ITUC OnLine – November 4, 2010

ITUC calls on World Bank to complete overhaul of “Doing Business”

Brussels, 4 November  2010 (ITUC Online):  The 2011 edition of the World Bank’s “Doing Business” report, released earlier today, includes a welcome first step for revising the report’s past practice of encouraging countries to dismantle labour and social regulations, which it did by granting its best ratings to countries with the lowest levels of workers’ protection. 

Doing Business 2011 has removed the “Employing Workers Indicator” (EWI) from the “Ease of Doing Business Index” and country rankings, although the basic data from which the EWI is calculated remains in an annex to the report.  The Bank has furthermore, according to Doing Business 2011, “instructed staff not to use the [EWI] indicators as a basis for providing policy advice or evaluating country development programs or assistance strategies”.

ITUC general secretary Sharan Burrow invited the Bank to complete the process of overhauling Doing Business.  “By considering labour regulations only from the view of whether they are deemed to be good for business, the World Bank has caused enormous damage to workers by advising borrowing countries through its highest-circulation publication that labour standards should be dispensed with,” said Burrow.  “The global economic crisis has made clear that well-designed and enforced labour regulations and social protection are essential for securing employment and for providing adequate income for those who lose their jobs.  The Bank should carry through on the positive step it has made in Doing Business 2011 by removing the EWI from all future editions and, instead, adopting policies on labour issues that recognise and reward the importance of adequate labour regulations and comprehensive social protection.”

The ITUC noted that even though Doing Business’s annex on “Employing Workers” speaks positively of countries that provide financial support for reduced working time programmes designed to prevent lay-offs or that have increased unemployment benefits, the report penalizes countries that require any sort of contribution by employers for unemployment insurance, workmen’s compensation, old-age pensions, maternity leave or other social protection programmes. 

Through its “Paying Taxes Indicator”, which has not been modified in Doing Business 2011, the Bank continues to advocate that business should be exempt from all forms of taxation, whether it be corporate income tax, property tax, social security contributions, property tax, capital gains tax or financial transactions tax.  Doing Business 2011’s top ten best performers for their very low total tax rate on business include Timor Leste, Vanuatu, Maldives, Macedonia, United Arab Emirates, Saudi Arabia and Georgia.

“At a time when countries around the world are facing huge fiscal crises as a result of the global recession even though corporate profits have surged back, it is not just retrograde but simply irresponsible for the World Bank’s highest-profile report to be promoting the idea that companies should not have to pay one cent of tax or social contribution,” said Burrow.

The ITUC also noted that Doing Business mentions countries that have sought to respond increased threats of job loss since the 2008-2009 recession by introducing advance notice periods for dismissal or, as in the case of Australia, severance pay requirements.  Burrow observed that, even with the changes in methodology for the EWI that the Bank has announced, these countries would still be downgraded in their Doing Business ranking if the EWI were reincorporated in the Ease of Doing Business index: “The Bank would be sending the wrong message to countries, namely that they should refrain from protecting workers facing dismissal and from providing adequate compensation to those who lose their jobs.  That is why it is important that the EWI be permanently removed from Doing Business.”

G20: Seoul Summit Must Tackle Rocketing Unemployment and Poverty, say World Union Leaders

Brussels/Paris, 4 November 2010 (ITUC OnLine, with TUAC): The Seoul G20 Summit needs to take decisive action to tackle the continuing global employment crisis and escalating poverty levels, according to the international trade union movement.  More than 220 million people are currently unemployed according to official figures – the highest level ever recorded.  Around 15% of the total unemployed lost their jobs since 2007.  Along with this, some 100 million people have been pushed into absolute poverty by the crisis.

“After a promising start by the G20 on employment and financial regulation, progress stalled at the last summit in Toronto.  Governments need to repair the damage when they meet in Seoul.  Coordinated action to generate decent jobs must be supported by effective regulation of banking and finance, including the introduction of a Financial Transactions Tax to take the burden of recovery off the shoulders of workers and make the banks, who caused the crisis, pay their fair share,” said ITUC general secretary Sharan Burrow, who will lead a 50-strong international delegation of top-level union officials to meet with G20 leaders in Seoul.

In their Global Unions Statement  to the summit, the unions set out a five-point agenda for global recovery and reform, based on:

  • Implementing recovery measures that focus on job creation, so that public deficits can be reduced through economic growth instead of spending cuts;
  • Putting quality employment and social protection at the heart of the G20 Framework for Growth;
  • Ensuring that green employment and “just transition” are at the core of action to arrest climate change;
  • Meeting development aid commitments, with creation of decent jobs in the recipient countries as a central objective; and,
  • Accelerating financial reforms, including fair taxation, a Financial Transactions Tax and a clamp-down on tax havens.  

A key union demand on the G20 involves the creation of a Working Group on Employment, involving government, employer and trade union representatives.  This would help ensure that employment, education and training issues would be given the necessary profile in the G20’s work in future.

The latest forecasts from the OECD show that the recovery has slowed in the wake of the shift to fiscal consolidation and that unemployment rates are expected to remain high at between 8 – 8.5 per cent in 2010 and just over 8 per cent in 2011. “The return to high levels of long term unemployment must not be the legacy of this crisis,” said John Evans, general secretary of the Trade Union Advisory Committee to the OECD, TUAC. “G20 leaders must re-prioritise and deliver a recovery in jobs in the short-term, meet their commitments on financial regulation and place fairness and sustainability at the heart of the G20 Framework for Strong Sustainable and Balanced Growth.”

“We are putting forward realistic and balanced proposals to the G20, and the central thrust of our message about creating decent jobs is supported by several governments and even the International Monetary Fund.  We are calling on the G20 leaders to demonstrate courage, determination and the political will necessary to lift the global economy out of recession and make the fundamental changes that are required to build a global economy which works for people,” said Burrow.

The ITUC represents 176 million workers in 151 countries and territories and has 301 national affiliates.

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