The Prevention of Debt Bondage with Microfinance and Related Services: Preliminary Lessons

Abstract

Numerous South Asian workers are bonded to their employers, forced to work for substandard or no wages because their earnings are retained by the employer to repay an outstanding debt. Debt bondage is most common in the agriculture sector, although it can also be found in other industrial sectors such as mining and gem polishing, brick-kilns, carpets and textiles, as well as domestic service. The victims of bonded labour tend to be the poorest and least educated segments of the population, from low castes and religious minorities.

In 1998, the International Labour Organisation (ILO) adopted the Declaration on Fundamental Principles and Rights at Work, under which all member States have an obligation to respect, promote and realize the elimination of all forms of forced labour. To help member States to abide by the Declaration, the ILO moved from the usual report based supervisory mechanisms to a more proactive approach with a variety of technical cooperation projects designed to prevent forced labour or to help rehabilitate labourers who have been released from bondage.

Starting in June 2000, one such initiative, the Dutch-funded South Asian Project for the Prevention of Debt Bondage, began piloting microfinance-based schemes for the prevention of bonded labour and the rehabilitation of former bonded labourers in four countries, Bangladesh, India, Nepal and Pakistan. This paper describes some of the project's lessons learned during its first 18 months, with a particular focus on: a) an increased understanding of different bonded labour phenomena in South Asia, and b) operational insights that should lead to an improved project implementation.

Citation

The Prevention of Debt Bondage with Microfinance and Related Services:Preliminary Lessons presented at Staying Poor: Chronic Poverty and Development Policy, Institute for Development Policy and Management, University of Manchester, 7-9 April 2003. Chronic Poverty Research Centre (CPRC), Manchester, UK, 10 pp.

The Prevention of Debt Bondage with Microfinance and Related Services: Preliminary Lessons

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