Debt Before Departure: The Role of Informal Credit in Trapping Migrant Workers

Abstract

In the last two decades, the prevalence of South Asian migrant workers has significantly increased in the UAE’s construction sector, and they are under huge debt. Although researchers heavily stress the role of employers in migrant workers’ debt, the role of debt before departure has not been investigated. Thus, this study bridges this gap in the literature in the context of South Asian construction migrant workers. The objective of this study is to investigate how informal recruitment fees and debt arrangements contribute to bonded labor and dependency among migrant workers. A qualitative approach was used to conduct in-depth interviews with 30 South Asian migrants employed in the construction sector. This article highlights how pre-migration debt—which is often accrued through informal loans and exploitative recruitment fees—has been underexplored in migration studies. Drawing on interviews with 30 South Asian laborers, this study identifies five interconnected themes: pre-migration debt bondage, exploitative lending practices, lack of legal recourse, emotional manipulation, and a cycle of dependency. While UAE labor policies have improved, the real vulnerabilities lie in the informal recruitment systems and weak oversight in migrant workers’ countries of origin. Consequently, five themes were generated from the analysis: pre-migration debt bondage, exploitative lending practices, no legal recourse, emotional manipulation, and cycles of dependency. This study contributes to our existing knowledge by revealing the experiences of migrant construction workers from South Asia in the UAE. While the UAE has established one of the region’s most progressive legal frameworks to protect migrant workers and set clear labor standards, many exploitative practices occur outside its jurisdiction, particularly in the workers’ countries of origin. This study underscores that the root of the problem lies in weak enforcement and informal recruitment networks in sending countries, not in UAE policy itself. Addressing these challenges requires coordinated international action to ensure that migrant protection begins well before arrival.

1. Introduction

Individuals from developing and underdeveloped countries leave their homelands for better income opportunities to be able to provide for their families and give them a better life through their remittance (IOM 2018). As per a recent report by the International Labor Organization (ILO 2024a), the number of migrants from South Asian countries seeking labor has doubled in the last two decades. However, these migrations are accompanied by unintended debt accumulation, which was ironically their initial reason behind the decision to migrate (Alffram et al. 2023). Labor migration from South Asia to the Gulf countries has grown rapidly. Most workers seek employment abroad to support their families through remittance. However, many migrants enter host countries already burdened with debt, primarily due to fees paid to unregulated brokers, lenders, and travel agents. Despite the UAE’s progressive labor laws, migrant exploitation persists through informal systems that operate in sending countries and escape both local and international scrutiny.

1.1. Background

The Gulf Cooperation Council (GCC) countries have become a highly preferred labor migration destination with their increase in economic growth, oil prices, and labor demands (HRW 2023). According to the ILO (2024b), the United Arab Emirates (UAE) is one of the largest foreign-labor-receiving countries around the globe, with 8.7 million labor workers, making migrant workers approximately 80% of the UAE’s residents. Migrant workers in the UAE predominantly belong to South Asian countries, i.e., Pakistan, India, and Bangladesh. The UAE operates the kafala system, where mostly private company employers “sponsor” the migrant workers to source cost-effective labor. The kafala system is in place to protect employees from exploitation by giving them basic rights of maternity and annual leave with regular salary reimbursements; however, these migrant workers are often left unpaid for consecutive months without leave (HIR 2022).

1.2. Problem Statement

Although the UAE has enacted strong labor protections to safeguard migrant workers, exploitation persists through illegal practices, led by both employers and migrant intermediaries. Violations such as excessive working hours, passport confiscation, and unlawful recruitment fees have been normalized, undermining the law’s intent and entrapping workers in cycles of debt and dependency. This study examines how such exploitation is perpetuated internally within migrant networks, highlighting the gap between legal protection and lived realities.

For instance, according to a report by HIR (2022), going against Emirati law, employers make these workers work for more than 8 h a day and confiscate their passports, which entraps them in the country with no money and poor living conditions. Despite the fact that it is banned under the law to ask for recruitment fees at any time from employees, companies impose this injustice with impunity because the government rarely investigates these violations of the kafala system. Eventually, migrant workers are forced to pay these fees upfront (Silvey and Parreñas 2020) or remain with their company until they are paid, which often amounts to their entire lives (Guthrie 2023). All these circumstances bind the migrant worker and make their life difficult, as they are already in debt when they arrive, their passport is confiscated so they cannot leave the country, their employee rights are violated by the companies, and they fall further into debt while staying in the foreign country. In addition, deaths of migrant workers are underreported, despite being common (Guthrie 2023).

1.3. Research Aims

This study investigates how informal loans and cultural expectations in migrants’ home countries contribute to debt bondage. Prior studies have focused on destination-country labor exploitation; here, we explore how financial entrapment begins prior to departure. This unique perspective advances the discourse on migration research and supports UN Sustainable Development Goals 8, 10, and 16 related to decent work, reduced inequality, and institutional justice.

1.4. Research Objectives

Researchers have mostly focused on working conditions and employee exploitation in their countries of destination in terms of their impact on debt and psychological pressure (Bylander 2022). However, it is important to highlight that migrant workers arrive with debt from their home country, which becomes a major source of their financial issues. Thus, this research is novel because it investigates the role of these informal loans and credits as pre-migration debt in contributing to the problem. Targeting this human rights issue is imperative because the United Nations (UN) Sustainable Development Goals (SDGs) aim to end poverty and inequality in all of their forms (UN 2023). Thus, the objective of this study is to investigate how informal recruitment fees and debt arrangements contribute to bonded labor and dependency among South Asian migrant workers in the UAE. This research targets the 8th, 10th, and 16th SDGs, respectively.

