We welcome and applaud the World Bank’s action yesterday to revise and restrict use of a controversial labor-market ranking contained in its “flagship” publication, Doing Business. This is a significant step in the right direction, and we commend World Bank President Robert Zoellick for acting to address the concerns that have been raised over the years with respect to the Employing Workers Index (EWI).

The EWI ranks countries according to labor market indices, including maximum hours, minimum wage, severance pay, and other non-wage benefits – with countries receiving lower scores for stronger labor market protections.

We also congratulate House Financial Services Committee Chairman Barney Frank for his leadership, tenacity, and commitment to ensuring that the World Bank correct and clarify the message it sends to developing country governments about successful and sustainable economic strategies via the Doing Business report. Chairman Frank held hearings on the Doing Business report in 2007, linked World Bank funding to needed reforms in the labor and tax aspects of the Doing Business report, and has been a stalwart advocate for the revisions announced yesterday.

According to a memo sent to Country and Sector Directors yesterday, the World Bank will no longer use EWI for its Country Policy and Institutional Assessments (CPIA), nor as a basis for policy advice, nor in any country program documents. For the upcoming 2010 Doing Business report, the EWI scoring will be adjusted so that compliance with key International Labor Organization standards no longer leads to a downgraded country score. The Bank also announced a longer-term review process to consider further revisions to the EWI index, as well as to the Paying Taxes indicator.

Since its inception in 2003, EWI has been a source of controversy for the Bank, with the International Trade Union Confederation (ITUC) and the AFL-CIO, among others, arguing that the index was methodologically flawed and economically irrational – penalizing countries with strong social safety nets, vibrant and democratic labor movements, and humane working conditions.

Guy Ryder, General Secretary of the ITUC, also welcomed the Bank’s announcement: “The Bank’s decision to pay greater attention to issues such as these is consistent with the commitment of G20 leaders at their London summit to ‘build a fair and friendly labour market for both women and men.’ We invite the Bank to work closely with the ILO on this theme.”

Contact: Alison Omens, (202) 637-5018