Counterfeit trade intensity has been consistently higher in economies marked by forced labour, weak wage protections and widespread informality, according to new cross-country evidence. Correlation analysis has linked higher counterfeit export activity with child labour, unsafe working conditions and weaker labour rights. Econometric results have shown these associations persist even after accounting for income levels, trade exposure and institutional quality.
- Countries more frequently identified as sources of counterfeit goods tend to report higher prevalence of forced labour, child labour, informal employment and fatal occupational injuries across multiple indicators.
- Forced labour prevalence and lower minimum wages remain statistically significant predictors of counterfeit trade intensity after controlling for income, trade openness and governance quality.
- The findings are set out in From Fakes to Forced Labour: Evidence of Correlation Between Illicit Trade in Counterfeits and Labour Exploitation, published recently by the Organisation for Economic Cooperation and Development (OECD) and the European Union Intellectual Property Office (EUIPO).
THE STUDY: The report has set out to test whether illicit trade in counterfeits has correlated with labour exploitation across economies. It has combined OECD–EUIPO counterfeiting proxies drawn from global customs seizure datasets with labour-market indicators from ILOSTAT and controls from World Bank and UN Comtrade sources. The econometric work has used cross-country OLS regressions, largely based on the latest available year of data, while noting that the evidence is primarily correlational and does not claim direct causality.
- Three counterfeiting proxies are used: seizure counts by provenance economy, the GTRIC-e score and OECD estimates of counterfeit export values.
- Labour indicators cover forced labour, child labour, hazardous child labour and fatal occupational injuries, alongside measures of informality and institutional strength.
- The modelling applies OLS regressions with robustness checks, then reports two selected models after diagnostic screening.
WHAT THE DATA SHOWS: The analysis shows a consistent positive association between counterfeit trade indicators and forced labour prevalence across economies. Economies identified more frequently as sources of counterfeit goods have reported higher prevalence of forced labour across comparative indicators. This pattern appears using both estimated values of counterfeit exports and seizure-based measures, suggesting the link is not driven by a single metric.
- Higher estimated values of counterfeit exports are associated with higher reported forced labour prevalence across reporting economies.
- Similar relationships emerge when forced labour indicators are compared with seizure-based measures identifying economies of provenance.
- The findings indicate that forced labour and counterfeiting tend to coexist where worker vulnerability is high and protections are weak.
WHAT THE DATA SHOWS: Exposure to illicit trade has also coincided with higher levels of hazardous child labour and poorer workplace safety outcomes. Economies more frequently identified in customs seizure records as sources of counterfeit goods tend to report higher shares of children engaged in dangerous work. The same countries also show elevated rates of fatal occupational injuries, pointing to riskier production environments.
- A positive correlation is observed between seizure-based counterfeiting indicators and hazardous child labour prevalence.
- Higher counterfeit activity is linked with increased rates of fatal occupational injuries per 100,000 workers.
- Labour safety risks appear more closely associated with seizure volumes than with the monetary value of counterfeit goods.
READING BETWEEN THE LINES: Econometric analysis reinforces the correlations by controlling for income levels, trade exposure and institutional quality. Forced labour prevalence and weaker wage protection remain statistically significant predictors of counterfeit trade intensity across specifications. These relationships hold even after accounting for broader development differences, indicating that labour exploitation and counterfeiting tend to co-exist within similar structural conditions.
- Forced labour prevalence is positively and significantly associated with seizure-based counterfeit measures.
- Lower statutory minimum wages, expressed as an inverse indicator, emerge as a significant predictor of higher counterfeit activity.
- GDP per capita and rule-of-law controls reduce but do not eliminate labour-related effects.
WHAT’S AT STAKE: Addressing counterfeiting solely through intellectual property enforcement or border controls has limits. The report discusses policy tools such as forced-labour import bans, due-diligence–based market restrictions and coordinated customs–labour enforcement as relevant contextual responses to labour exploitation in counterfeit supply chains.
- Avoidance of wages, workplace safety investment and regulatory compliance lowers operating costs for illicit producers and strengthens the economic incentives underpinning counterfeit manufacturing networks.
- Weak labour governance and inspection capacity constrain detection and deterrence.
- Criminal networks leverage vulnerable workers alongside trafficking routes to sustain supply chains.
