One step forward, two steps back? Why WDR 2019 harms the World Bank’s role as a thought leader on employment and gender equality

October 25, 2018 4 By Duncan Green

Guest post on the new World Development Report by Shahra Razavi (left) and Silke Staab of the UN Women Research and Data Section. (The views expressed here are in their individual capacities and do not reflect the position of UN Women).

Diego Rivera’s 1931 mural, The Making of a Fresco Showing the Building of a City, makes an alluring cover for the WDR 2019.  Rivera (a Communist), reflecting the 20th century ethos of the working man (aka the ‘male breadwinner’), places a ‘gigantic worker at the center of his work, towering over bankers, architects and artists’ (p.96).  As WDR aptly points out, ‘only one woman appears among the 19 people in the mural’ (p.96).

One would have hoped that the World Bank’s flagship report, the jewel in the crown of an enviable research and statistical machine, would offer an equally monumental edifice to the world of work in the 21st century, with the working woman, and her struggles, standing tall at the center.  Unfortunately, on this (and other) fronts the report has a distinctly yesteryear feel to it.

Message number one is the importance of human capital investments throughout the life course, especially in the ‘first thousand days of a child’s life’ (p.53). One would have thought that with the twist of the ‘first thousand days’, an opening is created for thinking more expansively about human capital and connecting it to the care economy.  Previous reports, especially WDR 2012 on gender equality and WDR 2013 on jobs, had started to acknowledge unpaid care work, though insufficiently.

But in WDR 2019 no reference is made to the critical role of unpaid care work in building human capabilities. The report thus remains wedded to a rather narrow neoclassical view of human capital that focuses entirely on the ‘value-added’ in the form of education and experience without considering the bearing and raising of children that creates the basic foundation which education and experience may enhance. The relevance of unpaid care work is not only in constraining women’s paid work (to which the report makes a passing reference, but offers little by way of policy guidance), but as an investment that sustains people in the here-and-now and from one generation to the next, while undergirding the entire economy. Feminist economists have brought unpaid care into mainstream statistical and policy arenas, including in new definitions of work and in the 2030 Agenda for Sustainable Development (target 5.4).

By ignoring the care economy the report also fails to identify and offer policy guidance on what is already a major employment engine, and likely to become even more so in the years to come.  According to a recently published ILO report, the global care paid workforce amounts to 381 million workers, or 11.5 percent of total global waged employment. Two-thirds of this workforce, or 249 million workers, are women, making up 19.3 percent of global female employment. That is, already nearly 1 in 5 women in paid jobs are employed by the care sector – as nurses, child minders, elder care assistants and domestic workers—apt depictions for a mural on the 21st century world of work, surely! The burning issue is how to ensure that growth in this sector produces jobs that are decent and that meet core labour standards.

This takes us to our second point, which is the report’s approach to labour market regulation. WDR 2013 acknowledged widespread market failures associated with labour markets and employment dynamics and saw a significant role for the state in pursuing policies that can support better and more equitable employment outcomes. This was refreshing, especially after the 1980s, when the Bank seemed to see all labour market regulations as ‘distortions’.  With WDR 2019 the World Bank risks turning the clock back to when government regulations, such as minimum wage laws or collective bargaining processes, were assumed only to raise labour costs, reduce the number of jobs and increase unemployment and informality.

All it has to offer on strengthening women’s earnings potential more specifically is the removal of discriminatory laws. But the problems of gender pay gaps goes far beyond legal discriminations; and regulation is critical to combat them.

This includes minimum wage floors to reduce the penalties for women at the bottom of the wage hierarchy. Take the case of domestic workers. Evidence from a diverse range of countries, including the so-called ‘emerging economies’ that appear to be of central concern to the report authors, shows how collective action combined with better minimum wage coverage produces positive results. In Brazil, such efforts were associated with a 47% real rise in domestic workers’ wages between 2003 and 2011, compared to a 20% increase in average wages for all wage employees over the same period. The doubling of the minimum wage in the 2000s also helped close the gender wage gap. In South Africa, likewise, the effect of minimum wage legislation on domestic workers (and other low-wage sectors) has been positive without a negative impact on employment—a finding that is at odds with what standard competitive market models predict.

Finally, the report’s call for ‘strengthening social protection’ is welcome in a world where women’s equal access to social protection remains far from achieved (though the report provides no sex disaggregated data and little, if any, gender analysis). In most countries with available data, women are less likely than men to receive a pension in old age. Women also remain poorly covered for gender-specific life course risks. Globally, for example, only 41 per cent of mothers with new-borns receive a maternity benefit.

WDR 2019 underlines the need to close these gaps; but instead of basing its recommendations on context-specific empirical analysis, its starting point is the blanket proposition that “the contributory approach is not a good fit for developing countries, where formal and stable employment are not common” (p. 113).

Conveniently ignored are the huge variations between the social security systems of ‘developing countries’ and the fact that in some of these, contributory systems not only cover a significant share of workers but have also been transformed to become more inclusive of both informal workers and women. Alongside the introduction of minimum wages, for example, South Africa, reformed its unemployment insurance to cover domestic and seasonal workers for job loss, maternity and sick leave. Countries such as Ecuador and Uruguay have also made progress in bringing greater numbers of domestic workers under contributory coverage within a relatively short period of time. And second-generation pension reforms across Latin America have introduced care credits in contributory systems alongside social pensions, to improve outcomes for women.

This is not to deny that gaps in coverage and benefit levels between formal and informal workers and between women and men remain large or that strong contributory links are often problematic for women. But limiting social insurance and doing away with labour standards while aspiring to create some vague ‘guaranteed social minimum’ through social assistance is too simple an answer. The report makes no reference to the ILO’s Social Protection Floor initiative—which provides a concrete menu of benefits and solutions for delivering them that are in line with international human rights standards— a lost opportunity. Indeed, the WDR manages to present an entire chapter on labour market (de)regulation and social protection without a single reference to the huge body of research by the ILO and others.

WDR’s narrow conception of social protection also sits uneasily with the growing body of evidence that suggests that it is the linkages that matter: between contributory and non-contributory social protection to be sure, but also between social protection, public services and infrastructure—a theme that governments will be discussing at next year’s Commission on the Status of Women (CSW). The importance of linking is particularly evident when it comes to strengthening the earnings potential of women in informal self-employment. While the report affirms that social assistance is not an alternative to health, education or other services (p. 110), the figure used to explain the idea of a Universal Basic Income suggests otherwise: it presents ‘cash’ and ‘services’ at opposite ends of the spectrum of social protection modalities instead of acknowledging that public services are critical to make cash transfers succeed (cue: cash plus).

Overall, WDR 2019 seems to return to the problematic practice of blanket prescriptions—which previous WDRs have been lauded for leaving behind. One can only hope that this is a one-off in the trajectory of a report that the world holds to the highest standards.