In the dock

Were the World Bank policies faulty?

 
Last Updated: Saturday 04 July 2015

WB policies have THE.policies of the World Bank have increased poverty and unemployment, according to an investigation done by the World Bank itself. Hungary and Uganda are considered by the World Bank as success stories - where the economies have flourished. But at two conferences, organised by the World Bank with citizens' representatives from a broad spectrum of society in these two countries, the banks' structural adjust-ment programmes came in for sharp criticism.

Structural Adjustment Programmes (SAPS), seen by the bank as necessary to get economies on a sound financial footing, have long been under attack by progressive groups. SAPS often require governments to cut budgets, which fall heavily on the poor. The theory is that eventually the poor will benefit from a growing economy. When officials met the local people in these countries, they heard a different story.

Last year, the World Bank president, James Wolfensohn, decided to review structural adjustment with the client governments and a broad array of their citizens - from labour, business, agri-culture and non-governmental organi-sations. "We are willing to take a look at what's been done and see what lessons there are for the future," he said.

There were two conferences in June this year. These will be followed by forums in Ghana and Ecuador next month. Tony Avirgan of the Develop-ment Gap, a group organising foreign input into the inquiry, said that in both countries bank officials were told by local economists and researchers that liberalisation and privatisation pro-grammes had destroyed jobs and local industries.

Economists told the bank that medium-sized companies in Hungary, that employ 70 per cent of the workers, have been severely damaged. Overall employment has been cut by 30 per cent. Local Hungarian groups said that 70 per cent of the population had lost at least 40 per cent of its real wages, while social services had been sharply cut.

Rapid liberalisation and high inter-est rates were hurting small business in Uganda. Cotton farmers and producers of indigenous crops have been hit due to lack of government aid and transport systems. An estimated 350,000 workers have lost their jobs due to the privatisa-tion process. In both countries workers' rights were neglected. Employers used the threat of sacking to ignore safety, overtime and other labour laws in Hungary.

Subscribe to Weekly Newsletter :

Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.