You are here: Home Resources The Doing Business Indicators: Measurement issues and political implications

The Doing Business Indicators: Measurement issues and political implications

— theme: Employment Relationship
— type: Working Papers

This paper addresses conceptual and methodological issues as well as the policy implications of the ‘employing workers’ component of the World Bank’s Doing Business Indicators. In 2004, the IFC began publishing the Doing Business Report which ranks 175 countries on the ‘ease of doing business’ a composite index of ten different regulatory areas, including labour market regulation.

Author/Editor
Publishing Year
2014

This paper addresses conceptual and methodological issues as well as the policy

implications of the ‘employing workers’ component of the World Bank’s Doing Business

Indicators. In 2004, the IFC began publishing the Doing Business Report which ranks 175

countries on the ‘ease of doing business’ a composite index of ten different regulatory areas,

including labour market regulation.

The index of labour market regulation is known as the “Employing Workers Index.”

It assess the amount of flexibility that exists in national labour legislation on issues

concerning use of term contracts, minimum wages, dismissal protection, severance pay,

working hours, annual leave and non-wage labour costs. Countries that have less protective

legislation score better on the index. The index is controversial because by ranking

countries on the flexibility of their labour legislation it possibly encourages labour market

deregulation, particularly if the index is used as a guide for determining loans by the

international financial institutions.

This paper is a critical review of the ‘employing workers’ indicator and its policy

implication that no regulation is best for business (or the lowest the regulation, the better the

business outcomes). This is followed by a methodological critique of the indicators that

addresses problems of selection, coding, weighting and ranking. The paper argues that

despite their role in influencing labour market reforms and policies, the

    Document Actions
    comments powered by Disqus