This fall, the World Bank unveiled its new Business-Ready (B-Ready) index, a successor to the controversial Doing Business Report (DBR), which was discontinued in 2021 amid a data manipulation scandal (see Dispatch Annuals 2023; Observer Summer 2023, Winter 2021). Promising a more comprehensive assessment of countries’ business environments, the new index goes beyond considering only the regulatory environment and includes measures of the quality of public services and enterprise survey data. Still, the B-Ready index maintains the approach that made the DBR a ‘darling’ of investors and a closely monitored product for policymakers: a simple ranking that reduces complex processes in the business lifecycle to mere numerical scores. While this reductionist approach might work for operational business tasks, such as measuring electricity access, its application to labour relations has fundamental flaws.

The index revives the controversial ‘employing workers’ indicator – previously removed from the DBR after years of criticism from the global labour movement and international organisations for rewarding countries with the lowest level of regulations, including violators of workers’ rights – which is intended to make their economies friendlier to business. The revamped B-Ready now includes indicators to measure whether countries guarantee fundamental workers’ rights – from freedom of association to occupational safety – and provide key social protection schemes such as unemployment and health insurance. However, ITUC’s new analysis reveals that by treating labour policy as a purely technocratic issue, stripped of social and political context, B-Ready perpetuates its predecessor’s pro-business, deregulatory agenda, fostering a race to the bottom on labour standards.

One major methodological flaw lies in B-Ready’s reliance on a handful of lawyers to evaluate complex labour institutions and relations. Georgia, the top scoring country in the labour section, scores full points for mandating social consultation in setting or updating the minimum wage, even though the country has not updated its minimum wage since 1999. Furthermore, it is rewarded for having a minimum wage rate that falls far below subsistence level. This disconnect between the legal frameworks that protect workers and their implementation permeates the entire labour section of the index. While enterprise surveys capture regulatory impacts on firms, the index ignores real-world consequences for workers. Countries can score highly by maintaining minimal social costs for employers, creating a façade of worker protection without meaningful implementation. In short, B-Ready allows governments to appear compliant while effectively undermining labour rights.

The index revives the controversial ‘employing workers’ indicator, previously removed from the DBR after years of criticism from the global labour movement and international organisations for rewarding countries with the lowest level of regulations, including violators of workers’ rights, to make their economies friendlier to business.

Smoke and mirrors: how B-Ready’s privatisation logic undermines workers’ rights and protections

The stark disconnect between international institutions and local realities is vividly illustrated in Indonesia. While the World Bank and IMF lavishly praise the labour market reforms in the country’s 2020 Omnibus Law on Job Creation, Indonesian workers have waged a four-year battle against its assault on worker protections. Last October, their resistance culminated in a Constitutional Court victory, ruling the law conditionally unconstitutional – the second such ruling since 2021. This gulf between technocratic praise and ground-level resistance reveals how dangerously divorced international financial institutions (IFIs) remain from the human impact of their policy prescriptions. This growing distance is hardly surprising, given neither the World Bank nor the Fund undertake ex ante or ex post human rights impact assessments.

Indonesia’s pursuit of higher B-Ready rankings demonstrates how these metrics distort policy priorities in favour of a broader privatisation agenda. Taking advantage of the Covid-19 pandemic, President Joko Widodo’s administration rushed through labour flexibilisation policies while accelerating privatisation. The Omnibus Law expands precarious work arrangements and weakens minimum wage protection, providing employers greater flexibility in managing their workforce, and minimising wage and termination costs in line with B-Ready prescriptions. It facilitates dismantling state-owned enterprises like Perusahaan Listrik Negara (PLN), the power utility, to benefit private providers (see Observer Spring 2024). The state shifted social costs from employers to the government, creating under-financed schemes that undermine universal social protection. Despite its poor standing in the ITUC’s Global Rights Index, these worker-hostile policies helped Indonesia reach the top 10 in the B-Ready’s labour category – mirroring the DBR’s pattern of rewarding countries with deteriorating labour rights. To cite another example, the Philippines, where trade unionists face deadly persecution, ranks sixth in B-Ready’s labour metrics – a striking illustration of how the index’s technocratic measurements mask brutal realities.

In its most recent ruling, Indonesia’s Constitutional Court gave the government two years to draft a new employment law, offering Indonesia a chance to prioritise workers’ rights over ranking competitions. Yet, as long as the B-Ready index continues to reduce labour rights and relations to simplistic scores that diverge from on the ground realities, policymakers will face pressure to contend for the approval of international investors over workers’ rights and well-being.