A Missed Opportunity: The World Bank's World Development Report 1995

Publication Date: 

January 1, 1995


Jerome I. Levinson

The World Bank's World Development Report 1995: Workers in an Integrating World (WDR) afforded an opportunity for the World Bank to provide leadership on a central issue that faces both its borrowing and non-borrowing member countries: how the increasing competition of countries for the same pool of investment capital, particularly for the purpose of producing manufactured goods, can be reconciled with the interests of workers in industrialized countries and countries at lesser stages of development.

Instead of providing leadership, the report is a major step backward. It (a) rejects linking internationally recognized, or core, worker rights -- the right of free association, to bargain collectively and to strike -- to international trade and investment agreements, a major initiative of the Clinton Administration; (b) blames urban workers in developing countries, who are fortunate enough to organize themselves into unions for the purpose of improving their wages and workplace conditions, for holding back less-favored workers in rural and urban areas; © is so fearful of the "monopolistic" power of unions that it recommends a labor-relations regime of decentralized bargaining to minimize union negotiating leverage with employers and governments; (d) attributes growing unemployment primarily to inflexible labor markets, onerous regulations, and minimum-wage and health and safety provisions that increase costs for employers.

What is missing from the WDR is any understanding of the imbalance in power between employers and workers in too many of the Bank's borrowing member countries and the consequent pervasive abuse of worker rights in such "model" World Bank borrowers as Mexico and Indonesia. Indeed, the Bank refuses to recognize the nexus between the development model promoted by the Bank, with its dependence upon attracting foreign direct investment (FDI), and labor abuses that are endemic among its principal borrowers.

The U.S. Congress has directed the Secretary of the Treasury to instruct the U.S. Executive Director in each international financial institution governed by the legislation to use the "voice and vote" of the United States in each institution to encourage borrowing countries to "guarantee internationally recognized worker rights" as defined in the 1988 Omnibus Trade and Competitiveness Act (U.S. Congress, 1994). Unfortunately, that direction is not reflected in the World Bank's World Development Report 1995.

World Employment 1995, a contemporaneous publication of the International Labor Organization (ILO), is in striking contrast to the WDR and calls into question the Bank's analysis and recommendations.