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Recent Support to Severance

Recent Support to Severance. Operational features & design of compensation packages. Why focus on severance?. Sensitive topic Bank’s position on this has changed over time Funding from adjustment Funding from investment OPMemos of 1996 and 2002 Expenditure Eligibility guidelines

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Recent Support to Severance

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  1. Recent Support to Severance Operational features & design of compensation packages Ranjana Mukherjee PRMPS

  2. Why focus on severance? • Sensitive topic • Bank’s position on this has changed over time • Funding from adjustment • Funding from investment • OPMemos of 1996 and 2002 • Expenditure Eligibility guidelines • Recent Board query Ranjana Mukherjee PRMPS

  3. Operational features How much support for severance? What changes did the OPMemo introduce? Compensation package design How many employees? How much money? Regional differences? Method of downsizing Training & assistance Return on investment Outline Ranjana Mukherjee PRMPS

  4. Operational feature : How much support • Roll-outof severance projects has been uneven • What proportion does severance constitute of • investment lending • A country’s IDA / IBRD allocation Ranjana Mukherjee PRMPS

  5. Number of severance-funding projects by year Ranjana Mukherjee PRMPS

  6. FY Severance component as % of investment lending 00 0.9 01 3.4 02 No severance funding project 03 No severance funding project 04 4.2% Severance in investment lending Ranjana Mukherjee PRMPS

  7. Operational feature: How much support? • Bank sometimes supported only part of severance payments • Severance as proportion of the loan loan has varied from 5% to 100% • Retroactive financing has been allowed Ranjana Mukherjee PRMPS

  8. Since the 2002 OpMemo • Major part of severance support still for SOE employees • Severance support for SOE employees has been 100 times that for other categories of public employees Ranjana Mukherjee PRMPS

  9. Design features • How many employees were downsized? • How much did severance cost? • Per head severance payment? • Regional trends? Ranjana Mukherjee PRMPS

  10. Severance payment per person Ranjana Mukherjee PRMPS

  11. Per employee severance - regional trends AFR 39 times per capita GNI EAP No projects ECA 2.7 times per capita GNI LAC Sample too small MNA No projects LAC Sample too small Ranjana Mukherjee PRMPS

  12. Design features of severance-funding projects • Redundancy Vs. Voluntary Retirement • Which one and why? • Consultation with unions • VRS uncertainties • Pension liabilities Ranjana Mukherjee PRMPS

  13. Design features of severance-funding projects • Training & Assistance • Common, but not universal • Activities funded under this component • Size • Design Ranjana Mukherjee PRMPS

  14. Design features of severance-funding projects • Return on Investment • FRR and ERR • Assumptions • Sensitivity Analysis Ranjana Mukherjee PRMPS

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