Governance stagnates globally as declines outpace gains, ILO reports

The International Labour Organization (ILO) has found that more than half of the world’s economies face governance conditions that generate uncertainty for business and investment, with declines in governance quality more common than progress over the past three decades, according to a press release issued on 27 April 2026. The new report, produced by the ILO Bureau for Employers’ Activities, analyzes governance trends across 208 economies between 1996 and 2024. It reveals that overall performance has changed little despite ongoing reform efforts. Progress across countries and regions remains uneven. The findings carry implications for investment, institutions, and employers’ organizations worldwide.

Governance conditions differ widely across the globe, the report indicates. Only 7.2 per cent of economies operate in what the report classifies as “sound” environments, characterized by strong institutions and high predictability. At the opposite end, 52.9 per cent face conditions that create uncertainty for business and investment. Global average governance levels have shifted only modestly since the mid-1990s. The pattern reflects both gradual improvements and setbacks across different contexts.

A central finding is that governance changes are not symmetrical. Countries that performed well three decades ago tend to remain so today, while those with weaker institutions have struggled to improve. When change does occur, it is more likely to be negative than positive, with nearly one-third of top-performing countries seeing their ranking fall. Political governance — including accountability, stability, and checks on executive power — emerges as the most vulnerable dimension. The report also identifies a clear link between governance quality and a country’s ability to attract foreign direct investment.

The report additionally examines employer and business membership organizations (EBMOs) as institutional actors within governance systems. Drawing on new data from 166 organizations worldwide, it introduces an EBMO Governance Index to assess autonomy, internal governance, and organizational capacity. Most EBMOs have achieved formal independence from government, yet many lack the capacity to translate that independence into effective advocacy. In developing and emerging economies, more than 83 per cent of organizations surveyed report limited capacity. “Governance underpins sustainable enterprises, decent work, and inclusive growth. Building strong institutions requires time and commitment, and progress can be fragile. Employers’ organizations play a key role by both advocating for and embodying good governance,” said Deborah France-Massin, Director of the ILO Bureau for Employers’ Activities.

The report closes with clear principles for reform, urging efforts that target the weakest dimensions of governance rather than headline improvements. Reforms should be designed for durability, not short-term visibility, and include safeguards against backsliding. Sustained investment in intermediary institutions, including employers’ organizations, is also considered essential. The ILO calls for renewed cooperation among governments, employers, and workers to strengthen institutional frameworks. The findings reinforce the conviction that effective social dialogue, decent work, and sustainable development depend on functioning institutions and accountable governance.