World Bank Scuttles Anti-Worker Index

by James Parks, Apr 29, 2009

The World Bank’s decision to revise the controversial labor-market ratings in its flagship publication, Doing Business, is long overdue and a “significant step” in the right direction, global union and political leaders say.

Every year, the World Bank rates nations 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.

One of the key rankings, the employing workers indicator (EWI), ranks countries on such things as maximum hours, minimum wage, severance pay and other non-wage benefits. For the past two years, former Soviet republics with repressive worker laws have received the top scores for worker protections, with other countries receiving lower scores for stronger labor market protections.

AFL-CIO President John Sweeney said in a statement:

We welcome and applaud this significant step, and we commend World Bank President Robert Zoellick for acting to address the concerns that have been raised over the years with respect to the Employing Workers Index.

We also congratulate House Financial Services Committee Chairman Barney Frank for his leadership, tenacity, and commitment to ensuring that the World Bank correct and clarify the message it sends to developing country governments about successful and sustainable economic strategies.

Testifying before Congress in 2007, 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.

In an April 27 memo sent to country and sector directors, World Bank management said the EWI does not represent World Bank policy and should not be used as a basis for policy advice or in any country program documents. The World Bank also will remove the EWI from the assessments the Bank uses to establish countries’ overall eligibility for loans and grants.

Rep. Barney Frank (D-Mass.) welcomed the changes, saying:

The notion that fairness for working men and women is somehow antithetical to good [World] Bank practice makes neither economic nor social sense, and I am pleased that this anti-worker indicator will no longer be promoted by the Bank.

International Trade Union Confederation (ITUC) General Secretary Guy Ryder, a longtime critic of the EWI, says:

In the context of the current global economic crisis, where 50 million more workers could become unemployed this year and pressures to decrease wages and workers’ living standards are intensifying every day, it is significant that an important development institution like the World Bank is turning the page on a one-sided deregulatory view on labor issues and proposing to adopt a more balanced approach where adequate regulation, improved social protection and respect for workers’ rights will be given a higher profile.

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