Pillar 8: Labour market

What does it capture? It encompasses “flexibility”, namely, the extent to which human resources can be reorganized and “talent management”, namely, the extent to which human resources are leveraged.

Why does it matter? Well-functioning labour markets foster productivity by matching workers with the most suitable jobs for their skillset and developing talent to reach their full potential. By combining flexibility with protection of workers’ basic rights, well-functioning labour markets allow countries to be more resilient to shocks and re-allocate production to emerging segments; incentivize workers to take risks; attract and retain talent; and motivate workers.

 

8.01 Redundancy costs

Measures the cost of advance notice requirements and severance payments due when terminating a redundant worker, expressed in weeks of salary. | 2017

The average value of notice requirements and severance payments applicable to a worker with 1 year of tenure, 5 years of tenure, and 10 years of tenure is considered.

Source: The World Bank Group.

 

8.02 Hiring and firing practices

Response to the survey question “In your country, to what extent do regulations allow for the flexible hiring and firing of workers?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

8.03 Cooperation in labour-employer relations

Response to the survey question “In your country, how do you characterize labour-employer relations?” [1 = generally confrontational; 7 = generally cooperative] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

8.04 Flexibility of wage determination

Response to the survey question “In your country, how are wages generally set?” [1 = by a centralized bargaining process; 7 = by each individual company] | 2017–2018 weighted average or most recent period available

 

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

8.05 Active labour policies

Response to the survey question “In your country, to what extent do labour market policies help unemployed people to reskill and find new employment (including skills matching, retraining, etc.)?” [1 = not at all; 7 = to a great extent] | 2017– 2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

8.06 Workers’ rights

 Score adapted from the ITUC Global Rights Index, which measures the level of protection of internationally recognized core labour standards. The scale of this indicator ranges from 1 (no protection) to 7 (high protection). | 2017

Dimensions of labour protection include civil rights, the right to bargain collectively, the right to strike, the right to associate freely, and access to due process rights. The indicator does not consider firing regulations. More details about the methodology of the Global Rights Index can be found at https://survey.ituc-csi. org/ITUC-Global-Rights-Index.html.

Sources: International Trade Union Confederation (ITUC); World Economic Forum.

 

8.07 Ease of hiring foreign labour

Response to the survey question “In your country, how restrictive are regulations related to the hiring of foreign labour?” [1 = highly restrictive; 7 = not restrictive at all] | 2017– 2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

8.08 Internal labour mobility

 Response to the survey question “In your country, to what extent do people move to other parts of the country for professional reasons?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

8.09 Reliance on professional management

Response to the survey question “In your country, who holds senior management positions in companies?” [1 = usually relatives or friends without regard to merit; 7 = mostly professional managers chosen for merit and qualifications] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

8.10 Pay and productivity

Response to the survey question “In your country, to what extent is pay related to employee productivity?” [1 = not at all; 7 = to a great extent] | 2017–2018 weighted average or most recent period available

Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Appendix B of this report.

 

8.11 Female participation in labour force

Illustrates the ratio of the percentage of women aged 15–64 participating in the labour force as wage and salaried workers to the percentage of men aged 15–64 participating in the labour force as wage and salaried workers. | 2017

Wage and salaried workers (employees) are those workers who hold the type of jobs defined as “paid employment jobs,” where the incumbents hold explicit (written or oral) or implicit employment contracts that give them a basic remuneration that is not directly dependent upon the revenue of the unit for which they work.

Sources: International Labour Organization (ILO); World Economic Forum.

 

8.12 Labour tax rate

Labour tax and contributions are the amount of taxes (at any level—federal, state, or local) and mandatory contributions on labour paid by the business, expressed as a percentage of commercial profits. | 2016

This measure includes government-mandated contributions paid by the employer to a requited private pension fund or workers’ insurance fund. More details about this indicator can be found at http://www.doingbusiness.org/Methodology/Paying-Taxes.

Source: The World Bank Group.