ABSTRACT

‘Economic growth is good for workers’. The World Bank asserts its belief and faith in these few words. 1 It also claims that the fear that growth will primarily benefit capital, create few jobs, and fail to raise wages is unfounded. However, the Bank recognises that workers often feel the pain as real wages fall, unemployment rises, and employment shifts into informal activities. 2 The report concludes that the problems of low incomes, poor working conditions, and insecurity affecting many of the world’s workers can be effectively tackled in ways that reduce poverty and regional inequality. It explains in detail how this can be achieved by increasing labour market flexibility which is essential in all regions of the world undergoing major reform. According to the World Bank, the most important reforms involve lifting constraints on labour mobility and wage flexibility, as well as breaking the ties between social services and labour contracts. 3 Measures to increase flexibility can influence the overall trajectory and speed of recovery. If properly implemented, the ‘shock’ is short-lived… if it is not, this is probably due to changes not having been implemented fast enough and more of the ‘shock therapy’ is recommended.