Step 2: Describe the framework that is used to govern the private sector

There are three general layers of government activity that usually shape the framework for private enterprises. It is necessary for you to describe the instruments that are used in each of these layers.

  1. Policies and laws: These set the directions and intentions of government. They underpin development efforts and influence the role enterprises perform in the national, district, and local economies. They provide the justification for regulatory action. Policies, like all the other fields of government activity listed here, can be developed at national, regional, and local levels. In countries where an English or Roman system of government operates, policy documents may be called a “white paper” or simply, a “policy”. In other countries a presidential decree sets the framework for government. Legislation is the act of giving laws: it is the exercise of a sovereign power. These laws may be passed by a parliament or congress (and sometimes there are two houses of parliament through which a bill must pass before it becomes law). Laws may take the shape of published legislation or cabinet, congressional, or presidential decrees.
  2. Regulations: These are the means through which policies and laws are implemented. Regulations are rules or procedural directives issued by administrative agencies to implement laws. These agencies must have specific authorization to issue directives and must usually adhere to procedures and conditions that are prescribed by the parliament or congress. Regulations represent the “tools” that are used to enact the policies and legislation in the pursuit of desired outcomes.
  3. Administration: This refers to the ways in which policies, laws and regulations are applied, managed and monitored. There are many policies and laws at the national level that affect enterprises - and increasingly, local governments are required to administer these. In some cases, private sector agencies, NGOs or business associations may be contracted by government to administer specified laws or regulations.

Look at the names and status that are given to policies, laws and regulations and provide a short summary of these. This will help the reader to understand more easily the terminology you use when describing the policy and legal framework.

This section should contain the official definitions for the following terms (where they apply):

  • Micro-enterprise
  • Small enterprise or small business
  • Medium-sized enterprises
  • Large enterprise
  • Cooperative enterprise

Depending on the interests of the Employers’ Organization, it will be useful to apply these definitions when mapping and assessing the policy, legal, and regulatory framework. Take note of any inconsistencies and look for situations in which some kinds of enterprise, including women-owned enterprises, are treated differently within the policy, legal, and regulatory framework.

Finally, there is more than one level of government in most member States of the ILO. Whilst central or national governments set the national framework (e.g., the Constitution) and direction (e.g., the National Development Plan) for the country, there are other levels of government that undertake activities that affect small enterprise development. These may be provincial, state, regional, local, town or village governments, authorities, or councils. Whatever they are called, their operations have a significant effect on the contribution small enterprises can make to the economy.

Box 3, below, displays the multiple layers of influence affecting sustainable enterprises. It illustrates how central, provincial, and local governments can all be engaged in the design of policy and legislation that affect the sector. Each of these levels of government can also design and implement regulations that affect small enterprises, which all require administrative mechanisms. Care must be taken when interpreting this chart, however, since whilst local governments may be involved in the implementation of central government policies, laws and regulations, it is unlikely central government agencies will do likewise for local governments.

Box 3: Three tiers of government and the relationship with the local policy and legal framework
 Central governmentProvincial governmentLocal government
Policy National policy development, with possible area or sector differentiation. Policy development within its area of jurisdiction and within the framework of national policy. Often more involved with development planning. Policy development within its area of jurisdiction and within the framework of national and provincial policy. Often more involved with development planning and land use planning (e.g., zoning, city planning).
Legislation National legislation, with possible area or sector differentiation. Legislation development within its area of jurisdiction and within the powers given to it by central government. Legislation – usually in the form of by-laws –development within its area of jurisdiction and within the powers given to it by central government.
Regulations National legislation will usually set the parameters for regulations that are used to enforce it. Required to establish regulations to enact their own policies and laws, but may also do this for national policies and laws. Required to establish regulations to enact their own policies and laws, but may also do this for national or provincial policies and laws.
Administration Administration can be performed through national agencies, some of which may be decentralized. There is a growing tendency toward decentralizing administration to more local levels of government. Required to administer their own activities and possibly those of central or provincial governments. Required to administer their own activities and possibly those of central or provincial governments.