Introduction

This ILO Working Paper examines how national social dialogue institutions (NSDIs) influence trade, investment and responsible business conduct (RBC) policies to align foreign direct investment (FDI) with national development priorities. The study draws on eleven case studies covering eight countries — Jordan, Peru, the Philippines, Senegal, Sierra Leone, Slovenia, South Africa and Viet Nam — and one regional bloc, the West African Economic and Monetary Union (WAEMU). Findings are based on desk research and expert interviews conducted between August and October 2023.

A social dialogue approach to advance national development objectives

Social dialogue encompasses negotiation, consultation and information exchange between representatives of governments, employers and workers on economic and social policy. Approximately 87 per cent of ILO Member States have established a permanent NSDI (p.19). Peak-level social dialogue (PLSD) has proven instrumental in facilitating effective consultation between governments and social partners, addressing issues ranging from wages and working conditions to broader socio-economic policy.

FDI is widely recognised as a key driver of sustainable development and the largest source of external finance for developing economies. However, the presence of FDI does not automatically translate into more and better jobs in host countries. Twenty-four international investment and trade agreements include references to the ILO MNE Declaration to date (p.16), which provides policy guidance to governments, employers’ and workers’ organisations, and multinational enterprises (MNEs) on maximising the positive impacts of FDI and MNE operations. So far, 23 ILO member states have appointed tripartite national focal points to promote the Declaration’s principles at the national level (p.17).

Examples of how national social dialogue institutions leverage trade and investment policy processes

A 2015 baseline survey of 28 NSDIs found that 72 per cent did not engage in discussions on how to maximise the positive developmental impact of global supply chains or MNEs in their countries, and only 8 per cent had such topics within the scope of their mandate (p.15). Since 2017, engagement has grown considerably.

Emerging practices documented include: establishing specialised subcommittees on trade and investment within NSDIs (South Africa’s NEDLAC); integrating social dialogue into national policy framework development and implementation (Slovenia’s Economic and Social Council); elaborating the labour dimensions of national development plans through tripartite engagement (the Philippines); advancing multi-stakeholder dialogue on business and human rights (Peru); generating knowledge and building capacity to attract sustainable investment (Jordan’s Economic and Social Council); and strengthening regional policy coherence through transnational social dialogue. The WAEMU Labour and Social Dialogue Council illustrates the latter, comprising 72 members representing governments, employers, workers and civil society from its eight member states (p.30).

Capacity of social dialogue institutions to influence FDI policies: Challenges and opportunities

Key challenges include: unclear institutional mandates; a tendency towards bilateral rather than tripartite engagement on economic and trade issues; unconducive industrial relations environments; reliance on government political will; and insufficient financial and human resources. The report recommends NSDIs review and clarify their mandates to encompass FDI, MNE and RBC issues, establish specialised subcommittees, promote cross-ministerial participation, and build the technical capacity of social partners.

Opportunities identified include: aligning economic and social agendas by expanding NSDI roles; strengthening the decent work impact of FDI through collaboration with investment promotion agencies; leveraging dialogue with trade partners and MNEs; participating in transnational social dialogues; developing sector-specific policies to enhance competitiveness; and establishing new multi-stakeholder platforms where existing institutions have limited capacity.

Conclusions

The report outlines policy options across five areas: creating enabling environments for effective social dialogue; clarifying and expanding NSDI mandates; enhancing institutional capacity; promoting inclusiveness and transnational engagement; and encouraging systematic self-assessment using the ILO Self-Assessment Method for Social Dialogue Institutions (SAM-SDI). Well-functioning NSDIs can bridge economic and social policy objectives and help ensure FDI contributes to sustainable economic growth, decent work and social progress.