We know the road taken by the World Bank and the International Monetary Fund (IMF) since the beginning of the 1980s. It was first called ‘Structural Adjustment,’ then ‘Washington Consensus,’ and finally simply ‘Neoliberal Policies.’ These were based on fiscal balance, open borders for goods and capital, privatisation and deregulation, promotion of competitiveness, and protection of property rights. No social dimension whatsoever was part of the consensus.

This changed in 1990 when the World Bank put poverty reduction on the global agenda. It was very clear, however, that this was not meant to add social policies to the neoliberal programme— it was more a kind of very smart cover for this programme. Austerity did not change, but from then on, all these policies promoted by the Bretton Woods institutions were meant to ‘reduce poverty.’ It was another example of how the idea of ‘poverty’ was politically used—or abused—for other objectives than its eradication.

However, several UN organisations did push for a social agenda. The consequences of structural adjustment were too bad to be ignored, and UNDP published its ‘Human Development’ agenda, UNICEF made studies on the concrete results of ‘adjustment’ for women and children, UNCTAD published its own poverty statistics, and in 2000 adopted a programme for ‘Millennium Development Goals.’ UNRISD, the research Institute in Geneva, put inequality on the agenda.

The ILO insisted on ‘social justice’ and ‘decent work'—it proclaimed its ‘fundamental principles and rights at work’ and in 2012 adopted a recommendation on ‘social protection floors.’ Slowly, the World Bank had to adapt its agenda as well, or was it only its discourse? Its ‘poverty reduction’ did not have the formally expected results. In 2000, the Bank published a first theoretical and strategic framework for social protection. It was called indeed ‘social protection,’ but in fact it was about risk management and it totally ignored the existing UN covenant on economic and social rights.

From that date onwards, the Bank constantly evolved and adapted its discourse to include a social protection agenda, it added labour to it in 2012, it proposed a ‘new social contract’ in its World Development Report of 2019, and it published a ‘Compass’ on ‘Charting a new Course’ for social protection in 2022.

A different logic

The World Bank speaks about social protection, even about universalism, a social contract, trade unions and collective bargaining, but time and again, the ideas either do not enter its political agenda or are weakened and watered down even before they become reality. ‘Universalism’ is the best example of a concept that is used with a different meaning. Even if the Bank signed a Joint Declaration with the ILO and entered a global partnership for universal social protection, it is only meant ‘for those who need it.’ It is clear that if you have a reasonable wage and you can pay your rent, you do not ‘need’ the help social protection may have to offer. It has to be mentioned that even for the ILO in its recommendation on social protection floors there is room left for interpretation.

As for the ‘social protection’ to which was added ‘labour’ in 2012, it was said that the focus was to ‘move social protection and labour strategy from isolated interventions to a coherent portfolio of programs.’ This was meant to go beyond the safety nets and conditional cash transfers. However positive these words may sound, it was clear that the focus was still on risks and risk management and therefore resilience to be developed by individuals and families so as to ‘cope with sudden shocks.’ ‘Shocks’ were not unemployment or illness but high inflation, epidemics, or natural catastrophes.

The main point in this strategy is the neoliberal belief that ‘insurance,’ which social protection basically is, should not be provided by public authorities but by the private sector. The addition of labour to the strategy at first was seen as very positive, since a good job with a decent wage is indeed the fastest and best way to get out of poverty.

Nevertheless, we have to mention the Doing Business reports. In 2013 for example, fixed term contracts and 50 hour workweeks were seen as positive achievements, whereas a premium for night-work and paid annual leave were on the negative side. ‘Employment laws are needed to protect workers from arbitrary or unfair treatment,’ the Bank said. It claimed its indicators were consistent with the ILO conventions, but they did not cover the ILO’s Core Labour Standards. Yet, ‘Upholding Core Labour standards is central to protecting workers and improving their productivity.’ This could indeed be a huge step forward if it did not add it wanted ‘to strike a right balance between protection and competitiveness.’

