Saturday

25th Mar 2023

How €2trn EU public tendering pushes 'race to the bottom' for labour standards

  • Before Covid-19, half of tenders in Europe were awarded based on 'the most economically advantageous' criteria (Photo: Unsplash)
Listen to article

Around €2 trillion is spent each year on the award of public contracts, generally linked to the service sector — that's 13 percent of the EU's GDP.

Yet before Covid-19, half of tenders in Europe were being awarded simply based on a "most economically-advantageous" criteria, as recorded on the tenders' electronic daily (TED) database.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

That approach ignores minimum working conditions, as some companies undercut workers' conditions and wages in order to bid low prices to win public contracts, according to UNI Europa (a regional union representing seven million workers in the services sector).

That's generally for three reasons, the union states.

First, the 2014 directive regulating EU public procurement does not require contractors to comply with fundamental labour rights.

Second, it is left to national, regional, or local authorities to decide whether to respect collective bargaining agreements.

And third, because the same applies to compliance with social criteria.

In practice, this is likely to have a detrimental effect on workers—but it also impacts on state coffers and competitiveness of the businesses themselves.

For example, Denmark awarded all interpretation services to a new and cheaper supplier that required all employees to work as self-employed, and at lower rates. When many of them refused the conditions, the company had to withdraw from the contract, the federation's report details.

And it's not only Denmark. In the Netherlands, during Covid-19, call centre operators commissioned by the Dutch government were underpaid and had no toilet breaks or entitlement to pension contributions, according to the Netherlands trade union confederation (FNV).

The list goes on, proving the old saying that 'cheap can be expensive'.

The same can be applied to the member states' coffers. "If all services workers were covered by a collective agreement the authorities would be €108bn a year richer," UNI Europa estimates.

Lead by example

Despite differences between member states, the snapshot from the global trade union concludes that current European rules do not ensure that public money goes to companies respecting decent conditions for their workers.

Paradoxically, this hampers competition and encourages unfair play by limiting social standards and giving a competitive advantage to those who employ on very low wages. In other words, it encourages a race to the bottom.

"We need to reopen the 2014 directive and develop sectoral legislation that makes using these [social] criteria mandatory," Green MEP Anna Cavazzini told EUobserver.

Cavazzini is one of over 160 MEPs who have joined the 'Procuring Decent Work' campaign to change EU rules and clear up the legal uncertainty surrounding them.

Procurement officers "need clear criteria and guidance, and help with ex-post monitoring to ensure that the social elements promised by bidding companies are effectively respected once they are awarded contracts," she warned.

To date, the European Parliament has already adopted a series of reports and motions to strongly enforce the social clause of the existing directive — with no action in response from the EU's executive arm other than to postpone the review until 2024.

"Public money can only be invested where decent working conditions are respected, where people are paid decent wages," said MEP Agnes Jongerius (S&D) during a February plenary session.

The investment should not be used into creating "lousy jobs that exploit people," she concluded.

German plan to offshore asylum 'unworkable' declare NGOs

German ideas of possibly offshoring asylum to countries outside Europe are unworkable, say civil society. The comments follow reports that the German government is exploring options of getting north African states to process asylum claims of those rescued at sea.

Analysis

MEPs push for greater powers for workers' councils

European Works Councils can play a key role for workers and their unions to bargain effectively — but what are they, why have they been neutered, and why is big business objecting to greater powers?

'No one is unemployable': the French social experiment

More than five million people in the EU have been unemployed for more than a year. Lack of skills or education is not always the reason or the solution they need, says a proposal for an EU Job Guarantee.

Opinion

Why can't we stop marches glorifying Nazism on EU streets?

Every year, neo-Nazis come together to pay tribute to Nazi war criminals and their collaborators, from Benito Mussolini to Rudolf Hess, Ante Pavelić, Hristo Lukov, and of course Adolf Hitler, in events that have become rituals on the extreme-right calendar.

Latest News

  1. EU's new critical raw materials act could be a recipe for conflict
  2. Okay, alright, AI might be useful after all
  3. Von der Leyen pledges to help return Ukrainian children
  4. EU leaders agree 1m artillery shells for Ukraine
  5. Polish abortion rights activist vows to appeal case
  6. How German business interests have shaped EU climate agenda
  7. The EU-Turkey migration deal is dead on arrival at this summit
  8. Sweden worried by EU visa-free deal with Venezuela

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  2. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  3. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence
  4. Nordic Council of MinistersCSW67: The Nordics are ready to push for gender equality
  5. Promote UkraineInvitation to the National Demonstration in solidarity with Ukraine on 25.02.2023
  6. Azerbaijan Embassy9th Southern Gas Corridor Advisory Council Ministerial Meeting and 1st Green Energy Advisory Council Ministerial Meeting

Join EUobserver

Support quality EU news

Join us