Doing Business’ persistent blind spots

26 September 2008

The latest edition of the Bank´s Doing Business report was published in September. Critics, including the international labour union ITUC, argue that the country ranking system rewards less regulation whether it derives from efficient or simply inadequate labour laws (see Update 60, 57, 53). The report, which connects labour regulations to business performance and in turn, macro-economic outcomes, has failed to address some of the key points of June’s Independent Evaluation Office (IEG) critique. For example, the unsubstantiated link between low levels of worker protection and positive economic outcomes is maintained despite the IEG´s disapproval of the “overstated claims of the indicators’ explanatory power.” The IEG evaluation reinforced civil society critiques of the indicators including about job protection, the bias toward lower regulation and the poor quality of data. The Bank management disagreed with some of the IEG findings yet seems to employ a tactic of selective reading. For instance, pointing out the conclusion that the ’employing workers’ index complies with the core labour standards and conventions of the ILO yet neglecting the criticism that it gives lower score to countries that have chosen policies for greater job protection.

“By declaring countries with the lowest level of workers’ protection to have the best labour regulations, the World Bank makes a mockery of its claim to respect workers’ rights and to support improved living standards for working people in developing countries,” said ITUC general secretary Guy Ryder. “The Bank should draw the appropriate lessons from its own evaluation unit, which found the methodology of Doing Business to be flawed in identifying labour standards and contributions to social programmes as nothing more than obstacles to investment. The mandate to determine the Bank’s policy recommendations for developing countries’ labour regulations and social protection should be taken away from Doing Business,” said Ryder.