The document of 2012 ‘Resilience, Equity, and Opportunity’ was indeed the first text in which the World Bank implicitly accepts trade unions and collective bargaining, included in the Core Labour Standards. In its World Development Report of 2013 however, it says that ‘collective bargaining does not have a major impact’ as well as that ‘there is little evidence on the impact of trade unions.’ Finally, it adds that ‘there is no consensus on what the content of labour policies should be.’

A social compass or a social contract?

The World Bank’s World Development Report of 2019 was entirely dedicated on the idea of a ‘new social contract.’ It was followed by a ‘white paper,’ that same year on ‘Protecting all: risk sharing for a diverse and diversifying world of work.’ The ‘labour market regulations’ the World Bank has in mind are not meant to create better labour markets with more security and protection for workers.

In order to ‘cover all workers,’ the World Bank in fact proposes to cancel all existing regulations and start anew. This means trade unions can continue to work and organise, can continue with collective bargaining, but in fact their power will be strongly eroded by the ‘new world of work,’ unless they succeed in organising all non-organised workers, an option the World Bank does not even consider.

Secondly, the World Bank does not propose to re-regulate the labour market and try to formalise workers or fight the current precariousness induced by the platform economy. The labour market is what it is, decided by big and small corporations. According to the Bank, we should not try to change it but adapt to this changing world. Standard labour contracts are not coming back, it says. The time we thought people and societies could shape the world they live in, is over.

Thirdly, the contributory system that made workers and employers the owners of social protection systems is bound to disappear. This will inevitably take away power from workers and make them entirely dependent on States, governments, and budgets. As was noted already in a comment on the draft World Development Report of 2019, to separate social protection from work is a very dangerous road to go as it de-powers workers.

Fourthly, while the role given to governments sounds positive, it does not de-privatise insurance and other mechanisms, on the contrary. Governments may give subsidies for insurance premiums and ‘nudge’ people to buy private insurances. Labour market mechanisms, such as for training or employment assistance can be totally private—governments will pay.

Finally, needless to say, and contrary to the ILO, the World Bank does not speak about human rights. ‘Risk sharing policies’ are not about protecting people against the whims of the market; it is about creating and promoting markets for insurance, health, and education, it is about promoting growth and productivity, it is about ‘consumption-smoothing,’ it is about pushing all people on the labour market. It is about ‘risks and shocks’ that people may have to cope with without catastrophic consequences. It is about subsidising very basic social security.

There is, then, no fundamental ‘re-thinking’ of its old ideas of the past thirty years, there is only a re-ordering, using some of the more attractive concepts from the ILO. In its 2022 ‘Charting a Course towards Universal social protection,’ the ‘Compass,’ the three goals of social protection, become ‘resilience, equity, and opportunity.’ Again, it looks as if the World Bank is making more progress, speaking even of unemployment insurance, but in fact it sticks to its management of risks. The objective of social protection is not to protect but to boost productivity and growth. This new objective determines all its proposals and has serious consequences.

Be ready...

The international trade union movement has never stopped to denounce the reports on ‘Doing Business’ for their lack of willingness to seriously take into account labour rights. Today, there is a new initiative: Business Ready or ‘B-ready.’

“The focus has been too much on what governments can do for the good of business—and not enough on what businesses can do for the good of all. This report is a first step to correct that imbalance. The Business Ready (B-ready) project aims to build a comprehensive instrument panel needed for a vibrant private sector development—the combination of conditions that will reduce poverty, advance shared prosperity, and speed up the transition to a low-carbon economy. Its goal is to accelerate smart development by encouraging healthy competition among businesses and countries. It is designed expressly to discourage 'a race to the bottom' or simplistic solutions that were the unintended by-product of Doing Business.” (p.xi)

