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

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.

Source: Justice for Blacks

Why is Dr. Kim refusing to address this long documented injustice first rather than trumping up his quota driven recruitment drive? Why does he not convert hundreds of Blacks who are consigned to the Bank’s consultant cohort to regular staff rather than launching a recruitment drive for new hires? It is all about PR optics not justice.

As bad as this seems at face value, framing the injustice in general discussions and abstract numbers does not begin to tell half the story of the raw and dehumanizing racism that Dr. Kim is presiding over. Here are two stories of Black women.

An imperative narrative

A recent racial discrimination case that was reviewed by the World Bank Administrative Tribunal, DD v. World Bank (2015), provides a telling example of the Bank’s naked apartheid grade and wage structure.

The case revealed that a Sub-Saharan African staff was kept at level GE, when in fact several managers acknowledged that she was performing tasks at level GG, two grades above her pay scale.

In 2005, Ms. DD’s manager wrote on her annual evaluation report that she acted for her GG level manager for an extended period and “delivered on all fronts, including program planning and monitoring as well as engaging in substantive operational work on several countries.”

In 2007, another manager highlighted that "in the last two years [Ms. DD] consistently operated at a higher level than her current GE level would call for."  Six years later, yet another manager reiterated the same assessment on her 2013 annual performance evaluation record: "Her insights stand out from her peers."

She consistently performed at GG level, while consigned to a sub-professional GE status. The salary gap between GE and GG is $66,800 per year. [5] This is not counting significant differences in pensions, resettlement allowances and other benefits.

Moreover, the salary range within a given grade is enormous. For example, the salary for level GE varies from $58,900 to $109,500. Sub-Saharan Africans are underpaid even within their grades. 

In the last five years of her employment with the World Bank (2010 to 2014), Ms. DD’s average annual salary increase was 1.6 percent. For the same period, the average annual US inflation rate was 2.0 percent.[6] During this period, her inflation adjusted salary was declining.

Ms. DD was terminated in 2014 under the false pretext of Dr. Kim’s reorganization and budget reduction initiative after she began to complain about her grade and salary.

In its December 2015 judgement, (DD v. World Bank, Decision no. 526), the Tribunal stated: “Since the redundancy of the Applicant’s position, the Bank hired a number of staff members and issued hundreds of consultancy contracts may be inconsistent with the Bank’s position that the reorganization and the associated budget reduction required the redundancy of the Applicant’s position. Therefore, a question would arise whether the abolition of the Applicant’s position was genuine.”

The judgment further highlighted: “The Bank intentionally omitted Applicant’s skills and experience” when reviewing her unit’s skills needs assessment. A summary of the Tribunal judgment acknowledged that during the reorganization period she was “placed in a list with and compared to staff of a much higher grade when decisions were made as to whom to retain in order to carry out the new work program.”

The Tribunal noted that “her experience appears not to have been recognized at all.” She was not “given credit for [her] task team leadership experience,” which is a key requirement for GG positions. It concluded: “The Bank conflated procedures in relation to the declaration of the redundancy of the Applicant’s position, with adverse consequences for the Applicant.”

The Tribunal found itself in a difficult situation, having determined that Ms. DD was classified into two grades – Level GG (senior officer) when making a decision to retain her position or declare it redundant and level GE (a sub-professional grade) to set her grade and salary.

Here is the conundrum that the Tribunal was confronted with. Ordering her reinstatement at GE level would be tantamount to endorsing the Bank’s apartheid grade and wage system. On the other hand, instructing the Bank to reinstate her at a higher grade commensurate with her experience and performance (level GG) would be striking down the Bank’s reservation grade and wage system, opening a floodgate of complaints for Sub-Saharan Africans in the Bank.

A judgement in her favor would have been a precedent-setting judgment that would have eventually redressed all similarly under-graded and underpaid Blacks with a total price tag of over $250 million. The Tribunal avoided that with a despicable judgment: “Reinstatement of the Applicant is not practicable under the circumstances and is not warranted.”

No explanation was provided as to why reinstating her was not practicable and not warranted, particularly in light of the Tribunal’s judgment in CT v World Bank, 2015. Ms. CT was terminated after she sent an email to her manager (a German national) referring to her as “Nazi Third Reich.”