2. Literature Review

Labor migration is vital to the UAE’s economy, but many migrant workers fall into pre-arrival debt cycles due to illegal recruitment fees. Although UAE labor laws protect workers’ rights, informal migrant economies start from their home country, and this usually goes unnoticed by the Emirati community due to cultural differences. Most of the existing research focuses on employer abuse, while intra-community exploitation by co-nationals is overlooked. This study fills that gap by examining how migrants exploit each other, deepening debt and dependency.

While much of the existing literature on pre-departure debt focuses on South Asian migration to the Gulf, this phenomenon is not confined to this region alone. Studies from Latin America, sub-Saharan Africa, and Southeast Asia have also highlighted how migrants incur substantial debts before departure, often through informal lending networks or exploitative recruitment practices. These debts can result in forms of bonded labor, emotional vulnerability, and long-term dependency. However, research focusing specifically on pre-departure debt in the context of South Asian laborers destined for the UAE remains limited. Therefore, this study contributes to the growing body of literature by exploring how informal debt systems and recruitment fees shape the migration experiences of South Asian construction workers, a group frequently excluded from broader global migration analyses.

2.1. Labor Migration to the UAE

People have always migrated for better work opportunities in high-income countries. Recently, this trend was abundant in the GCC countries due to major labor opportunities in both the skilled and unskilled work sectors. Migrant workers support their families through remittance, especially in the cases of people from low-income backgrounds, due to the major differences in currency levels (Sahu 2022). Labor migration is a major livelihood strategy, particularly for people in South Asian countries. Pakistan, Bangladesh, and Nepal are among the top 10 remittance recipients in the world (HRW 2023). South Asian individuals from all socioeconomic backgrounds wish to pursue work abroad for a better lifestyle for themselves and their families and to break out of debt. Securing employment in a foreign country and migration to a higher economy are both costly, which increases their indebtedness (Sahu 2022). Common jobs for South Asian migrants in the UAE include construction, domestic work, driving, fishing, and manufacturing sectors, all of which are major contributors to the country’s economy. However, these job roles have significantly low salaries. Due to their low income, these workers are unable to accumulate any savings and investments, which increases their dependence on the job to provide for their families (Silvey and Parreñas 2020). Previous arguments have proposed the following:

• P1—Migrant workers often enter exploitative labor arrangements already indebted, which restricts their bargaining power and freedom even before migration begins.

Pre-departure debt has long been recognized as a structural component of labor migration, yet it is underexplored in relation to South Asian construction workers in the Gulf. Notably, Lainez (2024) theorizes debt-financed migration as a process where debt becomes a productive force that governs migrant agency and reinforces structural subordination. His research, though focused on Southeast Asia, offers valuable insights into how informal financial systems extend coercive control into the migration process itself. Similarly, Bylander (2022) explores Trans-local loans and their role in reinforcing migration aspirations while simultaneously deepening vulnerability. She argues that emotional and social forces drive people to accept exploitative terms under the guise of familial obligation. Naidu et al. (2023) provide experimental evidence from the India–UAE migration corridor, revealing that migrants often fund labor permits through loans, reducing long-term remittance and increasing dependency.

2.2. Financial Debt Cycle

The financial debt of migrant workers begins before their migration to their destination country. As per Alffram et al. (2023), people take loans to mitigate financial difficulties, and they face inflation in their home country. These loans take the form of either formal or/and semi-formal loans, which are taken from banks, microfinance institutions, and self-help groups. Meanwhile, money lenders, friends, and families provide informal loans, which are often without any formal contracts, only verbal agreements. There are limited options left for the construction workers in their home country to deal with this debt, because they are highly underpaid, unpaid in most months, and work extensive hours, which leaves no room for extra income (Sharma et al. 2024). Since there has been a high demand for construction workers in the Middle East over the past few decades, they have decided to migrate to those countries, such as the UAE (Sahu 2022). Although these arguments also support the first proposition, they also pave the way for a second proposition that states the following:

• P2—Lenders within migrant-sending communities use high interest rates, vague terms, and social pressure to extract profit, reinforcing exploitative lending norms.

Since construction workers in South Asia are mostly uninformed about immigration or recruitment processes, they take assistance from recruitment agencies in their home country (Silvey and Parreñas 2020). However, these agencies charge them for consultations, recruitment fees, and assistance in the immigration process. Underprivileged individuals take further informal loans from the money lenders to fulfill these demands. Thus, migrant workers accumulate further loan debt via immigration consultancy agencies. These immigration agencies and brokers charge people money to secure their jobs in the UAE and assist with the migration process; in some cases, their employers assist with this payment (HIR 2022). Migrant workers pay consultancy agencies to seek work opportunities on their behalf and impulsively opt for exploitative jobs due to their desire to pay their debts as quickly as possible. However, upon reaching their work destinations, they are entrapped in the debt cycle by the very process of migration. This is because worker migration is either financed through loans or through wage deductions. While they also bring loaned money to build their new lives, their employers also make them pay for securing the job. Thus, they incur financial debt in the process of accessing work opportunities (IOM 2018). Furthermore, these arguments support both P1 and P2, additionally proposing the following:

• P3—The absence of formal protection or regulatory oversight leaves migrants vulnerable to abuse, with no effective way to challenge unfair financial arrangements.

Several other factors add to the increases in the debt of migrant workers. For instance, the UAE does not have a minimum wage for migrant workers; thus, employers have complete autonomy over their employees in terms of their wages and leave. This happens because UAE employers force migrant workers to sign lengthy contracts in either the Arabic or English language, both of which are incomprehensible to them without assistance (HIR 2022). The vast majority of unskilled migrants in the construction sector are poorly informed about their rights and do not possess the means to become informed. This misinformation allows the migration industry to profit from unskilled migration (Hantish 2023).

