Also called Debt-Bondage, bonded labor is a form of modern day slavery. A person enters into debt bondage when their labor is demanded as a means of repayment of a loan.
Typically, the laborer is tricked into accepting terms which are exploitive in nature, and in gross violation of their human rights. The combination of unlawfully low wages and unlawfully high interest rates create a situation of perpetually increasing debt.
Despite being prohibited by international law, debt bondage continues to exist in both developed and under-developed nations. An estimate by the International Labor Organization suggests that 12.3 million people are trapped by debt bondage at any one time. Other sources have estimated that the true number is over 27 million. Especially prevalent in South Asian countries including India, Pakistan, and Nepal, such labor is supported by local caste systems or other forms of social stratification.
The definition of trafficking in persons contained in the UN Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children does not explicitly refer to debt bondage as a form of exploitation. The Protocol, however, prohibits "forced labor or services, slavery or practices similar to slavery [and] servitude," terms which are defined in earlier UN treaties. For example, Article 1 of the UN Slavery Convention of 1927, defines "slavery" as "the status or condition of a person over whom any or all of the powers attaching to the right of ownership are exercised." The Supplementary Convention on the Abolition of Slavery, the Slave Trade, and Institutions and Practices Similar to Slavery defines "debt bondage" as:
The status or condition arising from a pledge by a debtor of his personal services or of those of a person under his control as security for a debt, if the value of those services as reasonably assessed is not applied towards the liquidation of the debt or the length and nature of those services are not respectively limited and defined.
This definition of debt bondage has also been adopted into national legislation. For example, substantively the same language appears in the U.S. anti-trafficking law, the Victims of Trafficking and Violence Protection Act of 2000. Article 165 of the Criminal Code of the Republic of Moldova, revised in 2002, also defines the offense of trafficking to include the "threat of use or use of physical or psychological violence non-dangerous for a person's life and health, including through abduction, confiscation of documents and servitude for the repayment of a debt whose limits are not reasonably defined . . ."
In addition, the 2003 U.S. Department of State Model Law to Combat Trafficking in Persons draws an explicit connection between debt bondage and trafficking. The law adopts language almost identical to the U.N. Supplementary Convention in defining debt bondage.
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