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The World Bank has recently released 2007 report "Doing Business", and its conclusions are one more time not "surprising". If a country wants to "progress" it should make it easier to fire workers, cut or eliminate severance payments and replace this cost on employers for unemployment insurance payed by workers, eliminate the ban on night work for women and children, where applicable, and even the eight-hour work shift, among other things.

Twenty-seven thousand workers at the Ghazl el-Mahalla textile plant – the biggest and oldest in Egypt – are on strike. At eighty-eight piastres (about fifteen dollar cents) per hour, they should work four hours to buy one kilo of tomatoes, and five days to buy one of meat. Workers have disobeyed orders to resume work given by the pro-government trade union and the movement has now spread to postal and railway workers upon the imminent wave of privatizations announced by prime minister Ahmed Nazif.

While the international press comments on the irruption of popular sectors into the political life of Egypt – where the opposition was reduced to the Muslim Brotherhood or the left-wing intelligentsia – the World Bank congratulates Egypt as “the top reformer” over the last year in its report Doing Business, which was released last week.

To add to the controversy brought by this report, in a large-sized advertisement published in the Financial Times, the Saudi monarchy enthusiastically celebrates the news that Saudi Arabia is now topping the ranking as the best country to do business in the Middle East, outpacing Israel. Doing Business had already brought scandal last year when Singapore rose to the top spot in the world ranking. The same as in Egypt, the political life in Singapore is characterized by authoritarianism, the merely formal existence of a tolerated opposition and the compulsory obedience of trade unions towards the ruling party. In Saudi Arabia there are neither parties nor trade unions and the female population cannot even drive cars. In the opinion of the World Bank, none of these factors negatively affect business undertakings.

Although the report is entitled “doing business”, the survey fails to take into account key factors for businesspeople such as the access to markets, infrastructure, public services, social and political stability or the skills and health care of the labour force. In turn, the ease of doing business index is built on the procedures that should be carried out to be granted a construction or an export license, to hire or fire workers, to get loans or close down a company. In all cases, to compare among countries, they take a “typical” company that abides by every law and regulation, has been set up with national capital, has 250 employees, is located in the country’s most populous city and “does not grant workers more benefits than those mandated by law”, while the “typical” worker is a male lawful citizen, who belongs to the same race and religion as the majority of the country’s population, has two children “and a wife that does not work” and is not a member of a trade union, unless membership is mandatory.

When data is compared on these assumptions, it is not taken into account that such “typical” company is a small-sized company in some countries, a medium-sized company in others and a large company in most poor countries and, therefore, it is capable of negotiating with the political power certain concessions and benefits that go beyond what is stipulated in general application regulations. The atypical character of the “typical” worker in diverse societies as those of the Third World is obvious. For the World Bank, not only do women engaged in household activities fail to work but also businesswomen are not considered as such since they are generally in charge of companies with less than 250 employees. The only gender-sensitive reference in the Doing Business report recommends to level the retirement age for men and women, which implies almost everywhere that women with formal jobs will be working more years!

Based on these concepts, it is not surprising that the results in the ranking turn out to be impressive and make Saudi autocrats happy. In South Asia, the dictatorship of Pakistan is ranked second below the tiny Maldive islands, while India is ranked penultimate, hardly outpacing Afghanistan! In Latin America, Brazil is ranked 26, quite below Belize, Jamaica and Nicaragua, while in East Asia, China and Vietnam are at the bottom of the ranking – although their progress has been acknowledged – largely outpaced by… Mongolia.

Not only do real world investors seem to ignore the recommendations of the World Bank and stubbornly aim at China, Vietnam, Brazil and India where doing business would not be easy at all, but also the considerations of the World Economic Forum held in Davos – the very well-known annual meeting place of the business world – are quite different. The “global competitiveness index” published annually by the WEF ranks Switzerland first, followed by Finland, Sweden and Denmark – Nordic welfare states (with advanced social security systems) – while Pakistan is ranked 91, quite below India in rank 43, and Mongolia is ranked below Pakistan.

Provided that neither the considerations of researchers working for the business world nor what investors indeed do when it comes to making investments are in agreement with the Doing Business report, what is the use of it? The answer is provided by the authors within the same report: “Publishing comparative data on the ease of doing business inspires governments to reform”.

Such is the emphasis placed on promoting reforms that the report’s website (www.doingbusiness.org) provides a software tool to simulate how a country’s ranking would change if it reformed. Besides reducing the number of procedures before public offices, using the Internet and simplifying taxes, if a country wants to “progress” it should make it easier to fire workers, cut or eliminate severance payments (and replace this cost on employers for unemployment insurance payed by workers), eliminate the ban on night work for women and children, where applicable, and even the eight-hour work shift.

Nevertheless, this incentive is not reduced to a healthy competition to win over neighbours. World Bank rankings, officially presented as an intellectual exercise that is not intended to risk the institution’s official opinion, are taken by the Organization for Economic Co-operation and Development (OECD) – which gathers the main donors and creditors of poor countries – as a measure of aid effectiveness and, therefore, they influence decision-making as to where such aid should be channelled.

Related information:

* World Bank and IMF – Major changes needed: World Bank’s "Doing Business" Report getting it all wrong on employment and workers’ rights, by ITUC

This article was first published on October 4, 2007 in Agenda Global, a weekly supplement issued every Thursday with the newspaper La Diaria (Montevideo, Uruguay).

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