Moreover, the kafala system also allows employers to wield total power over their workers, retaining their salaries and confiscating their passports (Guthrie 2023). In the kafala system, employers pay recruitment fees to migrant workers as sponsorship to work for them. However, workers are forced to pay back the recruitment fees initially paid by the employers when they decide to leave their jobs, which is nearly impossible for already indebted people. Thus, migrant workers stay entangled in a cycle of debt. Certain companies also deduct these recruitment fees from the monthly wages of migrant workers, which goes against Emirati law (Aslam 2025; HIR 2022). Workers borrow money from the recruitment agencies and depart from their home countries in a vulnerable position, already under debt (IOM 2018). It is evident that family obligations are a driving factor for such job demands, which shows that if it is already a norm to accept debt from an unauthorized broker that breaks the law, this must be due to the importance of family obligations. Thus, we propose the following:

• P4—Family obligations, social expectations, and appeals to duty are used to pressure individuals into accepting high-risk loans and suppress resistance.

Rasool and Haider (2020) conducted a qualitative study among Pakistani migrant workers in GCC countries and found that even after obtaining their job permits (Eqama) and arriving to their work destination country, upon buying a legal work visa, they cannot work unless their Eqama is active. The cost of activating an Eqama is anywhere from AED 5000 to 7000, which most workers must take out a further loan for. Although these regulations are criticized, it is also considered that they are the host country’s regulations and must be accepted. This logic suggests that since there is always a reason behind every piece of legislation, there is no significant problem with the fees.

2.3. Employee Rights Regulations

Several studies have investigated the prevalence of human rights abuses faced by migrant workers in the UAE (Alffram et al. 2023; IOM 2018; Silvey and Parreñas 2020). However, this issue continues to persist due to the exploitative mindset of migrants themselves. These actions are taken by migrant brokers, starting in the host country, where the UAE has no jurisdiction. It is fair to assume that the responsibility belongs to the native countries of the migrant workers.

Aslam (2025) reported that migrant workers face challenges in changing jobs or seeking legal support in fear of losing their residency permits. Support schemes, like SWADES (Skilled Workers Arrival Database for Employment Support), re-integrate migrant workers into the local labor market; however, a survey showed that a majority of 92% of Indian migrants were unaware of these schemes, despite 59% wanting to re-emigrate (ISPI 2024). Guthrie (2023) argued that the UAE should reinforce its existing labor laws and policies to safeguard its migrant workers’ rights and increase corporate social responsibility. It is also important to increase awareness among workers about their rights and provide them with the necessary means to reduce their debt. While Guthrie (2023) argues that the UAE should reinforce its labor laws and enhance corporate social responsibility to protect migrant workers, such claims overlook the root causes originating from sending countries. The UAE has already implemented progressive labor reforms, including bans on passport confiscation and illegal recruitment fees. However, many of these violations occur before arrival and are orchestrated by recruitment agents and informal lenders in countries like India, where oversight is limited and enforcement is weak. Therefore, the issue is not solely the UAE’s responsibility; instead, greater accountability must be demanded from sending states that permit or ignore exploitative pre-departure practices that lead migrants into cycles of debt and dependency. These arguments suggest the following:

• P5—Debt obligations perpetuate a recurring cycle of economic dependency, where repayment is delayed or renewed through continued migration, reinforcing long-term vulnerability.

2.4. Literature Gap

It is well established that migrant workers, especially in the construction sector, face several challenges in the UAE, and a major part in this is played by their employers. A key issue that various scholars have focused on is that financial debt traps these workers and prevents them from living their lives successfully and happily. However, hardly any focus has been paid to the role of pre-migration debt in worsening the situation of migrant workers in the construction sector. Therefore, this study contributes significantly to the debate by bridging this gap in the literature and highlighting a different perspective that enables policy-makers to address the issue of financial debt among migrant workers.

While this study focuses on the financial entrapment of South Asian migrant construction workers in the UAE, it also raises important questions about the structural exclusions that shape the lived experiences of temporary migrant laborers. The concept of citizenship, or rather its absence, becomes central to understanding these dynamics. Migrant workers often operate within what sociologists and anthropologists describe as “zones of exception,” where rights are contingent, protections are thin, and belonging is conditional. They perform essential economic roles without enjoying the political or social rights granted to full citizens, situating them at the margins of both the host and home societies’ civil frameworks.

This paper contributes to broader debates on “denizenship” and “precarious belonging,” offering empirical evidence of how debt acquired before migration restricts agency long before migrants even enter their destination state. In this light, pre-departure debt is not simply a financial burden but also a sociopolitical mechanism that reinforces exclusion from civil society both legally and symbolically. By foregrounding this aspect, the study invites further dialogue between migration studies and citizenship theory, especially in contexts where state sovereignty intersects with global labor demand. Although the study acknowledges the relevance of the broader debates on citizenship and civil society, a deeper engagement with these frameworks falls beyond the scope of this research, which remains focused on the financial and structural dimensions of pre-departure debt.

3. Methodology

This study adopts a research design grounded in an interpretivist philosophy, which seeks to understand the lived experiences and social realities of migrant workers from their own perspectives. Through informal conversations, field observations, and thematic analysis, the study captures how individuals interpret and navigate exploitation and debt within culturally specific contexts.

The sample for this study consisted of 30 male construction workers from South Asia, aged between 25 and 48, originating primarily from India, Pakistan, and Bangladesh. Most participants held low-skilled or semi-skilled positions and had limited formal education. Participants were recruited through snowball sampling, beginning with contact being established through migrant support networks and informal community gatherings. While this approach provided valuable access to hard-to-reach populations, it also limited the diversity of the sample. The study does not include perspectives from women, other nationalities, or non-construction sectors. This reflects the practical constraints of the fieldwork rather than being a comprehensive demographic design. These limitations are acknowledged as areas for future research to provide a more holistic understanding of pre-departure debt dynamics across varied migrant populations.

