Microfinance-led Strategies to Eliminate Bonded Labor

This paper discusses Preventing and Eliminating Bonded Labour in South Asia’s (PEBLISA) experiences in Bangladesh, Pakistan, Nepal and India.

Millions of workers in South Asia are bonded to their employers and forced to work for substandard or no wages. International Labour Organization (ILO) adopted the Declaration on Fundamental Principles and Rights at Work in 1998. As per this declaration, member states have an obligation to eliminate of all forms of forced labor. The ILO has established technical cooperation projects to help governments to abide by the declaration.

The paper describes one such initiative, the Dutch-funded PEBLISA project, which is designed to prevent bonded labor and rehabilitate released labourers. PEBLISA began piloting integrated microfinance-led schemes in 2000. PEBLISA’s integrated approach relies on three assumptions:

• Access to appropriate financial services is a fundamental prevention strategy, since bondage results primarily from credit and labor market inter-linkages;
• Microfinance is not sufficient to prevent bondage, but a group-based savings and credit delivery mechanism can provide essential services for empowerment;
• Related activities should strengthen the capacity of labourer households to generate a livelihood and reduce dependence on the employer.