OECD-EUIPO study reveals strong links between counterfeiting and labour exploitation

Counterfeiting has long plagued the fashion industry, but a new joint study by the Organisation for Economic Co-operation and Development (OECD) and the European Union Intellectual Property Office (EUIPO) reveals a darker reality: the illicit trade in fakes is inextricably linked to severe labour exploitation. Titled “From Fakes to Forced Labour: Evidence of Correlation Between Illicit Trade in Counterfeits and Labour Exploitation,” the report was published on January 20, 2026. It demonstrates that counterfeit production is not merely an intellectual property (IP) issue, but a human rights crisis involving forced labour, child exploitation and hazardous working conditions.

Structural link, not a coincidence

The research indicates that countries identified as primary sources for counterfeit goods typically suffer from weak governance and insufficient labour protections. According to the EUIPO, environments with limited regulatory enforcement and high social vulnerability allow both IP theft and worker abuse to thrive.

The study used global customs seizure data alongside International Labour Organization (ILO) and World Bank statistics to establish several key findings:

Exploitation as a business model: Criminal operators use forced and informal labour to slash production costs and mitigate risks, making illicit trade more profitable.

Predictive indicators: Forced labour is one of the most robust predictors of the counterfeit export intensity of a country.

Systemic fragility: High levels of informal employment and low trade union density create an ecosystem where illegal manufacturing flourishes.

Evidence from supply chain

Quantitative analysis confirms harrowing reports from enforcement agencies. This is not a matter of isolated incidents but a structural norm within illicit supply chains, including:

Clandestine factories: Facilities operating entirely outside legal frameworks without contracts.

Captive labour: Warehouses where migrant workers are locked in overnight.

Child labour: Small workshops where children are used to assemble footwear and textiles.

Econometric models show that even when controlling for income levels, poverty and trade openness, the correlation between worker exploitation and counterfeit production remains statistically significant. In short, where the rule of law is eroded, illicit trade fills the vacuum.

Integrated policy responses

The report argues that traditional enforcement—focusing solely on border controls—is insufficient. To dismantle criminal networks, policymakers must address the labour dynamics that make counterfeiting profitable.

Strategic recommendations:

Cross-agency intelligence: Customs authorities should integrate labour-risk indicators, such as regional forced labour prevalence, into their risk-profiling systems. This helps better target high-risk shipments in textiles, footwear and electronics.

Unified enforcement: Labour inspections and trade authorities must operate in tandem. Effective inspections that detect both IP infringement and forced labour represent the first line of defence.

Due diligence and certification: Leveraging OECD Due Diligence Guidance and “Clean” Trade Zone certifications can help businesses map and mitigate risks within their supply chains.

Social protection as prevention: Strengthening social policies and collective bargaining is not just a moral goal—it is a preventive tool that removes the cost advantage enjoyed by criminal networks.

Conclusion

Ending forced labour is both a moral imperative and an economic necessity. By treating commercial integrity and decent work as a single policy agenda, global markets can begin to reward legal compliance rather than criminal exploitation.