“The private sector must become more dynamic and resilient to meet formidable development challenges. These challenges are far beyond the capacity of governments to tackle alone.” (p.xix) “Business Ready is a key instrument of the World Bank Group’s new strategy to facilitate private investment, generate employment, and improve productivity to help economies accelerate development in inclusive and sustainable ways.” (p.xx)

B-ready’s analytical framework consists of ten topics, three pillars, and three cross-cutting themes. The 10 topics are Business Entry, Business Location, Utility Services, Labour, Financial Services, International Trade, Taxation, Dispute Resolution, Market Competition, and Business Insolvency. The three pillars are Regulatory Framework, Public Services, and Operational Efficiency. The three cross-cutting themes are linked to the 10 topics: digital adoption, environmental sustainability, and gender.

The Labour topic measures good practices in employment regulations and public services from the perspective of both firms and employees across three pillars. (p. 70) The first pillar examines the quality of de jure features needed for the functioning of the labour market related to workers’ conditions and employment restrictions and costs, such as the provision of a minimum wage, equal remuneration for work of equal value, and health and safety.

The second pillar looks at the existence of critical public services that can help enforce, facilitate, and complement quality labour regulations, such as unemployment protection, health care coverage, and retirement pension for workers, as well as employment centres, labour inspectorates, and dispute resolution mechanisms. The third pillar provides insights into non-wage labour costs, employment restrictions and costs, training, and the prevalence of labour disputes and efficiency in resolving them from the firm’s perspective.

...for no change

A first important comment needs to point to yet another semantic shift. ‘Public services’ here are not, as their name indicates, organised by public authorities for the public. They are for business:

“Public Services spans the facilities that governments provide to support compliance with regulations and the institutions and infrastructure that enable business activities. They emphasise such aspects as digitalisation, interoperability of government services, and transparency.” (p. Xxiii) Other important comments come, once again, from the international trade union movement. In the lead up to its development, the ITUC had already criticised B-Ready methodology as well as its effective promotion of a race-to-the-bottom in labour rights, working conditions, and social protection.

“As workers around the world face brutal retaliation for exercising their right to organise a union and improve their working conditions, it is deeply troubling for the World Bank to rank countries in a way that stimulates competition to erode labour standards. There is no shortcut for democratic consultation and social dialogue on labour market practices. Reforms based on such an unbalanced analysis will be misguided at best and dangerous at worst. Labour policies are not simple inputs, like business licenses or utility hook-ups, and they can’t be ranked in the same fashion.”

Despite repeated requests by trade unions to engage with the Bank on this and on other initiatives that have major implications for workers, the Bank went ahead with the Index with its flawed labour topic, ignoring the concerns of democratic workers’ representatives. More specifically, ITUC points to the Superficial evaluation of workers’ rights and fundamental freedoms, the Undermining social protection, and the erosion of social dialogue and promotion of harmful flexibility.

“By penalising contribution-based social protection systems, the B-Ready Index promotes an unrealistic and potentially harmful shift towards tax-financed schemes.” It also undermines the crucial role of collective bargaining. In fact, there is nothing ‘new’ in this new proposal. Social protection and labour rights are not meant to protect people anymore but to boost growth and productivity. It is at the service of the economy.

The World Bank did not change its basic philosophy. It constantly adapts its discourse, it uses the concepts en vogue when they are without risk, it changes its vocabulary when it is needed to avoid the traps of more solidarity and redistribution. The basic ideas remain the same as in 1990: target the poor and let governments and workers help companies to thrive—that is to make a profit. The new social contract, then, is not the result of a public and democratic debate between citizens, their organisations, and governments. It is not about the relationship between society, markets, and the State. It is not about shaping and regulating markets, labour relations, and social protection with rights and duties for all.

One last point has to be made for those who think the World Bank has no influence in their country. This may certainly be true, but what the Bank is doing is building and disseminating knowledge. It does not need to have direct influence—the knowledge percolates down and influences governments and other decision-makers. One should not be surprised to notice and undergo the repression of workers and their trade unions. It is implicit in Bank’s programme.