3.1. Research Design

This research was based on an approach to understanding the dependency of migrant workers due to bonded labor and informal debt from their own perspectives. An inductive approach was selected because it helped to understand the challenges, vulnerabilities, and barriers faced by the migrant workers from their lived experiences in the UAE construction industry. A similar methodology has been employed by studies that investigate the challenges and barriers faced by migrant workers in different industries in the Middle East (Aslam 2025; Zeeshan and Sultana 2020).

3.2. Sample Size

The sample size comprised South Asian migrant workers in the construction industry in the UAE. Qualitative research requires a small sample size from 5 to 20 (Alam 2021). Thus, interviews were conducted with 30 migrant workers of South Asian descent. Data saturation was reached on the 15th participant; however, this could be due to an ethnic majority in the sample group. Consequently, further interviews were conducted for other South Asian ethnicities to ensure that all possible perspectives were reported.

3.3. Data Collection and Instrument

Qualitative primary data was collected via in-depth interviews, as explained through descriptive information. An email containing information about the study, a consent form, and a list of interview questions was sent to potential participants. Interviews were scheduled for individuals who agreed to participate after their queries were answered. Open-ended questions were asked in the interview to obtain new insights into the problem, which would not have been possible with a survey (Braun et al. 2021). The interview questions were designed to target the causes of pre-migration debt, the vulnerability of migrant workers due to bonded labor, the role of the government in this situation, and employers’ tactics to worsen their circumstances.

As they were unstructured, each interview lasted for 15–20 min. The questions were as follows:

Interview Questions

• Do you give consent to participate in this study, knowing that your words may or may not be quoted in the published article without your name or identification?
• What is your country of origin, and when did you come to the UAE to work?
• How much debt did you have before coming to the UAE, and how much debt are you currently under? Overall, how much has it changed?
• How would you describe your current financial situation while working in the UAE?
• What were the reasons behind your migration to the UAE?
• How did you come into debt before migrating to the UAE?
• How does this debt impact your emotional, psychological, and physical well-being?
• What actions have you taken to improve your financial situation?
• How would you say that you could pay off all your debts? Describe any possible or necessary course of action that could reduce and eliminate your debt.
• Did you seek any legal or governmental help? If not, why not?
• Are you aware of any policies and legal reforms that could help your financial status in the UAE?
• What would you recommend for other migrant workers looking to come to the UAE for work?

3.4. Data Analysis

A thematic analysis was performed in this study, as it is appropriate for descriptive data obtained from in-depth interviews (Braun et al. 2021). The written transcripts were thoroughly reviewed by the researcher by reading and re-reading multiple times to become familiar with the content. Transcripts were coded line-by-line with different color highlights. Similar codes were collated into themes, and these themes are discussed as findings. This ensures the consistency and replicability of the analysis process (Braun and Clarke 2023). Five themes were generated from the analysis: pre-migration debt bondage, exploitative lending practices, no legal recourse, emotional manipulation, and a cycle of dependency. The data is triangulated with other research in the Analysis and Discussion section.

3.5. Ethical Approval

All procedures performed involving human participants were in accordance with the ethical standards of the institutional and/or national research committee and with the 1964 Declaration of Helsinki and its later amendments or comparable ethical standards. All participants were adults aged 18 years or older and gave informed consent for their participation. The identities of participants were kept anonymous, and their information was kept confidential. They were also informed of their right to withdraw at any time during the study.

4. Findings

The following section presents the key findings of the study, structured around five core propositions derived from the thematic analysis. Each proposition captures a distinct, yet interconnected, aspect of how informal credit systems and social dynamics contribute to debt and exploitation among migrant workers. The themes below explore and substantiate these propositions through participant experiences and field-based observations.

4.1. Demographics

The demographic characteristics of participants are reported in

Table 1. Demographic characteristics of the study participants. Demographics Table.

Variable	Subcategory	Frequency
Country of origin	India	10
	Bangladesh	7
	Pakistan	6
	Nepal	5
	Sri Lanka	2
Years working in the UAE	0–5 years	7
	6–10 years	11
	11 to 19 years	12
	20+ years	0
Current level of debt	AED 0–2000	4
	AED 2000–5000	6
	AED 5000–10,000	9
	AED 10,000+	11
Total		30

as frequencies. Out of the 30 participants, the majority came from India (10), followed by Bangladesh (7), Pakistan (6), Nepal (5), and Sri Lanka (2). The construction workers had been working in the UAE for the last 5 to 20 years. Among the respondents, there was a high level of approximate debt, as eleven workers had more than AED 10,000 (up to USD 3000) in debt, nine workers had AED 5000–10,000 in debt, six workers had AED 2000–5000 in debt, and four had up to AED 2000 in debt. The characteristics are shown in the Demographics Table, labeled Table 1.

Other responses from the participants are coded into themes and presented below. Five themes are generated from the analysis, i.e., pre-migration debt bondage, exploitative lending practices, no legal recourse, emotional manipulation, and the cycle of dependency. Quotes are also provided in the analysis, with a code for each participant, denoted as P1, P2,… P30. The Thematic Coding Table, labeled

Table 2. Thematic coding includes themes, codes, and their description. Thematic Coding Table.

