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What's the impact of regulations on business activity? Read brief summaries of important research papers on the regulation of employment.
Employing Workers
Doing Business measures the regulation of employment, specifically as it affects the hiring and redundancy of workers and the rigidity of working hours. In 2007 improvements were made to align the methodology for the employing workers indicators with the relevant International Labour Organization (ILO) conventions. In Doing Business 2010, additional changes to the methodology of this indicator were made. In addition, a working group including representatives from the ILO (as the international standard setting body) was formed to serve as an important source of advice on revising this indicator and on the establishment of a new worker protection indicator. In this context, the employing workers indicators were removed as a guidepost to the World Bank Country Policy and Institutional Assessment questionnaire (CPIA) and are not to be used as a basis for policy advice.
Note: In April 2009, the World Bank released the following note on revisions to the Employing Workers Indicator. This was followed up with a guidance note to staff.The table below shows the main indicators. They include:
- Difficulty of hiring index: Applicability and maximum duration of fixed-term contracts and minimum wage for trainee or first-time employee.
- Rigidity of hours index: Scheduling of nonstandard work hours and annual paid leave.
- Difficulty of firing index: Notification and approval requirements for termination of a redundant worker or a group of redundant workers, obligation to reassign or retrain and priority rules for redundancy and reemployment.
- Rigidity of employment index: A simple average of the above three indices.
- Firing cost: Notice requirements, severance payments and penalties due when terminating a redundant worker, expressed in weeks of salary.
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