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  • Workers are seen inside a Foxconn factory in the southern Guangdong province of China.

    Workers are seen inside a Foxconn factory in the southern Guangdong province of China. | Photo: Reuters

Published 22 April 2018

"Burdensome regulations also make it more expensive for firms to rearrange their workforce to accommodate changing technologies," the report noted.   

In a major blow to labor rights, the World Bank in its annual flagship report, World Development Report, has called for the credit-states or "poor countries" to have fewer workers' regulations, like eliminating a requirement for minimum wage, allowing the employers to fire workers without cause, and repealing laws limiting abusive employment contract terms.

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The World Bank Report makes urgent policy recommendations to governments, and in its working draft it raised concerns over the growing use of artificial intelligence, and automation which it says would impact the workers' force and their wages significantly. 

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

Bakvis said the draft "almost completely ignores workers’ rights, asymmetric power in the labor market and phenomena such as declining labor share in national income." Further adding, that it "puts forward a policy programme of extensive labor market deregulation, including lower minimum wages, flexible dismissal procedures and UK-style zero-hours contracts. The resulting decline of workers’ incomes would be compensated in part by a basic level of social insurance to be financed largely by regressive consumption taxes." 

Ironically, the World Bank's working draft which raises "concerns over technology-led disruption" quotes Karl Marx, pointing out how he "worried that "machinery does not just act as a superior competitor to the worker, always on the point of making him superfluous. It is the most powerful weapon for suppressing strikes." 

In proposing these recommendations, World Bank has also contradicted the findings of its earlier report. The Guardian pointed to the World Bank’s 2013 World Development Report which concluded that labor regulations had little or no impact on employment levels, but the 2019 draft says that if workers are expensive to dismiss, fewer will be hired. 

"Burdensome regulations also make it more expensive for firms to rearrange their workforce to accommodate changing technologies," the report noted.

Bakvis also pointed out that instead of focusing on "legal protection of workers’ rights, including their right to safe workplaces, and access to social security" and examining "options for incentivizing the formalization of work," the World Bank's draft focuses on the perils of the informal sector. 

"The WDR takes informality as an inevitable state and, worse, implies that it should even be promoted. Nor does it examine how the undermining of labor market institutions through deliberate corporate strategies such as outsourcing and disguised working relations [for example, classifying Uber drivers as independent contractors] can be countered by providing legal protections for these categories of workers.

“Workers in the platform economy who have engaged in campaigns for recognition of their rights have encountered fierce resistance from their companies," Bakvis told the Guardian.

A World Bank spokesman told the Guardian: "To stimulate debate and draw attention to critical issues, the report will present a range of ideas for how governments can create the conditions for workers to benefit from huge shifts in technology, demographics, urbanization and other factors.

"To end poverty and boost shared prosperity, it’s vital that we consider new initiatives to meet the disruption that will surely come from these structural changes. We encourage and look forward to comments and an evidence-driven discussion on this important topic." 


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