Theme	Description	Codes
Pre-migration debt bondage	Workers arrive already indebted to recruiters or relatives	Recruitment payment, Traveling cost, Borrowing money, loans Broker expenses Money lenders, Relatives, friends, family, Selling assets (gold, land, property)
Exploitative lending practices	Informal loans come with coercive terms, such as wage deductions	Verbal agreement, Salary deduction, High interest rate, deportation threats, Job threat, Threat for payment
No legal recourse	Informal loans fall outside labor laws, leaving migrants vulnerable	Undocumented debts, Lack of awareness, Labor laws, Legal action
Emotional manipulation	Recruiters frame debt as “help” or “sacrifice” for the worker’s future	Help, Sacrifice, Failure (to migrate), Emotional blackmail, Hopeful, Family responsibility
Cycle of dependency	Debt keeps laborers compliant and trapped in long-term exploitation	No end to debt, Emergency, Unexpected circumstances, Financial need

, shows the codes for each theme.

Migrant Debt Cycle

This chart shows the processual nature of migrant debt, not as a single transaction but a layered, reinforcing system of coercion. It illustrates how each stage deepens entrapment, confirming our paper’s unique contribution: pre-departure debt is the foundation of modern bonded labor in global migration systems.

4.2. Pre-Migration Debt Bondage: Workers Arrive Already Indebted to Recruiters or Relatives

This theme expands on the existing literature around debt bondage by showing how financial vulnerability begins before migration, limiting migrant workers’ freedom of choice and agency in labor arrangements. Migrant workers begin their employment in the UAE with existing debts that they accumulated before traveling to the country. They owe their debts to recruiters, together with family members and informal lenders from their home areas, which binds them financially before their entry into work. Their debt is acquired through payment of fees to recruiters, costs for travel documents, job placement bribes, and systematic training costs. One Sri Lankan respondent stated:

“The flight ticket to Dubai was expensive and I had to arrange money to give to the (immigration) consultant, so I borrowed money from money lenders. I send remittance to clear the debt every month”.

P5

Before taking their first flight from home, the workers are already indebted to their relatives and local loan providers. Along with this, they must maintain their families by sending them remittance. Therefore, they rely heavily on their income; however, in such cases, they are often met with cruelty from employers as their wages are delayed. Note the following response:

“During COVID-19, I down to my last dirham because I did not receive my salary on time, and I had already sent my savings home to support my wife and kids”

P19

Workers found themselves at a dead end in their recruitment process before they traveled. The workers inherently lose power when arriving at their destination due to their pre-existing debt obligations, which intensify their willingness to accept harsh conditions and reluctance to protect their labor rights. The roots of their debt can be traced back to the lead-up to migration rather than emerging after migration occurs because debt plays an essential role in determining the migration experience’s entire structure. Workers reported accruing significant debt before migrating, ranging from USD 1000 to USD 15,000, mainly due to fees for brokers, travel documents, and job offers. Many sold land or borrowed at high interest. One respondent shared the following:

“I borrowed money from local lenders just for a ticket and visa; I started work here already in debt.”

Workers belonging to a middle-class background were able to gather money by selling assets like gold, land, and properties, or using them as collateral for loans to borrow money at high interest rates. Nepali migrant workers frequently mentioned that they had to sell their land to gather funds for travel and for the broker’s expenses.

4.3. Exploitative Lending Practices: Informal Loans Come with Coercive Terms, Such as Wage Deductions

This theme builds on the literature concerning informal economies by illustrating how unregulated lending practices create predatory financial relationships that entrench exploitation. It also discusses exploitative lending practices, which include verbal agreements, coercive terms and conditions, and other types of informal loan practices. Atypical loans that migrant workers receive while working in the UAE contain vague, abusive agreement conditions. This is because the lenders impose excessive interest rates while deducting wages as repayment, and it is exploitative because there is a lack of documentation, while lenders use intimidating methods to enforce repayment terms. Moreover, loans are often verbal and unregulated and include wage deductions or employer threats. Some migrants reported not knowing the loans’ terms.

“My supervisor loaned me money and then deducted it every month from my salary without telling me when it would end.”

The acquisition of loans occurs mainly through spoken agreements with direct superiors as well as roommates and sub-agents but lacks a proper definition of repayment periods and overall expenses. Thus, the debt cycle continues without a definitive deadline. As explained by a Bangladeshi respondent:

“I took a loan for approximately 1000 dirhams to support his family back home and there was no formal contract of any kind, but we agreed upon a condition that they will deduct 200 dirhams monthly from my salary. The length of my situation remains unknown to me”.

P25

Similarly, an Indian respondent stated the following:

“COVID-19 was an emergency for me as I was running out of my savings and I had recently arrived here (in the UAE) to work from India, so I took a loan from a contractor back home. I was so desperate that I agreed upon a high interest rate. It has been 5 years, and I am still unable to pay it completely and I am unsure how long it will go on.”

P2

“I cannot urge my supervisor to increase my salary because he thinks it is an excuse. He tells me to leave if I keep complaining”.

P8

The employment bond created by abusive loans keeps staff members trapped with their companies while sustaining their economic reliance on their employers. These repayment systems go beyond monetary terms by including employee movement restrictions and renewing worker contracts and deportation threats that keep workers subordinated to unregulated financial business networks.

4.4. No Legal Recourse: Informal Loans Fall Outside Labor Laws, Leaving Migrants Vulnerable

This theme reinforces earlier research on migrant protection gaps by revealing how the absence of legal pathways leaves workers powerless against exploitative lenders and brokers. Moreover, this theme entails that there is no legal recourse for informal loans, as they fall outside of Emirati labor laws. Migrant workers face severe challenges with undocumented debts because they exist outside of a formal, legally binding framework and lack any recognizable documentation. Such a gap in employment law regulations gives employers and brokers ample opportunities to exploit migrant workers. An Indian respondent stated the following:

“I could not file workplace complaints against delayed payments. There is no way for me to protect my situation when my boss simultaneously loans money to me while decreasing my wages.”

