World Bank Calls for Lower Wages and Less Worker Protections

A working draft of the bank’s flagship World Development Report – which will urge policy action from governments when it comes out in the autumn – says less “burdensome” regulations are needed so that firms can hire workers at lower cost

By Larry Elliot and cross-posted from The Guardian

The World Bank is proposing lower minimum wages and greater hiring and firing powers for employers as part of a wide-ranging deregulation of labour markets deemed necessary to prepare countries for the changing nature of work.

A working draft of the bank’s flagship World Development Report – which will urge policy action from governments when it comes out in the autumn – says less “burdensome” regulations are needed so that firms can hire workers at lower cost. The controversial recommendations, which are aimed mainly at developing countries, have alarmed groups representing labour, which say they have so far been frozen out of the Bank’s consultation process.

Peter Bakvis, Washington representative for the International Trade Union Confederation, said the proposals were harmful, retrograde and out of synch with the shared-prosperity agenda put forward by the bank’s president Jim Yong Kim.

He added that the WDR’s vision of the future world of work would see firms relieved of the burden of contributing to social security, have the flexibility to pay wages as low as they wanted, and to fire at will. Unions would have a diminished role in new arrangements for “expanding workers’ voices”.

The paper “almost completely ignores workers’ rights, asymmetric power in the labour market and phenomena such as declining labour share in national income,” Bakvis said.

The International Labour Organisation has also expressed alarm at the proposals, which include the right for employers to opt out of paying minimum wages if they introduce profit-sharing schemes for their workers

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