MEDIA RELEASE-Reforms to World Bank’s flagship Doing Business report are off track and undermine World Bank’s credibility

Added 26 Aug 2014

Reforms to World Bank’s flagship Doing Business report are off track and undermine World Bank’s credibility

Campaigners demand urgent action from World Bank President Dr Jim Yong Kim

Tuesday 26th August

A global coalition of Civil society organisations (CSOs) are demanding World Bank president Dr Jim Yong Kim implements significant changes to the Bank’s flagship Doing Business report, as recommended by independent experts. The report ranks nations on the quality of their business environments, but experts say it is riddled with methodological flaws and promotes some reforms that can damage developing countries.

The report has come under intense criticism from civil society groups, from the Bank’s Independent Evaluation Group (IEG) and – most recently - from an Independent Panel Review, chaired by former South African finance minister Trevor Manuel, and set up by the World Bank president. The review found ‘serious flaws’ in the methodology of the report, and questioned its relevance in achieving the World Bank’s goals of eradicating poverty and boosting shared prosperity.

Recently the World Bank has proposed several changes to Doing Business, but the major recommendations from the independent evaluation have been ignored, including the recommendation to remove the aggregate rankings which influence decision makers, but can promote the wrong incentives.

Doing Business – published annually since 2003 - ranks nations on the basis of their business environments through several indicators - such as corporate taxation and access to credit - that have proved problematic over the years due to their methodology. The problems with the methodology were demonstrated in the former labour indicator, known as the “employing workers indicator,” which was removed from the main report and placed in an annex due to objections from trade unions, other organisations and some governments because it promoted a race to the bottom in terms of labour rights and workplace standards.

CSO groups have written to Dr Kim to stress their disappointment and frustration that many of the central recommendations coming internally and externally to the World Bank have not been reflected in proposed reforms.

Tiago Stichelmans, Policy and Networking Analyst at the European Network on Debt and Development (Eurodad), said: “The Doing Business report should assess the contribution of business to global development and the reduction of poverty – the Bank’s overall goal – which it currently does not. Despite a clear warning on the necessity to reform the report from within the bank, and by the independent evaluation, only minor reforms have been introduced. It’s time to ditch the unscientific and damaging rankings, and implement the reforms the independent panel recommended.”

Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC), said: “We are extremely disappointed that these recommendations are not being fully implemented. The DBR continues to advocate the elimination of labour regulations, thus discouraging countries from providing workers with proper protection. Some of the countries that perform poorly under the ITUC’s Global Rights Index, which is based on countries’ records in respecting workers’ basic rights, were highly rated within the DBR.”

Antonio Gambini, researcher for the Belgian organisation CNCD-11.11.11 noted that: “The paying taxes indicator is still based on questionable data and is still based on the naive assumption that any corporate tax break is good for the economy and society. The World Bank should instead join the growing international consensus against tax fraud and aggressive tax planning and for more tax justice”

To request an interview or for more information please contact Julia Ravenscroft, Communications Manager at the European Network on Debt and Development (Eurodad) on or +32 2 893 0854.

Notes to Editors:

The CSO letter urges the implementation of the following recommendations:

• The World Bank Group must drop the countries’ aggregate rankings. As outlined by the Independent Panel Review, the report’s role is to inform policy, not to outline a normative position, which the rankings do.
• The ‘Paying Tax Indicator’ should be changed by removing any reference to the issue of tax rates, which is an incentive to push down corporate tax rates.
• The Employing Workers indicator should be totally removed from the report (including its annexes and website). The Bank should instead, as the Independent Panel recommends, develop a more balanced approach to labour issues outside the Doing Business project on the basis of the findings of the “World Development Report 2013: Jobs”.
• The World Bank Group should create a peer-review process of the report, which would include academics and non-state actors from different backgrounds, to improve and validate the methodological approach of the report.

The organisations that have signed the CSO letter to the World Bank are:
• 11.11.11 (Belgium)
• Action Aid International
• Afrodad
• Bretton Woods Project
• Center of Concern
• Christian Aid
• CNCD-11.11.11 (Belgium)
• Eurodad
• Green Policy Institute (Bulgaria)
• ITUC – International Trade Union Confederation
• Jamaa Resource Initiatives (Kenya)
• JCTR – Jesuit Center for Theological Reflection (Zambia)
• KOO - Koordinierungsstelle der Österr. Bischofskonferenz f. internationale Entwicklung und Mission (Austria)
• KOSID – Kosovo Civil Society Consortium for Sustainable Development (Kosovo)
• Latindadd
• Oxfam International
• Urgewald (Germany