There are roughly a million landless waged labourers in Nepal. A significant fraction of them work as permanent labourers under a wide varieties of terms and conditions

Due to low wages and poverty, debt bondage is common among them. This bondage is used to not only extract excessive labour but also as labour service imposed on family members. Most widespread debt bondage labour systems are the Haliya/Haruwa system and the Kamaiya system.

The Haliya system is practiced in the hill districts of Nepal. The labourers are given a small loan at the beginning of the contract and they continue to work for the same employer until the loan is repaid. Such labourers are required to do all the ploughing work of the employer, and are paid an annual wage for the work. Usually, the amount taken as a loan is much larger than the annual wage, and is beyond the capacity of the labourers to pay back.

The Haruwa system is prevalent in the terai (plain) districts of Nepal. In this system, no advance is taken at the beginning of the contract. Labourers do incur debt within the contract period, but such debt is generally paid back within the contract period - through the share of the harvest from the plot of land allocated to them as part of the wage payment. Within this contract, however, family members, in particular wives, must also work for the same employer and are paid a fixed daily wage. In peak farming season this wage is lower than the market wage rate. Thus, they have to forgo the opportunity of earning higher wages, at least in the peak seasons.

The Kamaiya system is a bonded labour system within agriculture in the western lowlands of Nepal and it is almost solely the burden of the low caste ethnic group called Tharus .Within this system, a Kamaiya binds himself and his family to cultivate a landowner's land in return of an annual payment. While, in principle, this system is based on a voluntary contract, in practice, the Kamaiya often becomes deeply dependent on the landowner. He lives in a hut on this land that makes the landowner the landlord as well. As the debts are inherited from father to son some Kamaiya families are tied to the same landlord for generations. What differentiates this from the other systems though is that, if the Kamaiya unable to repay his loans at the end of the contract period the landlord can exchange his Kamaiyas with another landlord who is willing to repay the Kamaiya's debt. This sales transaction makes this system similar to slavery. . Surveys have estimated about 15,000 Kamaiya households with 46% of Kamaiya of them being homeless. Besides adults, there are roughly 13,000 children working under this system.

On 17 July 2000, the Government of Nepal made an historic announcement wherein it abolished the Kamaiya system. Despite this, thousands of former bonded labourers are today living from hand to mouth with no means to support themselves or their families.

In all the above cases, families are deprived of basic human freedoms, of mobility, freedom to choose employer, and to take decisions about their work. Excessive hours, low wages and the requirement of family labourers to work for the same employer, constrain them and make their exit from these systems impossible.

For more details see:

http://www.antislavery.org/archive/submission/submission1999-07NepalDebt.htm
http://www.ilo.org/public/english/standards/ipec/about/factsheet/facts11.htm
http://nepal.hjem.wanadoo.dk