WASHINGTON — World Bank staff representatives are worried the historic capital increase deal reached at the annual meetings last month will mean bank employees are asked to do more while being paid less.
The staff association has reiterated its concern that the agreement to infuse more capital into the institution has come at the expense of staff salary growth, a compromise they argue could make the bank less competitive for future job candidates. Others say the bank’s employees should remember that even if salary growth gets trimmed, a bigger World Bank is ultimately good news for staff.
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“The Staff Association cannot accept a quid pro quo that leaves us uncompetitive, unable to attract and retain the very best talent needed to respond to our shareholders’ demands,” reads a May 8 staff update obtained by Devex.
The capital increase deal includes a proposal — expected to be voted on and approved by the World Bank’s board in June — which would reduce the “total merit increase” that determines annual salary growth for World Bank headquarters staff, according to the update issued by the staff association. This came after a “town hall” discussion with World Bank chief executive officer Kristalina Georgieva, who described the potential salary changes.
“Our most important goal is to ensure that the Bank Group’s compensation methodology enables us to attract the best global talent to deliver impactful, customized, and innovative development and finance solutions for our clients,” a World Bank spokesperson wrote to Devex. “At the same time, we want to have a system that recognizes and rewards our staff and better aligns with performance while striking the right balance with financial affordability.”
While the staff association agrees that the bank will be better off with a capital increase than without it, they also argue that “the cost of this deal must not be shifted to staff.” They point out that the purpose of the capital increase is to allow the bank to do more. Coupled with higher spending by the International Development Association, which focuses on low-income countries, the bank’s future work will be more demanding of staff, not less, they argue.
In order to project what the proposed changes would mean for World Bank compensation, the staff association analyzed the hypothetical growth of a salary over the last nine years under both the current and the proposed formulas. While a salary of 100 would have grown to 141 between fiscal year 2009 and fiscal year 2018 under the current formula, the proposed changes would only see it reach 128. The update points out that since pensions are based on salaries, annual contributions would be lower as well.
As these differences add up over years of employment, the proposal is likely to be “tough on younger staff, but not so much on [baby] boomers or the management which agreed to this,” the staff association notes.
Other supporters of the capital increase deal say the overwhelming message it sends to staff is a positive one.
“If I were World Bank staff, I would be [made] extremely proud by the big confidence which is given to the World Bank Group by the shareholders in this difficult time. Governments, private sector … their bet is the world bank will make the difference,” said Frank Heemskerk, a World Bank executive director from the Netherlands, told Devex.
Heemskerk said the other big takeaway for staff from the pending agreement is: “This is quite a promise we are making to our shareholders, and we better deliver.”
The World Bank staff association has argued the board should view the bank as competing more closely with private sector employers than with public institutions, but not everyone agrees with that view.
“Let’s do a direct comparison of bank salaries with the salaries of public employees in their membership,” said Scott Morris, senior fellow at the Center for Global Development and former United States Treasury official.
Morris noted that World Bank employees typically earn higher salaries than U.S. government officials in similar roles.
“I think it’s reasonable to ask whether that gap is appropriate,” he said, pointing out that bankers and lawyers also work for U.S. government agencies, not just for high-paying private firms.
Given the lengthy and difficult negotiation that preceded last month’s capital increase agreement — and the very public announcements that World Bank leaders and shareholders have made about reaching a successful conclusion — there appears little doubt that the proposals that are currently on the table will be adopted. When the agreement’s backers look at the bigger picture, they say World Bank employees should be happy to see there is broad support for their work, even if it means a smaller raise.
“It’s much more fun to work at an institution that is growing than one that is shrinking,” Heemskerk said.