P11

The jurisdictional uncertainty between countries allows recruitment agencies with brokers to profit without taking any responsibility. The organizations choose to work across different national borders while charging their clients high placement costs in their home country, as well as reducing wages at their work location. The impenetrable system operates across jurisdictions to evade inspections by legal authorities while preventing working people from obtaining institutional support. In addition, informal loans fall outside the scope of the UAE labor law. Migrants cannot seek legal recourse for debt-related exploitation, as these transactions originate in their home countries, where regulation is weak or absent.

4.5. Emotional Manipulation: Recruiters Frame Debt as “Help” or “Sacrifice” for Workers’ Future

Expanding on moral psychology and social pressure dynamics, this theme shows how emotional manipulation and familial expectations normalize high-risk borrowing among migrants. This theme shows that the emotional impact of indebtedness creates a substantial force that makes workers adhere to their employment standards. Loan providers commonly present financial commitments as helpful assistance, together with required sacrifices, which protect workers’ future development while protecting family welfare. This rhetoric interlaces cultural standards related to masculinity with responsibility toward family members, so it changes financial requirements into moral duties. Participants stated that one of the major reasons behind foreign migration was that they are viewed as glorified figures in their home country. This is reflected in the following Pakistani respondent,

“People view migrant workers as successful in my country (Pakistan), despite of what they are doing or earning or how much debt, they are under. I cannot return (to my home country), even if I wanted to, because I will be viewed as a loser, who could not become successful”.

P20

Migrant workers are under peer pressure to stay in an employment country because being abroad makes them a champion in their relatives’ eyes. They stay hopeful about their situation improving with time. Emotional manipulation does not begin in their home country because they are guided by the recruiters to their jobs and the possible role it would play in improving the financial condition of their family. As per a Sri Lankan respondent,

“The agent explained that the money will serve to improve her (mother’s) comfort. How can I say no to that?”

P29

These descriptions make it hard to understand where assistance stops and domination begins. Despite recognizing employment exploitation in their debts, workers find it hard to oppose their terms because they feel a strong moral duty to fulfill their debt obligations. Workers face double restrictions on their rights to leave abusive arrangements because emotional manipulation works together with economic coercion.

Recruiters often frame debt as a noble sacrifice for the migrant’s family. This emotional narrative reinforces the acceptance of exploitative loans.

“If I return home now, everyone will think I failed. I have to stay, even if the work is hard and the pay is low.”

4.6. Cycle of Dependency: Debt Keeps Laborers Compliant and Trapped in Long-Term Exploitation

This finding contributes to the literature on structural precarity by demonstrating how debt repayment evolves into a cycle of dependency that keeps migrants economically and socially trapped. As this theme discusses the combined impact of debts incurred before migration, with unethical loans and lack of protection under the law, together with emotional pressure, this creates a continuous dependence that keeps migrant workers trapped in their situations. Following their initial loan, many migrant workers take further informal or formal loans to handle loan repayments and handle unexpected situations, such as COVID-19 or economic crises, and fund second migrations. This process creates substantial financial difficulty, which keeps workers trapped inside systems that exploit their labor.

One worker described leaving his homeland to pay off debt but remaining unable to return until his obligations in his current place of residence are fully satisfied. These workers expressed that their freedom seemed uncertain since their family members at home became sick, or they lost work, which forced them into additional borrowing. One participant said,

“It’s like I’m never finished (with the debt).”

P1

The cost of living in the UAE, along with supporting families back home and paying pre-migration debts, entraps the migrant workers, and they see no way out. Many participants take loans from their employers to repay previous debts. However, these loans are deducted from their wages, and they cannot leave their employers without paying debt because their passports were confiscated upon arrival. In all cases, migrant workers continue in their current employment without a raise, with wage delays and deductions in wages to repay debt, and without any legal help. Moreover, migrant workers fall into cycles of borrowing and re-borrowing to meet rising expenses, repay loans, or cover emergencies. Employers who confiscate passports restrict their movement, and often, the workers remain financially and physically trapped.

The immigration and loan cycle combines formal immigration restrictions with perpetual debt to create barriers for physical movement and financial opportunities, as well as psychological suffering from fear and duties along with hopelessness. The limited options available for individuals lead to re-migration, but with a more restricted and unstable set of conditions, which reduces their control from the beginning of the process. Transnational labor subjugation takes a permanent form because of this system, which requires extensive institutional reforms.

5. Discussion

This study expands the debt migration discourse by showing how debt functions as a form of social control, not just a financial transaction. It supports Segall (2022) and Hantish (2023) in arguing that debt becomes a mechanism for sustaining modern bonded labor. The moral economy around debt, viewed as a family duty or investment, complicates resistance to exploitative conditions. This study aimed to understand the reasons behind pre-migration debt and its contribution to bonded labor and dependency among South Asian migrant workers in the UAE. Five key themes were generated from the analysis, including pre-migration debt bondage, exploitative lending practices, a lack of legal protection, emotional manipulation, and cycle dependency. In this study, migrant workers reported having debt as high as USD 15,000, especially because their debt accumulated over time. This is much higher than the reported debt in Guthrie (2023), i.e., USD 4000 for migrant workers working in the UAE construction sector. This immense debt is mainly due to the dominance and exploitation of the informal credit systems of South Asian migrant workers.

