The IMF was in the process of scaling down its staff as it thought that with the robust activity in the private markets there was no need for their existence. This is true. See media report below:
IMF to cut staff by 15%
7 December 2007
Washington, DC
In an exclusive interview with the Wall Street Journal, Dominique Strauss-Kahn, the new Managing Director of the International Monetary Fund (IMF), reveals plans for significant layoffs at the institution, by as many as 300-400 jobs.
As part of his efforts to revive its relevancy and increase income, Dominique Strauss-Kahn, the new Managing Director of the International Monetary Fund (IMF) plans to cut IMF staff by as much as 15% -- the first significant round of layoffs since the institution was founded in 1945.
In an exclusive interview with the Wall Street Journal, Strauss-Kahn noted that the cuts would depend on his getting approval from member governments for his plans to increase income.
The IMF faces annual loan deficits of $400 million by 2010, according to the article. The IMF currently employs 2,634 staff. By cutting 300-400 positions, Strauss-Kahn would reduce the deficit by $100 million. In addition, the new Managing Director hopes to realize cost savings by reducing the bureaucracy in the institution and cutting the number of economists it employs.
"This institution works well, with dedicated people and very high-level staff, but it is a factory to produce paper," Strauss-Kahn said in the interview.
Strauss-Kahn hopes that the U.S. and other large shareholders will increase IMF's income in exchange for the proposed savings. He also plans to sell 400 metric tons of IMF's gold stock and invest institutional reserves in "higher-yielding instruments."
Though Strauss-Kahn says he wouldn't go ahead with the cuts without approval for his plans to boost income, the article notes that IMF members are "likely to force him to go through with the job cuts anyway."
Sources
IMF Plans to Cut Jobs, Lift Income, by Bob Davis, December 7, 2007. (Wall Street Journal website)
Strauss-Kahn Seeks to Quickly Refocus IMF, IMF Survey Magazing, December 7, 2007. (IMF website)
Sunday, October 3, 2010
Wednesday, July 7, 2010
Do Our Institutions Understand Austerity? - Pay raises at World Bank, IMF draw criticism
By Howard Schneider
Washington Post Staff Writer
Friday, June 25, 2010
Austerity may be the new reality for public employees in the developed world, whether it is pay cuts in Greece, layoffs in Germany or pension reform in Britain.
But the International Monetary Fund and the World Bank have pushed ahead with pay raises above the rate of inflation for thousands of workers -- despite opposition from major funders in the United States and Europe.
U.S. representatives on the IMF and World Bank boards abstained in the recent votes that approved raises of 4.9 percent and 3.7 percent, respectively. They were joined by European nations that felt the increases set the wrong tone when governments are being pushed to retrench. The IMF just released its "Ten Commandments for Fiscal Adjustment in Advanced Economies."
Raises at the World Bank were approved at a Wednesday board meeting, just a day after Britain released an austerity package featuring new taxes and spending cuts -- not the best timing for winning the British board member's support.
"We greatly value the hard work and expertise of bank staff," said Rob Kelly, a spokesman for Britain's Department for International Development. But "when governments worldwide are cutting public spending, increasing taxes, and reducing or freezing public-sector pay, to award an above-inflation pay rise risks making the bank appear out of touch."
The dispute mirrors some of the broader dynamics in the world economy. The United States and Europe remain the major financial backers of the IMF and World Bank, and they were recently tapped to help replenish the coffers of both institutions after the global crisis spurred record lending to support economies around the world. Salaries of top World Bank staff were frozen last year in recognition of the crisis.
At the same time, developed nations are coping with the uncomfortable new role as a source of world economic weakness. Although that status made representatives from some countries leery of approving raises at the two institutions, officials from Latin America and Asia noted that there were no such complaints when their countries went through similar periods of crisis and retrenchment, according to officials familiar with the discussions.
In the bank's case, raises for the roughly 7,000 employees at its headquarters are set by a formula based on inflation and labor-market data in the United States. Inflation is currently about 2 percent annually; the formula would have allowed raises of up to 4.3 percent, but the request was scaled back to 3.7 percent. According to bank officials, individual raises are based on job reviews, and most employees will not receive the full amount. The IMF uses a similar system; its pay raises were approved in April.
"Our board representing 187 countries approved this recognizing [the] record work by staff on behalf of clients during the crisis, and it is well below other multilateral institutions," such as the IMF and major development banks, said Hasan Tuluy, vice president for human resources at the World Bank.
The World Bank's overall budget was approved at the same meeting without abstention, and at $1.77 billion, it was essentially flat compared with the year before when adjusted for inflation, according to bank officials.
U.S. officials, speaking on the condition of anonymity because the pay discussions were private, said they are pushing for a fuller review of a compensation system that outpaces the cost of living.
