Creating more resilient labor markets and better jobs with data

The views expressed in the Let’s Talk Development blog are solely those of the author(s).
 

Strong labor markets are key to sustainable economic growth and shared prosperity, but without fundamental legal rights and protections, this goal cannot be reached. Legal inequalities prevent too many workers, especially women, from reaching their full potential and contributing to their communities and economies. This blog analyzes data from three key indices— Business Ready (B-READY), Women, Business and the Law (WBL), and the Labour Rights Index (LRI), offering advice to policymakers on ways to identify opportunities for legislative reforms that balance worker protections with business efficiency, support women's economic participation, and enhance overall labor market inclusivity and resilience.
 

Gaps in Worker Protections Worldwide

The World Bank’s B-READY 2024 finds that even with adequate labor laws, key public services like unemployment support remain insufficient. For women, labor market barriers are even steeper— the World Bank’s Women, Business and the Law 2024 reveals that women have just two thirds of the legal rights of men, limiting their ability to work and grow businesses. Additionally, WageIndicator Foundation’s Labour Rights Index 2024 finds that only 4.6% of the world’s population enjoys legal “access to decent work” (the highest of six scoring categories), emphasizing the need for improved legislation on freedom of association, family responsibilities, employment security, and fair wages.

Leveraging Data on Labor Legislation to Identify Opportunities for Reform

Regulations and public services influence companies’ decisions on hiring and impact workers’ wellbeing by providing good jobs and growth opportunities. That is why laws and policies must be grounded in data and evidence to build inclusive and resilient labor markets.

B-READY, WBL, and LRI collect and analyze data on the existence – or absence – of good practices in global employment legislation based on international standards, providing complementary insights for legislative reforms to promote inclusive economic growth (see Figure 1).

B-READY

B-READY assesses the global business and investment climate, promoting private investment, job creation, and productivity. One out of ten topics, the labor topic evaluates employment regulations, public services for labor, and their efficiency across three pillars:

1. Quality of Labor Regulations, covering laws on non-discrimination and working conditions
2. Adequacy of Public Services for Labor, such as social protections and labor inspectorates
3. Operational Efficiency, focusing on practical barriers like hiring costs
    

B-READY’s labor topic data reveal that all economies can improve across the three pillars. For example, on average, economies score 70.6 (out of 100) on Regulatory Framework, 58.3 (out of 100) on Public Services, and 62.3 (out of 100) on Operational Efficiency. For each economy, the B-READY website presents granular data which can be used to guide specific policy reform, such introducing paid annual or sick leave, which allows workers time for recovery without risking their income.   

Policymakers can use B-READY data to reform laws that balance workers’ protection with firms’ ability to make employment decisions efficiently. They may also use the data to design efficient social security systems and employment services that enhance formal job creation and labor market inclusion.
 

Women, Business and the Law

WBL aims to improve women’s economic opportunities and private sector development in 190 economies. While all ten indicators in the WBL index relate to women’s participation in the labor market, four indicators – Workplace, Pay, Parenthood, and Pension – comprise the labor topic since they specifically focus on laws and policies supporting or hindering women at work.

The WBL labor topic reveals large gaps in the implementation of equal pay legislation across 190 economies. For example, while 52 percent of economies mandate equal remuneration for work of equal value, only 18 percent have pay transparency measures or enforcement mechanisms to address the gender pay gap.

Policymakers use WBL data to identify and close legislative and policy gaps. For example, Sierra Leone’s reform of its 2023 Employment Act drew from WBL data to expand paid leave for mothers to 14 weeks and grant fathers two weeks of paid leave.
 

Labour Rights Index

LRI, a de jure index by the WageIndicator Foundation and the Centre for Labour Research, measures the quality of employment regulations according to International Labor Organization instruments and UN conventions. The LRI 2024 evaluates labor market regulations that directly or indirectly impact more than 90% of the global labor force. It evaluates countries using ten indicators, including Decent Working Hours, Employment Security, Fair Wages, and Safe Work.

The average score for 145 countries is 74 (out of 100), however more than 50% of the world’s population lives in countries where labor legislation provides “limited access to decent work” or worse.

Policymakers use the LRI to advance labor market protections at the country level. For example, during 2023 and 2024, the provincial labor departments in Punjab and Sindh in Pakistan used sub-national LRI profiles to draft reforms to their labor legislation. Once enacted, the new Labor Codes will include worker protections such as paid nursing breaks, flexible working arrangements and a minimum age for the employment of children.
 

Figure 1. Comparison of the three indices

Using the Data Sets in Tandem

Together, these three indices provide a comprehensive and current view of labor markets, highlighting areas for improvement to foster economic inclusion for all. While B-READY focuses on the regulatory framework and public services directed at firms, WBL evaluates laws and policies affecting women´s participation in the labor market, and the LRI analyzes worker protections.

While the indices share some thematic overlaps, each offers a distinct perspective to inform reforms.

• B-READY assesses labor regulations and public services from the point of view of workers and firms, highlighting practical barriers firms face in hiring and dismissal procedures and nontransparent health and safety inspections that may hinder efficiency and growth.
• WBL focuses on gaps between laws and their implementation, particularly for working women—for instance, tracking not just maternity leave entitlements but also the accessibility of leave benefits.
• LRI adds depth on worker protections, especially around freedom of association and workplace safety, such as the mandatory provision of personal protective equipment and injury benefits.

Policymakers may use B-READY labor topic data to spot opportunities for legal reforms that protect workers while allowing firms flexibility in making employment decisions without excessive administrative burdens. Similarly, WBL labor topic findings can help identify opportunities to reform laws and policies to support women business owners and workers while advancing economic growth. LRI is particularly useful for understanding workers’ legal rights, especially those planning to move between different countries.

By leveraging insights from B-READY, WBL and LRI, policymakers, researchers, and advocates can identify effective legal and policy solutions that protect workers’ rights while enabling inclusive job creation and sustainable economic growth.