Wednesday, November 14, 2007
[IWS] ILO: THE EMPLOYING WORKERS INDICATOR in WORLD BANK DOING BUSINESS REPORT [November 2007]
IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
INTERNATIONAL LABOUR OFFICE GB.300/4/1
300th Session
Governing Body Geneva, November 2007
FOR DEBATE AND GUIDANCE
FOURTH ITEM ON THE AGENDA
The United Nations and reform: Developments in the multilateral system
World Bank Doing Business report: The employing workers indicator
http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/wcms_085125.pdf
[full-text, 11 pages]
[excerpts]
5. The World Bank is strongly engaged in making the regulatory environment in countries
more conducive to investment and entrepreneurship. A landmark is the annual Doing
Business report whose 2008 edition was launched at the end of September 2007. In many
ways, these concerns rejoin the ILO's own efforts in fostering a conducive environment for
sustainable businesses. This came to fruition in June 2007 with the tripartite adoption of
the sustainable enterprises resolution by the 96th Session of the International Labour
Conference.
6. The resolution states, inter alia:
evaluating regulations that directly impact economic growth, making cross-country
comparisons, and identifying good practice reforms. It aims to provide an objective
measure of business regulations and their enforcement with a view to helping countries
develop a good regulatory environment to promote private sector development and
employment. The ranking is based on a Doing Business index (DB) which is composed of
ten subcomponents. These are: (1) starting a business; (2) dealing with licences;
(3) employing workers; (4) registering property; (5) getting credit; (6) protecting investors;
(7) paying taxes; (8) trading across borders; (9) enforcing contracts; and (10) closing a
business.
8. An issue of concern to the ILO is the employing workers indicator (EWI). The Office has
expressed its disquiet on a number of occasions to the World Bank staff responsible for the
Doing Business report that: the methodology of the employing workers indicator yields a
narrow and misleading view of the employment environment for business; results in a
ranking in which some countries with a strong and competitive private sector are placed at
the lower end; and is being used explicitly and implicitly to determine country lending
priorities in the field of labour market reform. In these contacts the Office has stressed that
other aspects of the Doing Business report may help focus attention on vital areas of
concern for healthy private sector development, such as security of property rights and
enforcement of commercial contracts, but that the methodology of the EWI detracts from
this effort.
10. These main issues and limitations involve the following key points:
(a) The EWI is a poor indicator of the investment climate and of labour market
performance to promote employment and decent work.
(b) There are serious methodological and technical limitations with the indicator.
(c) The design of the indicator and the scoring system suggests that reducing protection
to a minimum and maximizing flexibility is always the best option. The EWI does not
take into account the need for balance in labour market institutions and policies to
ensure that both enterprises and workers have the right combination of security and
flexibility to adapt to competition while ensuring an adequate security of income and
employment.
(d) International research does not provide conclusive evidence for the view that labour
market regulations are the main cause of informality or that lowering labour market
regulations beyond certain points will promote employment and transition to
formality.
(e) The Bank claims that " it is now possible for an economy to receive the highest
score on the ease of employing workers ... and comply with all 187 ILO
Conventions". This claim is misleading. Countries can achieve a high score on the
DB and face problems in the application of ratified Conventions.
(f) The Doing Business ranking has been used to promote policy reform in developing
countries, including via direct or indirect conditionality. While benefits can be
derived by reducing the cost of red tape and unnecessary regulations to a minimum,
there is a serious problem with promoting reforms of labour law based on the same
cost-minimization principles.
Appendix
Rankings on the employing workers indicator [for 2007]
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
INTERNATIONAL LABOUR OFFICE GB.300/4/1
300th Session
Governing Body Geneva, November 2007
FOR DEBATE AND GUIDANCE
FOURTH ITEM ON THE AGENDA
The United Nations and reform: Developments in the multilateral system
World Bank Doing Business report: The employing workers indicator
http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/wcms_085125.pdf
[full-text, 11 pages]
[excerpts]
5. The World Bank is strongly engaged in making the regulatory environment in countries
more conducive to investment and entrepreneurship. A landmark is the annual Doing
Business report whose 2008 edition was launched at the end of September 2007. In many
ways, these concerns rejoin the ILO's own efforts in fostering a conducive environment for
sustainable businesses. This came to fruition in June 2007 with the tripartite adoption of
the sustainable enterprises resolution by the 96th Session of the International Labour
Conference.
6. The resolution states, inter alia:
- An environment conducive to the creation and growth or transformation of enterprises
- on a sustainable basis combines the legitimate quest for profit one of the key drivers of
- economic growth with the need for development that respects human dignity, environmental
- sustainability and decent work ( ) Sustainable enterprises should innovate, adopt appropriate
- environmentally friendly technologies, develop skills and human resources, and enhance
- productivity to remain competitive in national and international markets. They should also
- apply workplace practices based on full respect for fundamental principles and rights at work
- and international labour standards, and foster good management relations as important means
- of raising productivity and creating decent work.
- on a sustainable basis combines the legitimate quest for profit one of the key drivers of
evaluating regulations that directly impact economic growth, making cross-country
comparisons, and identifying good practice reforms. It aims to provide an objective
measure of business regulations and their enforcement with a view to helping countries
develop a good regulatory environment to promote private sector development and
employment. The ranking is based on a Doing Business index (DB) which is composed of
ten subcomponents. These are: (1) starting a business; (2) dealing with licences;
(3) employing workers; (4) registering property; (5) getting credit; (6) protecting investors;
(7) paying taxes; (8) trading across borders; (9) enforcing contracts; and (10) closing a
business.
8. An issue of concern to the ILO is the employing workers indicator (EWI). The Office has
expressed its disquiet on a number of occasions to the World Bank staff responsible for the
Doing Business report that: the methodology of the employing workers indicator yields a
narrow and misleading view of the employment environment for business; results in a
ranking in which some countries with a strong and competitive private sector are placed at
the lower end; and is being used explicitly and implicitly to determine country lending
priorities in the field of labour market reform. In these contacts the Office has stressed that
other aspects of the Doing Business report may help focus attention on vital areas of
concern for healthy private sector development, such as security of property rights and
enforcement of commercial contracts, but that the methodology of the EWI detracts from
this effort.
10. These main issues and limitations involve the following key points:
(a) The EWI is a poor indicator of the investment climate and of labour market
performance to promote employment and decent work.
(b) There are serious methodological and technical limitations with the indicator.
(c) The design of the indicator and the scoring system suggests that reducing protection
to a minimum and maximizing flexibility is always the best option. The EWI does not
take into account the need for balance in labour market institutions and policies to
ensure that both enterprises and workers have the right combination of security and
flexibility to adapt to competition while ensuring an adequate security of income and
employment.
(d) International research does not provide conclusive evidence for the view that labour
market regulations are the main cause of informality or that lowering labour market
regulations beyond certain points will promote employment and transition to
formality.
(e) The Bank claims that " it is now possible for an economy to receive the highest
score on the ease of employing workers ... and comply with all 187 ILO
Conventions". This claim is misleading. Countries can achieve a high score on the
DB and face problems in the application of ratified Conventions.
(f) The Doing Business ranking has been used to promote policy reform in developing
countries, including via direct or indirect conditionality. While benefits can be
derived by reducing the cost of red tape and unnecessary regulations to a minimum,
there is a serious problem with promoting reforms of labour law based on the same
cost-minimization principles.
Appendix
Rankings on the employing workers indicator [for 2007]
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
****************************************
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
**************************************** # posted by SBasefsky : 12:32 PM