As it turned out the reference to “Nazi Third Reich” was the least offensive content of the email. The Tribunal stated that "Out of respect for the privacy of [the German national] and for reasons of decency, the Tribunal refrains from reproducing the contents of the email exchange." Nonetheless, the Tribunal found that her termination was unjustified and instructed the Bank to reinstate her.

Why is a staff who was terminated for serious and offensive “misconduct” reinstated, but another who was unjustly terminated was denied reinstatement even after the Tribunal found the Bank violated its “procedural” and “substantive” rules? The answer is in the 2015 Diversity report: Institutions hovering between Stages 2 and 3 are “tolerant of racial differences, but they are “not open for those who challenge the status quo.”

Ms. DD’s case is a reflection of the norm

In a gut-wrenching article titled “My life story, not my obituary: Fighting cancer and racism at the World Bank”, Dr. Jane Biko shared her own experience.

She wrote that a friend sent her a draft article about institutional racism at the World Bank for her comments and input. She began her article with: “Unbeknownst to the person, the draft reached me as I was preparing for mastectomy. It put my emotions afire like a TNT stick that is lit up on both ends.”

She continued on: “The draft article mentions a late African colleague who succumbed to cancer while fighting racial discrimination at the World Bank. It noted that she was advised by her colleagues to leave the Bank and focus her energy on her health. I was one of her colleagues who gave her such advice. She chose to ‘stick it out.’ I was not able to understand her thinking at the time. Little did I know that the advice I dispensed to her would return to me like a boomerang. Faced with the same situation I ignored my own advice and chose to stick it out."

Having worked with the Bank for 8 years as a short-term consultant, Dr. Biko competed and was selected for a regular staff position. Of the 12 candidates who were recruited with her by the same department, five were Black and seven were non-black. All none-black candidates were given the regular staff position as advertised. Three of the five Blacks including Dr. Biko were downgraded to consultancy assignments and told to take it or leave it. This entailed significant pay cut, for some as high as 40%.

Dr. Biko pleaded with Dr. Kim: "Dear Dr. Kim, I write to you as a victim of racial discrimination and as one inflicted by breast cancer at a young age without any family history of cancer... I am currently in Paris waiting for a surgery... I write to you to ask for a provisional relief and to once again plead with you to resolve my case through external arbitration" outside of the World Bank Tribunal “Apartheid Justice” system.

Sadly, her plea “did not even get so much as an acknowledgment, let alone a provisional relief.”  She took her case to the Tribunal. The Tribunal summarily dismissed it.

Over 450 cases of racial discrimination in 5 years

According to the Bank’s former Senior Advisor for Racial Equality, “over 450 cases of racial discrimination were filed with his office in a span of 5 years.” This figure represents an underreporting. As a 1999 US government study has documented “employees often saw the [Bank’s justice system] neither fair nor credible and this deterred them from using it.” [7]

President Kim’s orchestrated and widely touted race-based recruitment drive is nothing more than a cynical scheme to cover up the injustice by shifting attention from the DDs and the Bikos of the World Bank. The cover-up is more criminal than the crime itself!

It is long past time for the World Bank Board of Governors to establish a high-level external commission accountable to it to prepare an unvarnished report with concrete recommendations. Until such time the Tribunal should recuse itself from reviewing racial discrimination cases.

* Faith Moses is a pen name for a former World Bank staff. She will be available to meet and answer any question from the media or World Bank Board members.

End notes

[1] World Bank (2015), “The Strategic Review of Current Diversity, Inclusion and Racial Relations Issues Related to the World Bank Group Workforce”

[2] World Bank (1998), “Report of the Team for Racial Equality”

[3] World Bank (2003), “Enhancing Inclusion at the World Bank: Diagnosis and Solution”

[4] World Bank (1998), “Pay and Grade Differentials at the World Bank” http://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-1912

[5] World Bank (2014), Review of Staff Compensation for the World Bank Group.

[6] http://www.usinflationcalculator.com/inflation/historical-inflation-rat…

[6] Source: http://www.gao.gov/archive/1999/ns99096.pdf

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