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Gerold Permoser is Chief Investment Officer (CIO) of Erste Asset Management. In this function he is in charge of the asset management activities and investment strategies of all investment funds of the Erste Asset Management Group in Austria, Croatia, Czech Republic, Germany, Hungary, Romania and Slovakia.

When children work…

June has Children’s Day, World Day Against Child Labour, and the Day of The African Child coming up. These commemoration days form an arc that covers the topic of child labour quite well. The overarching theme is the well-being of children, which is also reflected in the definition of child labour. Child labour robs children of their childhood, potential, and dignity and harms them physically and mentally. In Austria, it is an absolute no-go. However, in poorer parts of the world, child labour is clearly a big problem.

Poverty is the root cause of child labour. This explains why child labour is largely regarded as exterminated in the wealthy industrialised countries, whereas it still exists in the poor countries of the “South”. From an ESG perspective and in terms of asset management, this means two things: on the one hand child labour is an issue mainly for investments in emerging markets, but on the other hand it is also relevant for us due to global interconnectedness and the increasing degree of integration in many production processes. And it is this interconnectedness that we as ESG investors have to analyse.

Child labour is a problem that does not affect all sectors equally. In the financial sector, a seven-year old child will not be useful. This explains why according to the International Labour Organization (ILO) children mainly work in the agricultural sector, in tourism, in the textile industry as well as in quarries, as street vendors, and house helps. The most extreme cases occur in child prostitution and as child soldiers.

These examples show that child labour affects both countries and companies. Companies actively employ children, and governments are partially to blame for their passivity when it comes to enforcing laws that protect children. Therefore, child labour is a criterion of exclusion for us, both in the corporate sector and on a governmental level.

The topic of child labour does of course come with clearly negative connotations. Nobody wants to promote child labour through their consumer or investment behaviour. That being said, child labour is subject to controversial discussion. Critics claim that child labour is not sufficiently looked at from the affected children’s point of view nor from the national environment. There are different definitions of regarding the age when child labour turns into ordinary labour as well as of whether a certain kind of work is exploitative child labour or not. At Erste Asset Management, we are aware of the different arguments and decided to go with the more stringent ILO definition of child labour.

As pointed out at the beginning, child labour needs to be seen above all in connection with poverty. Therefore, the fight against poverty and the achievement of a safe economic future is the best tool against child labour. For this reason, our micro finance fund is an effective building block in the fight against child labour. Fighting poverty also means fighting child labour. We invite us to join our fight.

Mag. Gerold Permoser

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