The existence of debt binds migrants throughout their migration journey as an essential component. Working migrants start their migration journey already burdened by debt because they enter employment through an unofficial recruitment process (Segall 2022). Debt works as more than a financial mechanism because it functions as structural violence, which penetrates social networks to perpetuate systematic harm against populations who lack proper advantages (Hantish 2023). The findings revealed that an indebted migrant faces special exposure to coercive actions, including wage withholding and prolonged contract periods, in addition to the seizure of passports and verbal intimidation. Exploitation becomes a standard practice in migration pathways, thus making it disappear. In addition, they are unable to request any salary increments or lenient treatment for fear of losing their jobs.

The practice of borrowing money before migration acts as the principal factor in sustaining bonded labor systems in today’s migration systems. Many workers need debt to enable their migration process because debt constitutes the initial requirement for moving between countries. Before setting out as migrants, they need to borrow substantial amounts of money because of the multiple costs surrounding recruitment fees, visa processing, travel expenses, medical tests, and bribes paid to informal facilitators (Lainez 2024). The expenses associated with migration are usually paid by private lenders who operate outside formal regulatory structures and by community credit options. Workers begin their financial difficulties while they are still living in their home countries. This is also confirmed by a quantitative study by Naidu et al. (2023), which revealed that Indian migrant workers had to pay an upfront cost for labor jobs, financed by additional debt, which consequently reduced their remittance by 10%. Arriving migrants serve their debts by accepting poor salaries while enduring long work hours in conditions of exploitative contract provisions because of high interest rates (Wells 2023). Jamil and Kumar (2021) also confirmed that Bangladeshi migrants working in the UAE’s construction sector received substantially low wages. Workers lose their freedom and negotiating strength because of their substantial debt levels. The payment obligation pushes workers to delay reporting labor abuse due to the fear that job termination and deportation could create unmanageable debts and reduce their position in society. Various studies have also reported this for migrant workers working in other sectors in the UAE (Blaydes 2023; Kumar and Jamil 2020; Lorenzini 2021).

Pre-existing debt acts both economically and politically on migrants by enabling their suppressors to silence any forms of dissent. These debts are created intentionally with the aim of being non-refundable. Informal lenders charge very high interest in most cases, and due dates are flexible, but people are tied to paying through wages or face extra pressure to renew agreements (Lainez 2024). In other instances, workers are forced to continue working under coercion to repay debts that they never expected to accrue. This mimics conventional types of bonded labor where liberty is deemed dependent on the payment of a fabricated, and, most often, manipulated debt. Furthermore, both groups of people see debt as natural in culture and society and justify it as a worthy cause (Blau and Arnold 2024). This is a common trend in migration; for example, the discourse within sending communities paints migration in a rather positive light, while debt is portrayed as an investment that would be made for the improvement of the family’s future (Blau and Arnold 2024; Deshingkar 2023). This moral perspective prevents the possibility of people objecting and hides the rather coercive nature of the recruitment practice. Not paying such a debt not only means a mere financial loss in terms of possible future remittance, but it is also perceived as moral and social misconduct in the eyes of society. Thus, the general framework of labor migration contributes to this structure being upheld (Mithila 2024).

This has been worsened by the fact that migration has been commercialized and by the recruitment process being conducted in a way that means that one has to pay for an opportunity to undergo recruitment processes and obtain a job (Silvey and Parreñas 2020). As per Bylander (2022), the GCC recruitment fees are USD 1000–USD 3000 for India and Nepal and USD 2500–USD 5000 for Bangladesh, which comprises a large sum after conversion into their regional currency. At each phase of the process, recruitment agents, middlemen, and financial actors reap profits because these financial arrangements occur beyond legal and formal frameworks, meaning that this cycle can continue unabated (Bylander 2022). High interest rates, unclear conditions, and oral agreements make it possible to exploit borrowers because enforcement measures, including document seizure and social pressure, also consolidate authority. The findings show that micro-crediting is a weapon far from being a neutral means of financial functioning, employed to maintain unstable working relations. All legal reforms should, therefore, be accompanied by continued enforcement to counter such abusive features in the context of financial transactions in labor migration.

For all the indicators of apparent globalized systems of labor migration, the dynamics described in the finding resemble historical patterns of bonded labor. Although it is legally prohibited, the framework of bondage continues legally as extralegal detention that binds people’s labor to debts that are not controlled by law. Equally importantly, migrants are frequently unable to abandon their employment or repatriate without taking out more debt that puts them in a new type of indentured servitude in the age of neoliberalism (Silvey and Parreñas 2020). As previously mentioned, the nature of informal debt in borrowing and business relationships does not fall within the labor laws of either the original or the recipient country (Hatayama 2021). First, migrant workers are legally marginalized and invisible in the cities, and recruitment intermediaries also play an intimate role in this process; second, there is a serious lack of governance of this circulation and intermediary process, which has sparked policy concerns.

Although HIR (2022) reported that recruiters urge people to take foreign jobs, no other study has reported the extent to which they manipulate migrant workers. This study shows that money borrowing is also performed through emotional and cultural discourse. For instance, lenders hint at losses for the worker’s family and in foreign work opportunities if loans are not taken and use the vocabulary of obligation to ensure that the message is not rejected. They use workers’ personal conditions to induce the irrational decision of taking further loans to secure their jobs. This kind of emotional manipulation changes indebtedness from obligation into an oppressive factor, which deepens psychological traps for workers. It is also important to draw attention to the emotional aspects of debt, which complement the economic preconditions with psychosocial implications of power dynamics. This has similarly been observed in migrant workers from Cambodia, who take pre-migration loans with the intent to increase their freedom and autonomy in the migration experience (Bylander 2022).

