Understanding Debt Bondage: The Key to Change

Domestic workers come to Hong Kong to find work and provide remittance to their families in their home countries[1]. Economics is the binding factor of the whole system. The domestic worker system works with agencies forcing domestic workers into debt by charging largely inflated fees for finding jobs[2]. Overcharging occurs despite the International Labour Organisation declaring recruitment fees to be illegal. Once the women are in debt, they are forced to remain in an employment situation to be able to pay back the debts, resulting in an inability to escape abusive situations. A clear example of this is the Erwiana case, where the domestic worker was repeatedly beaten and starved but remained in her employment because of the power of debt bondage[3]. Alexandra Golovanow from HelperChoice argues that ‘this is modern slavery- people have no alternatives’[4].

Borrowing provisions in Hong Kong further exacerbate the debt bondage cycle. The Money-Lending Ordinance provides that annual interest rates are legal up to 60%[5] and must be justified if they are over 48%[6]. When comparing this to what one would consider as a ‘regular’ interest rate, the interest rates placed within borrowing contracts for domestic workers are exorbitant. In some sense, this is understandable because of a lack of credit history and thus lack of certainty in repayments, however, moneylenders’ increasing interest worsens the cyclical nature of debt bondage.

One solution is the establishment of agencies that follow policies similar to that of the Fair Employment Agency (FEA). The concept behind the FEA is to ensure that employers pay the costs, such as for medical examinations or visa fees, and the FEA itself does not participate in illegal practices[7]. The International Labour Organisation additionally proposes a holistic and integrated approach, particularly microfinance schemes to target low-income women[8]. This could include loans with less interest, microinsurance and grants. However, this would require the establishment of more effective institutions to execute successful microfinancing schemes.

- Anita Meltem Bayraktar

1. Md Mizanur Rahman, Lian Kwen Fee, ‘Gender and the remittance process: Indonesian domestic workers in Hong Kong, Singapore and Malaysia’ (2009) Asian Population Studies

2. Astrid Zweynert, ‘Abolish fees to end Hong Kong domestic worker debt bondage: agency boss’ Business Insider (June 17 2015)

3. HKSAR v Law Wan Tung [2015] HKEC English Judgement DCCC 421 and 651/2014

4. Beh Lih Yi, ‘Goodbye Debt: Helping Domestic Helpers Escape Modern Slavery in Hong Kong and Around the World’ South China Morning Post (Hong Kong, 25 Jun 2018)

5. Cap. 163 Money Lenders Ordinance, s24(1) Hong Kong e-legislation <https://www.elegislation.gov.hk/hk/cap163!en>

6. Cap. 163 Money Lenders Ordinance, s25(3) Hong Kong e-legislation <https://www.elegislation.gov.hk/hk/cap163!en>

7. Fair Employment Agency <https://fairagency.org/our-story/>

8. Smita Premchander, V Prameela, M Chidambaranthan ‘Prevention and Elimination of Bonded Labour: The Potential Limits of Microfinance-led Approaches’ (2014) International Labour Organisation