Fostering effective participation of business in the policy cycle

In recent years, OECD countries have navigated an unprecedented number of multidimensional challenges, comprising economic crises, the effects of climate change, a global pandemic and geopolitical conflicts in several parts of the world. In this context, building trust in institutions at local, national and international levels has emerged as a major priority. Effectively addressing mis- and dis-information, fostering transparency as well as better engagement of citizens in evidence-based policy discussions at the appropriate level are important avenues to foster accountability and build trust.

Business is an important part of society as it creates jobs for many citizens, contributes to government revenues through taxes, and drives economic growth and development locally and globally. Business can also play an important role in fostering societal dialogue and promoting social inclusion. As such, effective participation of business in policy discussions must be an important priority for governments. As the official voice of business to the OECD, Business at OECD (BIAC) has fulfilled this function for over 60 years, informing OECD policy discussions through comprehensive business advice across policy areas.

Businesses just like citizens have been significantly impacted by the policy tradeoffs made in the context of recent crises, as our economies have had to quickly adjust to supply chain disruptions, high energy prices and inflation, many of which have sent the costs of business soaring.

As governments have sought to address these multidimensional challenges, they are facing an increasing trust issue. Indeed, as the OECD notes in the latest edition of the OECD Survey on Drivers of Trust in Public Institutions_], public satisfaction with how governments are addressing complex policy challenges has decreased, with many seen as being less reliable to factor in unknowns or tradeoffs. Our recent Business at OECD economic survey also finds that businesses identify the lack of political will or leadership as one of the primary obstacles to reform.

More than ever, governments need to enhance dialogue with the private sector to help create a policy environment that fosters private sector-led economic growth, an inclusive society, sustainability and trust. It is in the public interest for a wide range of participants to be able to provide their perspectives, data or additional evidence for countries to consider as part of the policymaking process. The private sector’s expertise and insights to policymaking are important to enable better regulation in the context of a policy framework that prioritizes integrity, transparency and inclusive dialogue.

Yet too often, businesses lack the information and resources necessary to effectively participate in these processes. The representation of small businesses in the policymaking process is especially hindered by the difficulties they face to organise in ways that larger businesses, with their greater resources and more clearly defined interests, can engage. This underlines the important role that representative business and employers’ organizations play to provide structured and comprehensive input to policy discussions. Governments should ensure effective engagement channels for comprehensive business input to be heard in the policymaking process. This is essential to ensure that practical business realities are duly reflected in policy making. It also increases businesses’ trust in government, while providing them with greater visibility and certainty to plan their operations in the long-term, supporting investment in innovation and job creation.

The private sector must also take responsibility for engaging in and educating themselves about the policymaking process. Business and employers’ associations play an important role in this regard to ensure that businesses within their membership understand and engage in the policymaking process. Business at OECD is proud to represent over 50 national business and employers’ organizations in OECD countries and beyond that include companies of all sizes across sectors which can help deliver structured business advice on a wide range of OECD activities that matter for our societies and economies.

We firmly believe that by engaging in the policy cycle, businesses can help develop better regulation that will help our economies and societies to succeed and foster sustainable and inclusive growth. Incorporating private sector views in the development, implementation and review of regulation can maximise benefits and minimise costs for all.  This is all the more important as the OECD is advocating for policies that enable technologies such as artificial intelligence to thrive while addressing the associated risks and ensuring ethical and transparent decision-making.

We also encourage national governments to consider the need to foster trust in the private sector’s ability to address some of the most pressing problems of our time. As the 2012 OECD Recommendation on Regulatory Policy and Governance recommends, policymakers should identify and consider the most efficient and effective regulatory approaches, including non-regulatory alternatives, before making a decision to regulate to achieve public policy goals. In addition to the important role of effective and balanced regulation, due attention should be given to the role of voluntary business initiatives to address issues such as climate change, corruption, gender-based initiatives, and others.

It is vital to democracy that countries prioritize efforts to increase stakeholder engagement and invest in the capacity needed for ensuring an inclusive, transparent, and equitable participation of all stakeholders in the policymaking process. The more and earlier both citizens and businesses are consulted in the policy cycle, the better the laws and regulations adopted will be able to tackle the complex policy issues of our time, while restoring trust in government’s capacity.

This blog is part of a collection of opinion pieces that showcases diverse perspectives on the new frontiers of citizen participation, from thought leaders and practitioners across national and local government, academia, business, trade unions, and civil society. It offers insights and inspiration for discussions at the 2024 Global Forum on Building Trust and Reinforcing Democracy, and future multidisciplinary work at the OECD.  

The Global Forum takes place in Milan, Italy,  21-22 October 2024.  Register to follow the discussions online:  https://www.oecd-events.org/global-forum-on-democracy/en 

This blog article should not be reported as representing the official views of the OECD or of its Member countries. The opinions expressed and arguments employed are those of the authors.