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English Legal Tradition (1.5) Than in Those with a French Legal Tradition (2.7) JOBS WORKING PAPER Issue No. 16 Public Disclosure Authorized Public Disclosure Authorized Labor Regulations throughout the World: An Overview Public Disclosure Authorized Arvo Kuddo Public Disclosure Authorized Labor Regulations throughout the World: An Overview Arvo Kuddo 2018 2 © 2018 International Bank for Reconstruction and Development / The World Bank. 1818 H Street NW, Washington, DC 20433, USA. Telephone: 202-473-1000; Internet: www.worldbank.org. Some rights reserved This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http://creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: Arvo Kuddo. 2018. “Labor Regulations throughout the World: An Overview.” World Bank, Washington, DC. License: Creative Commons Attribution CC BY 3.0 IGO. Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution: This is an adaptation of an original work by The World Bank. Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by The World Bank. Third-party content—The World Bank does not necessarily own each component of the content contained within the work. The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: [email protected]. 3 Abstract 1 Between 2007 and 2017, 99 countries initiated reforms in labor regulations that affected World Bank Doing Business labor indicators. The most common topics for reforms are (i) procedural requirements in case of contract termination, and changes in notification arrangements; (ii) fixed- term contracts; (iii) severance payments; (iv) annual leave arrangements, and (v) working time arrangements. Approximately 48 percent of the reforms made labor legislation more flexible, and 52 percent enforced more worker protection. The objective of this study is to document these reforms, and identify key benchmarks in labor legislation by country groups. JEL classification: J41, J80, J81, J83, K31 [email protected] 1 The findings, interpretations, and conclusions expressed herein are those of the authors, and do not necessarily reflect the views of the International Bank for Reconstruction and Development / the World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 4 Acknowledgements: We would like to acknowledge the valuable comments and suggestions provided by Dorina Peteva Georgieva, Matteo Morgandi and David Robalino. The publication of this report has been made possible through a grant from the World Bank’s Jobs Umbrella Trust Fund, which is supported by the Department for International Development/UK AID, and the Governments of Norway, Germany, Austria, the Austrian Development Agency, and the Swedish International Development Cooperation Agency. 5 Contents Contents Introduction .................................................................................................................................................. 7 Chapter 1. Overall framework for labor regulations............................................................................... 9 1.1 Doing Business methodology ........................................................................................................ 9 1.2. Limitations in measuring labor regulations ................................................................................ 10 2. Entering into employment, and working conditions .......................................................................... 13 2.1. Employment contract ................................................................................................................. 13 2.2. Probationary period .................................................................................................................... 14 2.3. Fixed-term contracts ................................................................................................................... 16 2.4. Working time .............................................................................................................................. 22 2.5. Leave entitlements...................................................................................................................... 32 Chapter 3. Minimum wages .................................................................................................................. 36 Chapter 4. Redundancies ...................................................................................................................... 40 4.1. Procedural requirements ............................................................................................................ 40 4.2. Collective redundancies .............................................................................................................. 43 4.3. Retraining and/or reassignment obligation ................................................................................ 46 4.4. Priority rules ................................................................................................................................ 47 4.5. Notice period .............................................................................................................................. 49 4.6. Severance pay ............................................................................................................................. 51 Conclusions ................................................................................................................................................. 57 6 Abbreviations and Acronyms ALMPs Active labor market programs CIS Commonwealth of Independent States DB Doing Business EC European Commission ECA Eastern Europe and Central Asia EU European Union EPL Employment Protection Legislation FYR Former Yugoslav Republic GNI Gross National Income GDP Gross Domestic Product ICT Information and Communication Technology IFC International Finance Corporation ILO International Labor Organization LFS Labor Force Survey MSEs Micro and small enterprises OECD Organization for Economic Cooperation and Development PDR Peoples’ Democratic Republic PES Public Employment Service SMEs Small and medium size enterprises UI Unemployment insurance UK United Kingdom 7 Introduction The recent World Development Report on Jobs2 notes that government’s role should be to set conditions for private sector job creation, and remove obstacles to creating jobs with the highest development payoffs. Policies should also address imperfections in the labor market such as inadequate or asymmetric information, uneven bargaining power, limited ability to enforce long- term commitments, and insufficient insurance against employment-related risks. Labor policies and institutions — including regulations, collective representation, active labor market programs, and unemployment insurance — can, in principle, be used to address these imperfections. Flexible labor legislation is essential for promoting creation of new businesses, growth of established firms, and job creation. A task of labor law and other labor market institutions is to balance the need to protect workers’ rights with the need to increase labor market flexibility, and establish a more conducive environment for creation of productive employment opportunities and enhancement of social dialogue. Further reforms in labor legislation and other labor market institutions constitute an integral part of reforms
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