World Bank President faces staff mutiny amid reform

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Financial Inclusion

World Bank President faces staff mutiny amid reform

World Bank Group President Jim Yong Kim at a 2013 meeting in Lima. Photo: World Bank Photo Collection (flickr) .

World Bank President Jim Yong Kim is catching heat for his efforts to reform the organization. While most agree that reform of the powerful organization is overdue, employees are critical of how reforms have been executed. In October, the Washington, D.C. headquarters actually saw a staff demonstration against the changes. 

Since its’ 1944 formation in the wake of World War II, the United Nations financial institution has served to provide loans, financial expertise and other technical resources to developing countries. But now, an abundance of capital is flowing from the private sector and major philanthropies into the developing world, reducing the need to borrow from the World Bank. This is actually a good sign: Where private capital is willing to step in, the bank should step back. Yet extreme poverty still exists, so the bank could still have a meaningful role to play. 

Kim recognized that the organization would have to adapt to remain valuable. So in July, the Bank began restructuring away from geographic regions to 14 “global practices,” that is, topics like water and health, in the hopes that this would encourage more cross-border collaboration. Whereas previously the bank administered funds to developing countries with the general objective of supporting growth, Kim is now narrowing the focus to the task of eradicating extreme poverty and raising the incomes of the world’s poorest 40 percent by 2030.

Kim has declared $400 million in annual budget cuts, eliciting complaints from Bank staff who say their diminished budgets undermine future lending. Then, on October 30, the Bank announced 500+ layoffs over the next three years. Meanwhile, new appointees to senior jobs received hefty bonuses, prompting outrage from staff. The news suggests a grim future for Bank employees, who may want to review their CVs.

Does this new strategy actually make a difference to the Bank’s clientele? The Bank was already supposed supposed to be helping the poorest, so the formal new goal seems unlikely to matter. The restructuring, however, might: Kim insists that the new practices will allow the Bank to tap into its expertise around the world more efficiently.

Certainly, Kim has his defenders: India’s new reform-minded prime minister Narendra Modi expressed his support via Twitter, while the media has looked favorably upon Kim’s public commitment to the Ebola crisis, an example of a “global practice” initiative. Perhaps such high profile support has emboldened Kim who, in an interview earlier this year, dismissed complaints from his staff, saying, “There’s grumbling about parking and there’s grumbling about breakfast.”

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