The Day the World Bank (Sorta) Went on Strike

World Bank headquarters - an unlikely site for "industrial action."

Being in the service of world development and an American-led institution has always presented a conflict of interest at the heart of the World Bank that lies unresolved. Insofar as the will of America is not quite the same as what's developmentally appropriate for developing country borrowers, the role of the World Bank has often been at the heart of the IPE puzzle. On the hard left, you have those believe that the World Bank together with the IMF are tools of American domination and exploitation of poor countries. Think of the "Fifty Years is Enough" movement that calls for the immediate end to their operations. You also have persistent critics like our colleagues at the Bretton Woods Project who think the World Bank and IMF can continue, albeit in much-changed form.

The recent leadership change to the Korean-American Jim Yong Kim has inspired a round of internal reforms that have rubbed many bank veterans the wrong way. What ignited a firestorm of controversy within the World Bank was the decision to retain CFO Bertrand Badre's hefty bonus of $94,000 on top of his base salary of $397,000 (plus other benefits) even as he was in charge of "right-sizing" the headcount through layoffs. Let's begin with details of the redundancies:

The World Bank said it plans to cut 500 jobs over the next three years as part of a broad restructuring meant to make it more efficient but that has rattled employees. The long-expected layoffs, along with budget cuts and internal reorganization, have sparked regular staff protests and fears of a broader revolt at a time when the bank is trying to ramp up its work in fighting the Ebola outbreak and other global challenges, and maintain its relevance.

The cuts, announced on Thursday, represent about an 11 percent reduction in the 4,500-employee workforce of the bank's internal-facing divisions, including finance, human resources, research and security. These divisions employ about a quarter of the bank's total staff.

Since Badre was the architect of these cuts, many World Bank employees believed that he should share in the pain instead of being rewarded for getting rid of so many jobs:

The World Bank chief financial officer is giving up part of his bonus after an uproar over cost-cutting measures at the lender. Bertrand Badre will decline the remainder of his 94,000 dollar annual bonus, the bank said. The move was an attempt to appease staff, who were angry that he got a bonus while the bank was cutting jobs.

Mr. Badre had pushed for much of the cutbacks at the organization, which is being reorganized. World Bank president Jim Yong Kim reportedly made the announcement to applause during a staff meeting on Tuesday. “Of course staff unease is natural and understandable in any large organisation undergoing such a large-scale realignment,” World Bank spokesman David Theis said.

The internal unrest was such that there was a strike of sorts occurred in which employees downed their tools:

For the first time in its seven-decade-long history, World Bank staff staged a work stoppage earlier this month. Staff are unhappy about the “Change Process,” the ongoing internal reorganization that President Jim Yong Kim initiated on his arrival at the Bank now more than two years ago...

One tell-tale indication of the internal turmoil: Recently, the vice president for Africa “resigned” just days before last month’s Annual Meetings of the World Bank and the IMF — only to be brought back two weeks later. From outside, it is easy to assume that a well-paid staff is grousing about losing status or position or even employment itself because of a reorganization. But after living through and observing reorganizations at the World Bank over the last 30 years, I have the sense that the media get that part of the story mostly wrong.

A recurrent complaint is that instead of streamlining the World Bank, the so-called reforms are making matters worse to get things done on the ground. From longtime World Bank follower and development stalwart Nancy Birdsall:

Staff, it seems, do not believe this reorganization is done — nowhere near done, let alone at the stage of fine-tuning. Their specific concerns are fundamental:
1. The new reorganization has created 14 silos where there were four — and more, not fewer management layers.
2. Decision-making is more centralized, not less.
3. Transaction costs to organize teams are higher than ever and budgeting for work with clients is not flowing.
4. A few senior managers get bonuses, while a big budget cut is slashing travel budgets. Surely management should share in the austerity.
It sounds as though structure and incentives are less aligned than before. Something is wrong, and it seems right to ask President Kim to say so and fix it

The funny thing about the World Bank is that it views labor militancy as an obstacle to development and investment when you have these well-paid economists--and they are mostly economists--complaining about losing parking spaces and breakfast allowances. It is sad that some want to strike over such meaningless perks in a world full of poverty they are supposedly committed to fight.

Meanwhile, morale at the World Bank continues to sag.