Categorized | Africa

$250 million: The cost of ending racism at the World Bank

World Bank

As he did last year, World Bank President Jim Yong Kim has announced another recruitment of Africans. But this is a PR gimmick meant to cover up deeply rooted racial discrimination against Black staff at the Bank. The Bank’s latest diversity report stresses that the Bank will not make substantive progress in eliminating subtle as well as overt racism unless more systemic changes are made.

Since 1971, numerous World Bank reports have documented that racial discrimination in the World Bank Group is “systemic”. On a graduating scale of 1 to 6, with 1 signifying “a mono-cultural institution” and 6 representing “an anti-racist, multi-cultural one” the Bank is “hoovering between 2 and 3”, according to a 2015 World Bank diversity report. [1]

The report noted that institutions in Stage 1 “see racial and cultural difference as deficits.” In Stage 2 they start “being tolerant of racial and cultural differences.” In Stage 3 they undertake “symbolic changes” that do not undermine the institutional architecture or cultural construct of the status quo. Stage 4 is the tipping point “where institutions develop an intentional identity as an ‘anti-racist’ institution and begin to develop accountability to [their] racial and ethnic constituents.”

Thirty-seven years after the Bank’s Board of Governors expressed commitment to stamp out racial discrimination (during the Bank’s 1979 Annual Meeting in Belgrade), admittedly the progress that the Bank has made is merely “being tolerant” of racial differences and making “symbolic changes.”

There are two cross-fertilizing factors that organically collide to form a stubborn resistance to a systemic change: an endemic culture of racism and the estimated $250 million financial cost of justice.

The Bank’s racial signature DNA was laid naked in a 1998 World Bank report: “Interviews with managers for African Issues Working Paper in 1992 revealed cultural prejudices among some managers, who rated Sub-Saharan Africans as inferior.” [2]

The report brought to light that “Sub-Saharan Africans are recruited at lower grade than comparably qualified staff from other parts of the world and earn significantly lower average salary level.”  A follow up 2003 World Bank report revealed that similar findings have been documented “with varying degrees of empirical rigor, in 16 earlier Bank Group diversity studies.” [3]

In 2000, the cost of ending the Bank’s institutionalized race-based grade and salary structures was estimated to be about $250 million dollars over 10 years.

At the time, the Bank was faced with an additional cost of $125 million to give long term consultants past pension credits. The story about the $125 million was published in the October 2000 issue of the Staff Association Newsletter. Long-term consultants were granted pension credits for their past services, after the Tribunal rendered a precedent-setting judgment in Prescott v. World Bank (2001).

The $250 million preliminary cost of ending institutional racism was erased from the Bank’s institutional memory and the matter was ignored.

Current World Bank President Dr. Jim Yong Kim

The first thing that Dr. Kim announced after he came to the World Bank in 2012 was the need for streamlining of the Bank’s operations along with the resultant personnel restructuring. The reform agenda was silent on Diversity.

When Dr. Kim first announced the appointment of 16 senor directors to implement his signature reform, none was Black. It was in 2014 after an uproar from the DC Civil Rights Coalition and the African Board of Governors that he took a number of symbolic steps, including setting up quotas. This is a futile and superficial step. The Bank’s own studies have concluded that quota-driven policies do not address the root causes of the problem.

The 2015 World Bank diversity report stressed that the Bank will not make “substantive progress in eliminating subtle as well as overt expression of racism unless more systemic changes are made.” The conclusion is consistent with that of the aforementioned 2003 World Bank diversity report: “Barriers to inclusion that have become institutionalized rarely change in the absence of a substantial change” in the organization’s “business and legal environment.”

The report further noted that the Bank’s all too familiar diversity policies that are “always very numbers-driven will not address the root causes of the inequities and the problems will persist and recur, despite repeated special interventions.”

More importantly, the 2003 report revealed that “In interviews conducted during this study, staff from groups covered by employment targets made repeated statements such as ‘We never want to be tokens’ or ‘We want to be promoted based on competence, not a diversity profile.’”

Why is DR. Kim resisting the widespread and longstanding call for a transformative change? The answer becomes evident when reviewing the following question: Why has July become Dr. Kim’s preferred month to announce his yearly race-based recruitment drive?

In July 2015, the Bank announced a race-based recruitment drive stating: “Senior leadership has committed 80+ vacancies to be filled by African nationals.” Once again, in July 2016, the Bank launched another “World Bank Group Recruitment Drive for African Nationals.”

The fast track recruitment drives both in 2015 and 2016 included interviews as early as August and job offers by end of September. As was the case in 2015, the 2016 timing is carefully tied with the World Bank and IMF Annual Meeting in the first week of October, where the Bank will herald the new recruits before the Board of Governors as trophy hires to showcase Dr. Kim’s “commitment” for racial equality.

Beneath the symbolic quota-based racial recruitment drive resides a PR optics at best, or an outright manipulative scheme to cover up the root causes of the Bank’s systemic and endemic racism.

Dr. Kim understands that it is a hell of a lot cheaper to hire 80 Africans and appoint a few African vice presidents than to dismantle the Bank’s race-based grade and wage structures. Equally importantly, the symbolic gesture leaves the institutional architecture and cultural construct of the racial status quo intact. Remember this is the defining characteristic of institutions in Stage 3 of race relations progress.

A system of apartheid wage

A revealing statistical study that was conducted by three World Bank research economists established with statistical evidence that the Bank’s race-based salary gap is a result of a bank-wide institutional policy. [4]

The report noted that “large international organizations such as the World Bank pursue multiple objectives in hiring policies, including cost reduction… One way to reduce costs would be to pay employees their reservation wages.”

The reservation wage is the lowest wage rate at which a worker would be willing to accept a job offer. The study found that the Bank pays different groups “different reservation wages – implying unequal pay for equal work, or discrimination.”

The Bank understands that Sub-Saharan Africans (who have limited employment opportunities in their countries) are willing to accept substantially lower grades and salaries than their equally qualified European or American colleagues (who have better employment opportunities in their countries) and sets its grade and wage structure accordingly.

As noted by Justice for Blacks (an organization of current and former World Bank staff), the institutionalized grade and wage segregation can be demonstrated using data from the Bank’s IT vice presidential unit (VPU). Justice for Blacks picked the IT VPU because the Bank’s IT work is pretty standardized. Each IT staff is assigned to provide technical support to the same number of staff and each serves as a backup for the other.

As the chart below shows, the percentage distribution across the three cohorts senior officer (GG), officer (GF) and Analyst (GE) is relatively even for the non-black staff, with GF level representing the majority (43 percent). The same is true for non-Black women, showing the progress that the Bank has made in addressing gender discrimination issues for non-Black woman.

By contrast, for Blacks 61 percent are in the sub-professional (GE) cohort. Furthermore, the percentage difference across the three cohorts is huge. Only 7 percent are in level GG. Many Blacks with a Master’s degree and 20 years World Bank experience languish in level GE when they should be in level GG. It is highly unlikely, if at all possible, to find a non-Black IT expert with similar credential in level GE.

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