CAFOD calls for World Bank reform to boost jobs

As unemployment rises to 200 million during the global recession, the World Bank's annual meetings in Tokyo focused on jobs – how to get them, and their role in tackling poverty.

In a high-level panel, to coincide with the World Bank meetings, CAFOD brought together representatives from the Chinese government, international trade union movement, Zambian civil society and the World Bank to debate reforms to the Bank’s influential Doing Business project.

These rankings influence changes to the business environment in all countries. We believe they need radical change if they are to make a positive contribution to creating jobs and to reducing poverty.

This builds on the work of CAFOD’s Get Down to Business campaign, and Thinking Small reports, which highlighted the importance of small businesses in providing jobs and routes out of poverty for the vast majority of poor men and women in developing countries.

Impact on small businesses questioned

During the panel discussion, Peter Bakvis, Director of the International Trade Union Confederation, criticised the current rankings saying, “It’s not an analytical document that countries can use or ignore. It is used systematically by the World Bank to push for reduction of workers protection. For example, when China introduced its new labour law in January 2008, it got a worse Doing Business score in the subsequent report for labour. This was really quite basic labour rights. Yet we know of no case where they said regulations were not good enough.” 

Economist Geoffrey Chongo, from CAFOD partner organisation Jesuit Centre for Theological Reflection (JCTR), added, “This publication gives too much attention to big businesses, not to small businesses. I come from a Christian organisation that speaks about social justice for poor people. So our concern is that the impact that this ranking has on small businesses is negative.”

Doing Business in context

World Bank representative Augusto Lopez-Claros,defended the Doing Business rankings, when placed in context: “There are many things you need to get right in order to promote development, such as education, and information communication technologies. Getting the rules that underpin activities of the private sector is one of these factors. It is tremendously important, but it is one among many.

"The Doing Business report has tried to capture what is important in this one subcomponent of a very complex agenda. Getting development right will require a much broader agenda to promote economic growth.”

Further reform needed

The need for reform was put forward strongly by panellist Bin Han, Alternate Executive Director for China, World Bank, saying: "For China, the conclusion made, based on our past ten years experience, is straight forward: the report has used wrong methodologies, failed to reflect facts, misled readers and added little value to improving China’s business environment, not to mention its growth and development."

This discussion showed that there is a process of reform ongoing at the Bank. This process is looking at measuring countries against their own progress rather than pitting them against each other, looking at how to rebalance some indicators such as those on labour regulations and corporate taxation, and looking at how to present findings differently to diffuse some of the controversy of ‘naming and shaming’ countries.

The discussion also showed that these reforms do not yet satisfy the Bank's critics, and that the new review, launched by World Bank President Jim Yong Kim, has a real job to do.

Read further highlights of the event and quotes from the speakers >

Read more analysis of the event on Phillip Inman's Guardian economics blog >