Doing Business as Usual, World Bank Rewards Worst Worker Record

by James Parks, Sep 28, 2008

For the second year in a row, the World Bank has rated a former Soviet republic as “having the best worker protection” in the world. The top-rated country this year is Belarus, a country where labor practices are so bad the International Labor Organization (ILO) has condemned the country’s dictators for curtailing workers’ rights and the European Union withdrew trade preferences. 

Last year’s “winner” was Georgia, which, in 2006, did away with most of its worker-protection rules, removed many working conditions from collective bargaining and allowed any worker to be dismissed without valid reason. Further, unions there can be banned altogether if officials believe they are stirring up “social conflict.” 

So what’s going on that these two repressive countries rate such a lofty position from the World Bank? Every year, the World Bank rates nations in its flagship publication, Doing Business, based on criteria that in principle rank countries’ “ease of doing business.” The bank measures 10 separate indicators. But unions, academics and activists have criticized Doing Business as a one-sided publication, focused almost exclusively on a narrow “private investor” perspective, with little regard for social impact.  

Testifying before Congress last year, AFL-CIO Policy Director Thea Lee said:

Doing Business is an international disgrace. It classifies most protections for workers as investment impediments. It ranks human-rights abusers as stars, and downgrades democratic countries with strong labor institutions and protections.

Doing Business is not simply a neutral set of indices, but rather a powerful policy document, used to determine loan eligibility and to send a message, both to governments and to investors, about “desirable” regulatory reforms.

Lee and others note the World Bank consistently gives the best scores to countries that have the least amount of regulations on minimum wages, maximum work hours, advance notice for mass layoffs, severance pay, hiring and firing and more.

Guy Ryder, general secretary of the International Trade Union Confederation (ITUC), says the danger in the ratings is that the World Bank uses them to advise countries on how to deal with workers.   

By declaring countries with the lowest level of workers’ protection to have the best labor regulations, the World Bank and IMF [International Monetary Fund] have used the Doing Business indicators in numerous country-level policy reports to advise governments to dismantle workers’ protection or reduce funding for social safety nets. In some cases, countries have been forced to comply with the recommendations through loan conditions, even if such measures work at cross-purposes with the Bank’s stated goal of eliminating poverty. 

One solution, Lee says, is for the World Bank to include the promotion of decent work as one of its key criteria for loans. According to the ILO, decent work  

involves opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men.    

It makes a difference to American workers if our international institutions see their mission as fighting poverty by empowering and protecting workers, or as weakening worker protections in a misguided attempt to stimulate private investment and growth.   

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