Washington Post Staff Writer
Friday, June 25, 2010
Austerity may be the new reality for public employees in the developed world, whether it is pay cuts in Greece, layoffs in Germany or pension reform in Britain.
But the International Monetary Fund and the World Bank have pushed ahead with pay raises above the rate of inflation for thousands of workers -- despite opposition from major funders in the United States and Europe.
U.S. representatives on the IMF and World Bank boards abstained in the recent votes that approved raises of 4.9 percent and 3.7 percent, respectively. They were joined by European nations that felt the increases set the wrong tone when governments are being pushed to retrench. The IMF just released its "Ten Commandments for Fiscal Adjustment in Advanced Economies."
Raises at the World Bank were approved at a Wednesday board meeting, just a day after Britain released an austerity package featuring new taxes and spending cuts -- not the best timing for winning the British board member's support.
"We greatly value the hard work and expertise of bank staff," said Rob Kelly, a spokesman for Britain's Department for International Development. But "when governments worldwide are cutting public spending, increasing taxes, and reducing or freezing public-sector pay, to award an above-inflation pay rise risks making the bank appear out of touch."
The dispute mirrors some of the broader dynamics in the world economy. The United States and Europe remain the major financial backers of the IMF and World Bank, and they were recently tapped to help replenish the coffers of both institutions after the global crisis spurred record lending to support economies around the world. Salaries of top World Bank staff were frozen last year in recognition of the crisis.
At the same time, developed nations are coping with the uncomfortable new role as a source of world economic weakness. Although that status made representatives from some countries leery of approving raises at the two institutions, officials from Latin America and Asia noted that there were no such complaints when their countries went through similar periods of crisis and retrenchment, according to officials familiar with the discussions.
In the bank's case, raises for the roughly 7,000 employees at its headquarters are set by a formula based on inflation and labor-market data in the United States. Inflation is currently about 2 percent annually; the formula would have allowed raises of up to 4.3 percent, but the request was scaled back to 3.7 percent. According to bank officials, individual raises are based on job reviews, and most employees will not receive the full amount. The IMF uses a similar system; its pay raises were approved in April.
"Our board representing 187 countries approved this recognizing [the] record work by staff on behalf of clients during the crisis, and it is well below other multilateral institutions," such as the IMF and major development banks, said Hasan Tuluy, vice president for human resources at the World Bank.
The World Bank's overall budget was approved at the same meeting without abstention, and at $1.77 billion, it was essentially flat compared with the year before when adjusted for inflation, according to bank officials.
U.S. officials, speaking on the condition of anonymity because the pay discussions were private, said they are pushing for a fuller review of a compensation system that outpaces the cost of living.
Tuesday, February 23, 2010
Time for Change, IMF and World Bank
IMF and World Bank
The two sister organizations engaged in international lending reside across the street from each other in downtown Washington. While the IMF’s mandate covers surveillance of country and regional economies, in particular in relation to banking and currency, and crisis lending, the World Bank focuses on project-based lending for economic development. Regardless of their respective mandates, their actual work entails substantial overlap. More often than expected, they step on each other’s toes and even compromise the objectives of each other—and thus they compromise the objectives of the countries that they represent and those that they serve. Two sets of Executive Boards and two sets of staff are involved. There is substantial duplication and significant “intentional differentiation” of operational and support activities between the two organizations, e.g., human resources policies and practices, technology. These organizations do not only represent two major bureaucracies but in fact a represent a preponderance of excess. The financial year of the two organizations is also different which makes it hard to reconcile and control costs. Time after time, whenever the discussion turns to consolidating these two lenders, there is lack of support from within--given their interests to preserve their respective bureaucracies and high paying jobs--every effort is made to justify keeping the two organizations separate. The staffs of the two organizations earn excessively high salaries for the value added. In today’s financial environment, we cannot afford not to consolidate these two organizations.
The two sister organizations engaged in international lending reside across the street from each other in downtown Washington. While the IMF’s mandate covers surveillance of country and regional economies, in particular in relation to banking and currency, and crisis lending, the World Bank focuses on project-based lending for economic development. Regardless of their respective mandates, their actual work entails substantial overlap. More often than expected, they step on each other’s toes and even compromise the objectives of each other—and thus they compromise the objectives of the countries that they represent and those that they serve. Two sets of Executive Boards and two sets of staff are involved. There is substantial duplication and significant “intentional differentiation” of operational and support activities between the two organizations, e.g., human resources policies and practices, technology. These organizations do not only represent two major bureaucracies but in fact a represent a preponderance of excess. The financial year of the two organizations is also different which makes it hard to reconcile and control costs. Time after time, whenever the discussion turns to consolidating these two lenders, there is lack of support from within--given their interests to preserve their respective bureaucracies and high paying jobs--every effort is made to justify keeping the two organizations separate. The staffs of the two organizations earn excessively high salaries for the value added. In today’s financial environment, we cannot afford not to consolidate these two organizations.
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