Counterfeit Trade’s Dirty Secret: Why Fake Goods Depend on Forced and Child Labour

A joint OECD–EUIPO report finds that global counterfeit trade is deeply linked to labour exploitation, with fake goods thriving in countries where forced labour, child labour and weak worker protections are widespread. It concludes that protecting workers and strengthening labour governance are essential to curbing illicit trade, not just border enforcement.

Counterfeit goods are usually seen as a problem of fake logos, lost profits and weak border controls. But a new report by the Organisation for Economic Co-operation and Development (OECD) and the European Union Intellectual Property Office (EUIPO) reveals a far more troubling reality. Behind the global trade in fake products lies widespread labour exploitation, including forced labour, child labour and dangerous working conditions. Counterfeiting, the report argues, is not just a trade or intellectual-property issue. It is a labour crisis hiding in plain sight.

Each year, counterfeit and pirated goods are worth up to USD 467 billion, about 2.3% of global trade. These products range from luxury handbags to medicines, electronics and car parts. While consumers face safety risks and governments lose tax revenue, the report shows that the real cost is often borne by invisible workers trapped in abusive conditions.

Why Counterfeiting Depends on Exploited Workers

Criminal networks involved in counterfeiting operate much like businesses, but without rules. To maximise profits, they cut costs wherever possible. Labour is one of the easiest targets. Instead of paying legal wages or ensuring safe workplaces, counterfeit producers rely on people who have little power to refuse work: undocumented migrants, children, and workers trapped in debt or coercion.

The report explains that counterfeit production thrives in places where labour laws are weak, inspections are rare, and workers lack basic protections. In these environments, forced labour and informality become tools for competitiveness. Cheap, unprotected labour replaces innovation and productivity as the main way to stay profitable.

What the Data Reveals

To test whether this link is real and not just anecdotal, the OECD and EUIPO combined global customs seizure data with labour statistics from the International Labour Organization. The results are clear and consistent. Countries most often identified as sources of counterfeit goods also tend to have higher levels of forced labour and child labour, more informal employment, and weaker labour institutions.

The study finds positive links between counterfeit trade and unsafe working conditions, including higher rates of fatal workplace injuries. At the same time, countries linked to counterfeit exports generally have lower levels of trade union membership and collective bargaining, meaning workers have less voice and protection.

Importantly, these patterns hold even after accounting for income levels and trade openness. The report’s economic analysis shows that forced labour remains one of the strongest predictors of counterfeit trade. In simple terms, where exploitation is easier, fake goods are more likely to be produced and exported.

From Factories to Street Sales

These findings reflect what law-enforcement agencies see on the ground. Across Europe and Asia, police have uncovered hidden factories producing fake clothes, cigarettes and consumer goods using undocumented migrants locked inside warehouses. In some cases, children have been found assembling counterfeit products or attaching fake labels.

Counterfeiting also overlaps with human trafficking. Migrants who are smuggled across borders are sometimes forced to sell fake goods on city streets to repay debts. The same criminal networks often handle both people and products, using shared routes and logistics. For these groups, people are both a commodity and a workforce.

A Call for Smarter Solutions

The report argues that tackling counterfeiting without addressing labour exploitation will never be fully effective. Border seizures alone do not change the conditions that make illicit production profitable. Likewise, efforts to end forced labour will fail if they ignore the demand created by counterfeit supply chains.

Recent laws in the United States and the European Union aim to block goods made with forced labour from entering markets. While important, these measures mainly target formal supply chains and do not directly dismantle criminal networks. The OECD and EUIPO call for a more joined-up approach: better co-operation between customs officials, labour inspectors and police, improved data sharing, and stronger labour protections.

The message is simple. Counterfeiting and labour exploitation are two sides of the same problem. Protecting workers, enforcing labour laws and strengthening social protections are not just moral choices. There are some of the most effective ways to weaken the global trade in fake goods and build fairer, safer markets for everyone.