Oxfam criticises World Bank for backing deregulated labour markets
World Development Report dismisses concern about growing income inequality, say critics.
Aid charities and trade unions have denounced a World Bank report that advises some of the poorest countries in the world to accept the demands of multinational corporations to hire and fire workers and remove laws protecting workers’ rights.
Oxfam said the report’s main message was that governments should abandon labour market regulation and rely instead on low levels of welfare to prevent workers falling into extreme poverty.
With poor countries facing the twin threats from large corporates unwilling to negotiate with trade unions and young start-ups insisting on casual labour arrangements, Oxfam said the World Bank appeared to offer labour market deregulation as the only way to prepare countries for the changing nature of work.
The International Trade Union Confederation also expressed alarm, saying that the World Bank, which provides development loans to struggling nations, was guilty of accepting as benign the sweeping changes brought in by new technologies, in its latest World Development Report (WDR).
It also accused the World Bank of selectively choosing a small group of countries and household income figures from favourable years to illustrate falling levels of inequality.
“One particularly striking assertion near the beginning of the report is the dismissal of any concern about growing income inequality. It does this by claiming that in 37 of 41 developing and emerging economies Gini coefficients, which measure inequality, either decreased or remained ‘unchanged’ between 2007 and 2015. Besides the limited number of countries in the sample, the choice of the WDR to retain only eight years of data – starting with the beginning of the global financial crisis – is highly selective,” it said.
Launched at its annual meeting in Bali, the World Bank’s annual policy statement is widely regarded as setting the tone for anti-poverty projects across the developing world. A draft of the report published earlier this year was widely criticised for proposing lower minimum wages alongside greater hiring and firing powers for employers.
Proposals to cut minimum wage levels have been dropped, but broader deregulation policies remain a key theme of the report, critics said.
The bank’s president, Jim Yong Kim, said he was urging governments to increase spending on social protection, health and to clamp down on tax evasion.
“The report challenges governments to take better care of their citizens, calling for a universal guaranteed minimum level of social protection. Full social inclusion will be costly, but it can be achieved with reforms in labour market regulation in some countries and, globally, a long overdue overhaul of taxation policy,” he said.
Oxfam said the emphasis on social protection put the costs of supporting workers and poor households on the government, letting employers off the hook.
“The WDR casts serious doubts over the commitment of the World Bank to reducing the gap between rich and poor,” it said.
“Its core recommendation, the need to water down the rights of workers for the greater good of the economy, was discredited may years ago. It is completely at odds with the OECD and the International Monetary Fund, both of which are saying that we need more trade unions and higher minimum wages to counteract the growing power of extreme wealth in the world.”
The World Bank has suffered a turbulent year following the exit of its chief economist, Paul Romer, who quit after accusing his department of manipulating figures to support the bank’s policies.
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