1.1.2b. Debt Bondage
Debt bondage occurs when a worker incurs or inherits debt, which binds the worker to his or her employer for an unspecified amount of time. Schemes like loans with high interest, cash advances, and fees can rack up a large amount of debt for fisher folk, and keep them from leaving difficult situations at work.
Guidance
The worker is allowed to witness the product being weighed or graded to calculate their income.
The worker is not paying off debt to the cooperative, association, buyer, or permit holder.
The worker is paying off debt to the cooperative, association, buyer, or permit holder (for equipment, permit fees, fuel costs, ice, etc.), but:
Worker keeps most wages and only a small percent of income is used to pay off debt;
The debt has remained stable or decreased over time.
Additional Information
Definitions
Debt bondage is the status or condition arising from a pledge of a debtor of their personal services or of those of a person under their control as security for a debt if the value of those services as reasonably assessed is not applied toward the liquidation of the debtor the length and nature of those services are not respectively limited and defined (ILO Supplementary Convention on Abolition of Slavery, 1956).
Bonded Labor is a form of forced labour in which the job or activity is associated with (i) advance payments or loans or excessive fees from recruiters and/or employers to the worker or to a person’s family members; (ii) a financial penalty, meaning that the terms of repayment are unspecified at the outset and/or in contravention of laws and regulations regarding the amount of interest or other repayment conditions, or the job or activity is under‐remunerated (in relation to legal regulations or the labour market); and (iii) some form of coercion until a worker or family member has repaid the loan or payment advance.”(See Guidelines concerning the measurement of forced labour
Recruitment Fees
These measures should aim particularly at preventing fraudulent practices by labor recruiters, abuse of workers, debt bondage and other forms of economic coercion.
There is a need to prevent and/or deter the solicitation and collection of illicit money from workers in exchange for offering them employment contracts.
Sample questions to guide you when assessing the Unit of Assessment against the standard:
Is any portion of the workers’ pay automatically withheld/deducted to cover loan payments or interest on loans?
Is any worker rendering work in exchange for debt repayment?
Is the basis for pay and wages clearly explained to all workers?
Are workers allowed to observe/witness processes such as weighing and grading of products that are used as basis for calculating their pay?
How much of the workers’ pay is automatically withheld or remitted for debt repayment and allotment?
Applying What You Learned
Case Study Assessment
Instructions: Read the case study below and answer the questions that follow.
Handline fishers continue to be paid through profit-sharing schemes, which often result in unreliable and unpredictable wages for workers, increasing their risk of exploitation. Income from tuna handline fishing is greatly dependent on the size of the tuna catch, and as catches continue to decline, handline fishers grow increasingly dependent on loans.
Fishers all communities expressed difficulty surviving on a day-to-day basis. Almost all the workers interviewed were in debt, whether to local stores and suppliers, their boat operator, or local loan sharks. The practice of boat owners providing fishers with cash loans at interest rates up to 20 percent still persists. Since boat operators and fishers are typically not paid until after the fish have been weighed, valued, and sold—a process that can take anywhere from three days to one month—they often request cash advances from boat owners while they wait, which are later deducted from their income.
Sometimes handliners incur a negative balance once all the cash advances are deducted from their share. When this happens, handline fishers often request another advance from the operator, and in turn, have no choice but to join the next fishing venture in order to pay down their debt.
In an already highly informal, poorly regulated sector, this debt cycle exacerbates the fishers’ inability to leave the job, despite having no written employment contract with the vessel owner for whom they work.
(Source: Recruitment and Hiring Practices in the Tuna Handline Fishing Sector)