October 8, 2014

World Bank workers turn on bosses, protest pay cuts and executive bonuses

The World Bank has been the go-to financier for developing nations for decades. But now its own employees are staging a rich-nation protest reminiscent of Occupy Wall Street, voicing outrage that top managers got hefty bonuses while pushing an aggressive cost-cutting agenda expected to include salary reductions and layoffs for lower-level staff.

The behind-the-scenes clash has gone public in recent days with a series of employee rallies — held in the bank’s headquarters lobby just blocks from the White House — thrusting the famously tranquil institution into turmoil just ahead of the annual World Bank and International Monetary Fund meetings that open Friday.

Bank insiders said the situation reached a boiling point Tuesday.

World Bank President Jim Yong Kim led a hastily arranged “town hall” meeting to announce that bank Chief Financial Officer Bertrand Badre would “renounce” a bonus he received while spearheading efforts to shave $400 million from the bank’s budget through layoffs and other savings.

A World Bank source later clarified that Mr. Badre already had received more than half of his $94,000 “scarce-skills premium” bonus but agreed to forgo the rest “effective immediately.”

The announcement was made just hours after hundreds of bank staffers gathered in the World Bank lobby to protest management secrecy over the massive reorganization Mr. Kim is pushing.

Bank staffers said the protests were organized clandestinely because of fear among the rank-and-file economists that their jobs would be at risk if they spoke out.

According to the sources, a roar of applause and cheering erupted Tuesday morning when one staffer grabbed a microphone circulating among the protesters and bellowed: “When managing change, it’s like cleaning the stairs: You have to start at the top!”

“What the guy meant was that if you really want to bring positive changes through any reorganization, you should start by making sure management is being ethical and being transparent,” said one bank staffer, who spoke on the condition of anonymity with The Washington Times. “So far, that’s not happening.”

World Bank spokesman David Theis maintained that the dissent and protests marked a positive development.

“Of course staff unease is natural and understandable in any large organization undergoing such a large-scale realignment,” he said. “We believe we will come out of this process as a stronger, more unified organization, better positioned to achieve our mission.”

Mr. Kim’s announcement about Mr. Badre in the afternoon suggested that the message had been heard. Bank staffers said hundreds turned out for Mr. Kim’s impromptu meeting in an auditorium at World Bank headquarters but that the staffers remained skeptical of management’s sincerity.

“People welcomed Badre’s bonus denouncement,” said one staffer. “But the perception was still there that the top is not being affected by the belt-tightening the way the rest of us are.”

“There’s also still this fear of retribution,” said another, who added that attendees were stopped by a security guard for what they were told was a routine check “to make sure there are no journalists” trying to get into the Kim meeting.

Others voiced outrage over the way Mr. Kim, an American nominated by President Obama in early 2012, has implemented a reorganization that he says will help the bank better achieve its goals of ending extreme poverty in the world by 2030 and boosting shared prosperity for the globe’s poorest 40 percent.

The crux of the reorganization, announced in April, would double the World Bank’s annual lending to middle-income nations from $15 billion to $27 billion a year while shaving $400 million off the bank’s annual budget.

The point of contention, according to sources inside the bank, stems from general opaqueness surrounding the proposed cuts — specifically on the question of who among the bank’s 10,000 employees are about to lose their jobs.

Frustration soared two weeks ago when word spread that Mr. Badre, a former top official at the French banking giant Societe Generale, had been awarded his skills “premium” on top of a $95,000 signing bonus he received when Mr. Kim hired him in 2013 to spearhead the budget cuts.

The World Bank’s most recent annual report shows the bonuses rival what the majority of the institution’s rank and file — the economists who do the legwork in crafting, granting and collecting on loans to governments worldwide — make in total salary. Bank “professionals” and “senior professionals” get $102,000 and $140,000 a year respectively in base pay.

News that Mr. Badre had received $189,000 in bonuses on top of his $379,000 base salary as the bank’s CFO prompted a stern reaction from the World Bank’s staff association, essentially the union for the bank’s rank-and-file economists.

“We question the timing of such payments given the sacrifices the rest of us are being asked to make as a result of the back to front Expenditure Review process underway and the staff cuts that will follow,” the staff association wrote in a Sept. 25 internal email obtained by Bloomberg News.

Rumors have swirled through the bank that Mr. Kim also may have approved bonuses for three other managers.

World Bank sources confirmed Tuesday that four “scarce-skills premium” bonuses have been given out over the past year but Mr. Badre was the only top executive to receive one, suggesting that the other bonuses may have gone to midlevel managers.

The turmoil has risen at a sensitive moment for the World Bank, which faces growing lending competition from emerging economic powers such as the “BRICS” — Brazil, Russia, India, China and South Africa — challenging the traditional U.S. dominance of the bank and its policies.

An internal blog post Tuesday by World Bank Vice President of Human Resources Sean McGrath revealed how $200 million of the impending budget cuts would “be related to staffing” — but maintained that there was no specific number of staffers to be cut.

A copy of the post, obtained by The Times, also said there “is not single date when staff whose employment is at risk will be notified.”

Bank employees said privately that the blog post was just the latest example of management’s lack of transparency over the reorganization.

“These guys are running the premier development bank in the world, and it’s being mismanaged,” one World Bank source said.


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