The World Bank and the ILO: Two Visions of Employment Regulation

Abstract

The World Bank's Doing Business report has become one of the most influential, yet the most controversial instruments which affect labour law reforms around the world. This study discusses the controversy between the World Bank's and the International Labour Organization's approaches towards flexibility of employment regulation with special emphasis on fixed-term contracts.

The ILO employment regulation targets are balanced to harmonize the interests of all three stakeholders - employers, employees and governments, while the Doing Business targets clearly favour the interests of employers. What is more important, the Doing Business targets on fixed-term contracts and dismissals seem to contradict the international labour standards as reflected in the ILO conventions and recommendations. Although both organizations ultimately have the same goal - to help economies and people prosper, their visions of the proper mixture of flexibility and security are clearly different. It is hardly possible to expect that Doing Business reports would lobby for the interests of employees because this will not necessarily stimulate more favourable businesses environments. However, as this study suggests, there are ways to reduce tensions between these two visions.

Keywords: employment regulation, rigidity, flexibility, labour markets, fixed-term contracts, international labour standards, ILO, World Bank

JEL Classification: K31, K33, K49