Debt bondage is a cyclical process because some workers, due to the inability to repay initial loans, are forced to borrow more money to cater for further migration or work continuation expenses. In some cases, this is due to constant threats from debt collectors (Sen 2022). This evokes a never-ending cycle of suffering in other countries where re-migration is the only possible way to achieve what can be often viewed as a desirable outcome. It is for this reason that higher levels of interventions are needed to intervene and end the cycle for good, such as fighting for financial literacy, offering clear and accessible loan structures, and providing adequate legal requirements.

The current knowledge on labor relations in the UAE and other destination countries describes informality in terms of the employment contract as an extant solution rather than as a burgeoning issue (Jayaram and Varma 2020). This conveniently results in the creation of a legal vacuum that informal debt can take advantage of. They use judicial discrepancies to charge the fees at the source country while enjoying deductions in the destination country. This means that, to address this, there needs to be cooperation not only within countries but also across borders on the regulation of labor. Legal systems must categorize informal credit as a mode of labor abuse (Sharma et al. 2024), and there must be global cooperation in supervising recruitment practices, outlining the expectations of the written commitments signed between the recruiters and the candidates, as well as defining open and clear means of seeking recovery. Therefore, the reform process should, first and foremost, ensure that migrant workers can be heard and are able to make independent decisions. Licensing, penalties, and oversight involving external sources at the international level must form the cornerstone of the regulation of informal credit systems and ensure that ethical standards in recruitment are adhered to. While the UAE hosts many of these workers, the root causes of their exploitation lie in their unregulated recruitment strategies and informal lending in their sending countries. This calls for shared accountability between origin and destination countries.

As shown by this study, pre-migration informal credit is the real culprit, causing labor exploitation that is embedded in a control mechanism. It is an operation at the juncture of economic, legal, and emotional structures, all of which represent inequality under the category of opportunity. Migrant debt should be seen as a new form of modern-day bonded labor, which necessitates rethinking of migration policies, financial governance, and labor rights.

6. Conclusions

Pre-migration informal credit traps workers into long-term labor exploitation. This study reveals how financial and emotional tools reinforce dependency; therefore, reform is required at structural, legal, and cultural levels. Only international cooperation and migrant-informed policies can break this cycle. The cycle of debt bondage can only be broken through coordinated efforts allowing migrant workers to achieve the dignity and security that they are looking to obtain through migration. A combined effort from source and destination countries is needed to refine the legal reforms and prevent pre-migration debt.

6.1. Recommendations

Based on the findings of this study, policy-makers are recommended to regulate recruitment fees to ensure there is a reduction in the financial burden that compels migrant workers to take loans from informal parties. For legal authorities, ensuring improvements in access to legal aid and dispute resolution for migrant workers, while increasing awareness about the legal aid available, is recommended. Increasing migrants’ awareness of the dangers of informal loans and extending their financial literacy could be crucial in dealing with the problem at its source. In addition, it is important to provide supportive counseling and address the emotional and social dimensions of debt in the migrant worker community, as their well-being is an integral part of achieving the SDGs.

6.2. Practical Implications

1.

Cross-border regulations of recruitment practices and informal lending.

To address the root causes of pre-departure debt, there is a pressing need for bilateral or multilateral regulatory frameworks that hold recruitment agents and informal lenders accountable across borders. Origin and destination countries must cooperate to standardize ethical recruitment guidelines, enforce licensing and monitoring mechanisms, and penalize agents engaging in exploitative practices, such as charging exorbitant fees or misleading migrants about job conditions. Formalizing recruitment channels and regulating informal lending networks can help dismantle the systems that enable debt bondage before departure.

2.

Financial literacy training in migrant-sending communities.

Providing financial literacy education in rural and migrant-sending communities can empower potential migrants and their families to make informed decisions about borrowing and spending. Training programs should focus on explaining the risks of informal loans, promoting saving behaviors, understanding employment contracts, and assessing the real costs of migration. These programs can be delivered through schools, community centers, or local NGOs in collaboration with government agencies, thereby reducing vulnerability to predatory lending and misinformation.

3.

Improved access to legal aid for migrant workers.

Migrant workers often lack access to affordable legal assistance, especially when facing contract violations, wage theft, or disputes with recruitment agents. Establishing transnational legal aid support systems—both in origin and host countries—can help workers seek redress without fear of retaliation. This includes setting up helplines, mobile legal clinics, and partnerships with labor rights organizations. Legal aid should be multilingual, confidential, and culturally sensitive to ensure that migrants fully understand their rights and seek justice when needed.

4.

Psychological counseling to help the workers recognize and respond to emotional manipulation.

Migrant workers frequently endure psychological pressure and manipulation both before and after migration that can affect their ability to assert their rights or seek help. Offering pre-departure psychological counseling and mental health support services can help workers build emotional resilience and recognize signs of coercion or guilt-based manipulation. NGOs, religious organizations, or trained peer counselors can provide group or individual sessions, helping migrants to mentally prepare for the challenges ahead and develop coping mechanisms.

6.3. Future Research Directions

The findings revealed from construction migrant workers’ interviews can be compared with other migrant workers’ experiences in the domestic help sector, as they are the other most uninformed and unskilled worker class in the UAE. Moreover, quantitative surveys with a large sample size should be conducted to confirm the generalizability and validity of these findings in a larger migrant worker population.

6.4. Final Note

It is unfair to attribute the persistence of migrant labor exploitation solely to the UAE, given that many of these issues originate in sending countries, where oversight of recruitment agents and informal financial systems is weak or absent. Furthermore, migrant-led informal economies and social networks often reproduce exploitative practices within the host country, independent of state policy. This study recommends holding migrant intermediaries accountable under UAE law and enhancing enforcement mechanisms against such actors. The UAE’s ongoing reforms and legal protections demonstrate a strong commitment to improving labor conditions, and such efforts should be recognized and supported through coordinated international action.