Weakening labour regulations will stimulate job creation is an unfounded claim says International Trade Union Confederation

The 2013 edition of the World Bank’s Doing Business report, released today, makes unfounded claims that weakening labour regulations will stimulate job creation. It states that countries that reduce dismissal notice periods or severance pay “are addressing one of the main factors deterring employers from creating jobs in the formal sector”. (Doing Business 2013, p 100)

This claim contradicts one of the finding of the Bank’s World Development Report 2013, launched earlier this month, which stated, “New data and more rigorous methodologies have spurred a wave of empirical studies over the past two decades on the effects of labor regulation…. Most estimates of the impacts on employment levels tend to be insignificant or modest.” (WDR 2013, p 261)

ITUC General Secretary Sharan Burrow called on the World Bank, under President Jim Yong Kim, to develop a new balanced approach to labour market issues and in favour of decent work inspired by the recommendations of the WDR 2013, and to remove the theme of labour from Doing Business once and for all.

Burrow expressed surprise that Doing Business has reverted to promoting elimination of workers’ protection rules: “We were hopeful that with WDR 2013 the Bank would finally recognize that labour regulations play an important role in providing protection to workers faced with job loss or exploitation by employers. Instead, the Bank’s highest-circulation publication is again claiming that labour market deregulation creates jobs, an assertion which the Bank’s own Independent Evaluation Group (IEG) already declared to be without foundation in a study it did on Doing Business in 2008.”…

via ITUC – International Trade Union Confederation : World Bank’s Doing Business 2013: Unfounded claims about deregulation.