An effective labour administration system provides for a stable business climate, as it is a key market supporting institution that encourages national and foreign direct investment. Investors are not attracted by a weak labour administration system. In today’s world market, a poor record of compliance with national legislation – as well as non-compliance with international core labour standards – can generate consumer concerns. A strong labour administration which guarantees compliance with national law by national and international companies can be an attractive feature for national and international businesses.
In addition, a sound labour administration is important for employers because through it, governments give effect to key economic and social policies which directly impact on the workplace. ILO Convention No. 150 (Labour Administration Convention, 1978) recognizes the relevance of this by requiring ratifying States to establish consultation, co-operation and negotiation mechanisms with employers’ organizations, thereby promoting the engagement of the latter in the development and implementation of national labour policy.
Employers’ organizations have a role to play in arguing for appropriate budget allocations, monitoring the performance of the inspectorate and bringing issues of abuse or corruption or concern to the attention of government. They can also have a role in helping in the training of inspectors and in the preparation of materials used by the labour administration which set out the rights and responsibilities of employers and workers under the law.
Legal compliance is an obligation on all actors in society, including business. Legal compliance helps to ensure a level playing field so that all are required to respect the same rules and standards. Proper labour inspection can help companies benchmark their compliance and, rather than being purely a fine-imposing service, the labour inspectors can help educate and assist business in meeting these obligations.