A new International Labour Organization (ILO) report published on April 27, 2026, finds that more than half of the world’s economies face governance conditions that create uncertainty for business and investment, according to a press release by the ILO. The report, produced by the ILO Bureau for Employers’ Activities, analyses governance trends across 208 economies between 1996 and 2024. Overall performance has changed little over time, with uneven progress across countries and regions. Governance gains are fragile, and declines are more common than progress.
The report finds that only 7.2 per cent of economies operate in what it classifies as “sound” environments, characterized by strong institutions and high predictability. At the other end, 52.9 per cent face conditions that create uncertainty for business and investment. Global average governance levels have changed only modestly since the mid-1990s. Governance is highly persistent: countries that performed well three decades ago tend to remain so today, while those with weaker institutions have struggled to improve. Nearly one-third of top-performing countries saw their ranking fall.
Political governance — including accountability, stability, and checks on executive power — emerges as the most vulnerable dimension in the report’s findings. Improvements in regulation or legal frameworks can be gradually built, but political stability and accountability are more susceptible to erosion. The report also 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. More than 83 per cent of organizations surveyed in developing and emerging economies report limited capacity.
The report also finds a clear link between governance quality and a country’s ability to attract foreign direct investment, even after accounting for global and regional trends. Effective reform efforts need to focus on the weakest dimension of governance rather than headline improvements, and should be designed for durability, not short-term visibility. Deborah France-Massin, Director of the ILO Bureau for Employers’ Activities, said:
“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.”
The report calls for renewed cooperation among governments, employers, and workers to strengthen institutional frameworks on which resilient and inclusive labour markets depend. It stresses that governance gains must be actively defended and cannot be taken for granted. Sustained investment in intermediary institutions — including employers’ organizations — is identified as essential to anchoring reforms over time. The full report, titled Governance: Hard to Build, Easy to Erode – Global Trends, Business Implications and the Role of Employer and Business Membership Organizations, is available on the ILO website. Strengthening internal governance and operational capacity is described as essential to ensuring that business voices are heard and that governance gains endure.
