The Prevention of Debt Bondage with Microfinance-led Services

Abstract

Millions of the poorest and most vulnerable workers in South Asia are bonded to their employers as they strive, often in vain, to repay loans. The root causes of this bondage include: inter-linked and monopolistic labour and credit markets, deeply entrenched social exclusion, and asymmetric information particularly regarding legal rights. The International Labour Organization, together with its social partners and other relevant stakeholders, is pilot testing microfinance-led prevention strategies in India, Pakistan, Nepal and Bangladesh. This paper describes this initiative and summarises the early findings of this effort.

Des millions de travailleurs parmi les plus pauvres et vulnérables en Asie du Sud sont dépendants de leur employeur alors qu'ils s'efforcent, souvent en vain, de rembourser leurs dettes. Les racines de cette forme de quasi-esclavage comprennent: des marchés du travail et du crédit imbriqués et monopolistiques, une exclusion sociale profondément ancrée, et une information asymétrique, notamment celle relative aux droits légaux. L'Organisation Internationale du Travail, en partenariat avec ses partenaires sociaux et d'autres parties intéressées, encadre une initiative pilote qui vise á tester en Inde, au Pakistan, au Népal et au Bangladesh, des stratégies micro-financiéres de prévention de ces situations. Cet article décrit l'initiative et en résume les premiers résultats.

Notes

The authors work for the Social Finance Programme of the International Labour Organization, Geneva, Switzerland.

1. There are four categories of Fundamental Principles and Rights at Work. Besides forced or compulsory labour, the Declaration also covers: 1) freedom of association and the right to collective bargaining; 2) the elimination of child labour; and 3) the elimination of discrimination in employment or occupation.

2. The project conducted baseline studies on the incidences and causes of debt bondage in certain regions in the four countries. While specific citations are not included in this paper, it draws from the data, analyses and conclusions of the papers listed in the bibliography.

3. In the next phase of this project, the ILO's Social Finance Programme will partner more closely with the Special Action Programme to Combat Forced Labour (SAP-FL) of IFP/Declaration to address all five intervention areas.

4. This is not a problem in Pakistan where the former Haris are based in resettlement camps.

Additional information

Notes on contributors

Erik Beemsterboer

The authors work for the Social Finance Programme of the International Labour Organization, Geneva, Switzerland.