreaking work, or dangerous working conditions.

For instance, The Democratic Republic of Congo in Central Africa is a major global supplier of cobalt, a critical component of lithium-ion batteries powering smartphones, computers, and electric vehicles. There, children as young as seven work in hazardous conditions, digging for cobalt in tunnels prone to collapse, without protective gear, and wages barely enough to survive on. The situation in the Philippines is not much different, with many children 17 and below working in unlicensed gold mines and other dangerous workplaces.

The primary challenge in eradicating child labor—aside from law enforcers turning a blind eye to the problem—is the lack of transparency in the supply chain. Many multinational companies claim to have zero tolerance for child labor, but tracking down the exact origins and labor practices from raw material production to final product often results in a gap between company policies and reality.

Even socially conscious companies can find it difficult to guarantee that the products are free from unethical practices. Traditional methods such as audits and certifications have only been partially successful since many suppliers are able to take advantage of loopholes in legal regulations.

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Blockchain and the Problem of Child Labor?

Basically, a blockchain is a digital ledger that records every transaction or movement of a product within the supply chain. Each item, whether mined, harvested, or manufactured, can be tagged with a digital identifier at the point of origin. This identifier could contain data such as the date, location, type of labor used, and other relevant details. As the item moves along the supply chain from raw material to finished product—every transfer is recorded on this blockchain.

But is that enough to stop unfair practices in the workplace?

Here are some options:

1. Smart contracts could be set up to release payments to suppliers only after independent auditors verify that no child labor was used in the production process. Every stage, including shipping, processing, and repackaging, will require digitally-signed proof that no child labor was used.

2. Certified child-labor free workplaces could put a digital stamp of authenticity on the products that leave their facility. Only products with these digitally verified identifiers will be considered to be of ethical origin. Through the blockchain, these items can be traced through the different stages of the supply chain until they make it to the hands of end users. Consumers can rest assured that the products they buy are truly fairly sourced and produced.

3. Products can have a QR code that consumers can scan to display blockchain ledger entries to confirm whether or not it meets ethical standards. With that information, they can decide whether or not to keep supporting the product. For example, after tracing the product lifecycle of a chocolate bar from farm to market, if the product is proven to have originated from a farm that does not adhere to fair labor practices, the consumer can choose to purchase another bar of chocolate instead.

This level of transparency has the potential to enhance customer loyalty to a brand truly committed to ethical practices.

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Case Study: JICA Uses Blockchain Technology to Stop Child Labor in Chocolate Manufacturing

An example of blockchain technology being put to good use is the initiative by the Japan International Cooperation Agency (JICA) to track down child labor. Child labor and slavery are widespread in cocoa farms in Western Africa.

In Côte d'Ivoire, a country that produces 43% of the world's cocoa, JICA implemented a blockchain project tracking the attendance of children at school rather than in the fields. Local farmers were encouraged to ensure their children attend school, verified through blockchain records, in exchange for better market prices for their cocoa.

Project partners included teachers and school staff, members of farmer organizations, and an NGO. School teachers entered the students’ attendance records into a database while representatives from farmer organizations entered information about whether or not child labor was used on their farms. The databases were then compared, and if entries did not match, it would be easy to pinpoint potential cases of child labor going on. Cocoa beans produced by farmers’ groups with verified low rates of child labor (as attested by school attendance and further follow-ups by the monitoring team) could command a higher price. This incentivized the farms to shift away from child labor practices to maximize their profits.

At least three cases of child labor were uncovered during the implementation of the program.

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Future Challenges

Although blockchain technology offers promising solutions to problems, we still have a long way to go before it becomes implemented on a scale large enough to leave an impact. The technology requires significant infrastructure and technical know-how, both of which are quite lacking in developing regions where child labor is most prevalent. Even with these in place, limited access to technology and internet connectivity due to financial reasons can hinder the effectiveness of digital solutions. Besides this, the initial setup and ongoing maintenance of a blockchain system can be costly, especially for small to medium enterprises.

Addressing these challenges will require collaboration between governments, NGOs, industry leaders, and technology providers. Solutions may include public-private partnerships to fund blockchain implementations, training programs to raise digital literacy, and regulatory incentives for companies that adopt transparent supply chain practices.

Let's not forget that the fight against child labor is a complex one. Although blockchain technology offers us hope for greater transparency, accountability, and more incentives to enforce labor standards, any progress in the area ultimately requires systemic changes that prioritize ethical practices over maximizing profit. Any technological solutions need to be accompanied by global cooperation and a real commitment to human rights to truly make a difference.