Latest Information

The World Bank’s ‘Doing Business‘ (DB) report is one of the Bank’s flagship initiatives to promote business-led economic growth. The annual report ranks countries on a variety of indices in order to compile a list of the countries with the most pro-business enabling environment. In the 2008 report, Singapore tops the index, whilst the Democratic Republic of Congo is considered the worst country in the world in which to do business.Earlier this month the World Bank’s Independent Evaluation Group (IEG) released a report which argued that the DB report was “ideologically stilted” and “of little practical use”.  They stated that “on seven of the ten indicators, less regulation generally gets a higher score, whether a country starts with a little or a lot of regulation.” The evaluation underscores that this feature makes it difficult to tell whether DB’s top ranked countries have regulations that are good and efficient or simply insufficient or inadequate from a socio-economic viewpoint.”

One of the key problems identified with the ranking is the ‘Employing Workers‘ index, where selected measures “give lower scores to countries that have policies for greater job protection”. The report noted that a “surprising number” of countries which have almost no labour rules, some of which are not even members of the International Labour Organisation (ILO), were considered by DB to be best performers for their labour legislation.

Since its inception in 2003, the ranking has been criticised as flawed by labour groups such as the International Trade Union Confederation and the ILO. The ITUC’s critique argues that the report rewards countries for removing limits on work time, reducing minimum wages, abolishing workers’ recourse against unjust dismissal, and eliminating requirement of advance notice for mass dismissals.

In response to the Evaluation Group’s publication, the ITUC has issued a harsh response, calling for the removal of the topic of labour standards from the mandate of ‘Doing Business’.

Why is this so important? Well the DB indicators are incorporated into the World Bank’s general labour market strategy and its Country Policy and Institutional Assessment (CPIA) which is used to assess a country’s need for the Bank’s assistance.  As it currently stands, the DB report may risk supporting countries with lax labour legislation over those where workers’ rights are adequately protected.

This is an interesting insight into the high-level politics which affect the work Impactt does on the ground.  It is the outcome of debates like this which affect the focus a country puts into enforcing or updating its own labour legislation.  It is a positive step that the World Bank’s internal processes have identified the ideological bias encompassed in the existing reporting structure.  We sincerely hope that the IEG’s critique spurs the World Bank into recognising what Impactt has argued for some time - that labour regulations matter not just for workers but also for business.