ILO Report Says Worker Participation Strengthens Foreign Investment Strategies

A new study by the International Labour Organization (ILO) argues that foreign investment should no longer be judged only by how much money it brings into a country. Instead, governments should also ask whether investments create decent jobs, improve labour rights and support long-term social development. The report, prepared by the ILO’s Labour Governance and Sectoral Policies Department and the Employment, Skills and Sustainable Enterprises Department, examines how countries are using social dialogue to shape investment policies that benefit both economies and workers.

Authored by researcher Vongai Masocha, the study looks at examples from South Africa, Peru, Jordan, Vietnam, Slovenia, Senegal, Sierra Leone and the Philippines, as well as the West African Economic and Monetary Union (WAEMU). It finds that investment can help countries grow through technology transfer, industrial development and job creation, but only when governments, businesses and workers cooperate effectively.

Why Social Dialogue Matters

At the centre of the report is the idea of “social dialogue”, a process where governments, employers and workers’ organizations discuss and negotiate economic and social policies together. Traditionally, these discussions focused mainly on wages and labour disputes. However, the report shows that many countries are now using these platforms to influence broader issues such as trade, foreign investment and responsible business conduct.

The ILO argues that involving workers and employers in investment policymaking creates more balanced and sustainable outcomes. When labour groups are included in discussions, governments are better able to design policies that protect workers while still attracting international businesses. The study says this approach also builds trust between industries, workers and policymakers during times of economic change.

Countries Using Dialogue to Shape Investment Policies

Several countries highlighted in the report have already started linking social dialogue with economic planning. In Vietnam, labour reforms were introduced during negotiations for the European Union–Vietnam Free Trade Agreement. The government worked closely with employers and trade unions to improve labour laws and strengthen industrial relations, helping the country position itself as a destination for sustainable investment.

South Africa’s National Economic Development and Labour Council, known as NEDLAC, also played an important role in shaping industrial and trade policy. The institution created a dedicated chamber where government officials, business representatives and labour unions could discuss investment strategies and economic reforms together.

In the Philippines, the Department of Labour and Employment collaborated with national tripartite councils to integrate labour priorities into the country’s economic development plans. Sector-based councils representing industries such as construction, textiles and aquaculture helped improve labour standards while boosting competitiveness in global supply chains.

Peru took a broader approach by involving trade unions, indigenous groups, businesses and civil society organizations in developing its National Action Plan on Business and Human Rights. The report describes this as an example of how inclusive policymaking can strengthen responsible business practices and improve confidence among stakeholders.

Major Challenges Still Remain

Despite these positive examples, the study warns that many social dialogue institutions still face serious problems. In several countries, these bodies have weak legal authority and limited influence over government decisions. Economic policymaking often remains dominated by direct negotiations between governments and investors, leaving workers’ organizations excluded from important discussions.

Funding shortages and lack of technical expertise are also major obstacles. Many institutions do not have enough resources to deal with increasingly complex issues such as global supply chains, sustainability rules and responsible business standards. In some cases, tensions between governments, employers and labour unions further weaken dialogue processes.

The report also notes that some governments still treat labour policy and economic policy as separate issues. This creates a disconnect between investment strategies and social protections, making it harder to ensure that economic growth benefits workers and local communities.

Building a More Inclusive Investment Model

The ILO study concludes that social dialogue institutions can become powerful tools for inclusive development if they receive stronger political and financial support. It recommends clearer mandates for dialogue bodies, greater participation from ministries responsible for trade and investment, and stronger labour rights protections.

The report also calls for multinational companies to participate more actively in discussions about responsible business practices and sustainable investment. According to the ILO, future investment policies must balance economic growth with decent work, social inclusion and environmental responsibility.

As countries compete for foreign investment in sectors ranging from manufacturing to green energy, the report delivers a clear message: successful investment policies are not only about attracting capital but also about ensuring that workers, businesses and governments all have a voice in shaping economic progress.