Responsible business identified as key indicator to drive economies by independent ‘’Doing Business” review panel

The International Trade Union Confederation has called on the World Bank to adopt and implement key recommendations made by the independent Doing Business Report Review Panel, headed by South Africa’s Minister of Planning Trevor Manuel.

Sharan Burrow, General Secretary of the ITUC, said for ten years the World Bank’s ‘’flagship’’ Doing Business report has given governments cover to put the interest of private companies ahead of working people and their families.

The ITUC has been a strong critic of Doing Business because of its use by the Bank to push for indiscriminate elimination of government regulations. It has harmed governments’ capacity to properly regulate and tax business activities and protect the interests of workers and the poor.

“The industrial tragedy in Bangladesh two months ago, where more than 1100 workers lost their lives because of lax regulation, shows the dangers of promoting a deregulatory agenda in the area of workers’ protection.

“The World Bank is a development institution and should encourage countries to adopt and enforce adequate regulations, not act as a lobby for the most retrograde business interests.

“We very much support the panel’s recommendation that the Bank should develop a new and balanced approach on labour market policy outside of the Doing Business project and work more closely with the ILO,” said Sharan Burrow.

One of the report’s key recommendations is to remove the tax rate indicator which encouraged governments to reduce to a minimum all taxes and contributions paid by business.

“It is high time that the World Bank stopped inciting countries to become tax havens, now that even the G8 is addressing the issue of tax avoidance.

“The Bank should encourage governments to design a tax system that allows states to generate the revenue they need for financing quality public services and providing needed infrastructure. This is vital to countries’ economic as well as social development,” said Ms Burrow.

The ITUC called for three recommendations in the report to be implemented quickly to ease the impact of the Banks discredited Doing Business principles on working people:

• Elimination of the “Total Tax Rate Indicator”, through which the Bank has encouraged governments to reduce to a minimum all taxes and contributions paid by business, including pension premiums, workmen’s compensation and other health and safety fees, including those for maternity protection; tax havens and oil states have usually been given the best scores.

• Permanent removal of the “Employing Workers Indicator”, which had been used to encourage countries to reduce labour regulations to a very low level; the Bank suspended this indicator in 2009 but Doing Business has continued to collect the data for this indicator and promote a one-sided view of labour regulations in an appendix to the annual report.

• Ending the overall “Ease of Doing Business Indicator” and country rankings, which have encouraged a race to the bottom of eliminating a wide range of government regulations without an adequate evaluation of their benefits and costs; the impact has been particularly damaging on countries dependent on World Bank financial assistance because of its use in loan conditionality.

Unions are calling for the change to be implemented as soon as possible, although the major recommendations are not expected to be included in the next 2013 World Bank Doing Business report due to be published by October.

“The panel’s report is defining moment for World Bank policy to reflect the needs of working people, and a balanced approach to labour market regulation. If adopted, the World Bank has the opportunity to reshape the relationship between working people, business and governments,” said Sharan Burrow.