22nd Mar 2023

'Race to the bottom': EU public tendering cuts pay and rights

  • 'Public contracts should not go to companies that seek a competitive advantage by suppressing workers' pay', warns the European trade union federation (Photo: Unsplash)
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The award of public contracts in the EU amounts to €1.9 trillion per year.

Contracts are put out to tender, and won by whichever company the national, regional or local public body deems fit, although in half of cases they are won by whoever offers the lowest price.

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The reality on the ground is that by not including social provisions, the 2014 EU directive regulating public procurement allows for precarious and harsh situations for cleaners, security guards, call centre staff.

Situations like the one experienced two summers ago in Portugal by a group of workers from the security company Securitas.

In June 2021, the relevant Portuguese authority awarded a public contract to Ovisegur, a different private security company from the one that previously provided the service. The security guards occupying these posts in the Portuguese Ministry of Finance received an email from one day to the next asking them to collect all their belongings and await their transfer to a new placement. When they arrived, they were barred from entering, one of these workers told EUobserver from Lisbon.

The situation panned out as follows: the new company intended to carry out the service previously provided by 11 people with only five, and without retaining any of the previous employees. The old company, for its part, did not take any further action.

With uncertainty looming, the staff spent 21 days going to Ovisegur every day to be admitted, but never actually started work there. In the end, with the support of social partners and the Portuguese Ministry of Labour, the company was required to keep the same working conditions. As they did not have the ressources, Ovisegur withdrew from the contract — and the Securitas service and the former employees were reinstated.

But it's far from a happy ending. The workers are still awaiting a court ruling and a new contract that will allow them to have a more stable employment than one that is renewed every month, or every six months, such as the one they currently have.

"The EU's rules for public procurement are broken. They pave the way to a race to the bottom for working people," Oliver Roethig, regional secretary of UNI Europa, a European trade union federation representing seven million workers in the service sector, told EUobserver. "When only price is considered, it incentivises companies to cut corners".

The cut comes in wages, tax revenues and collective bargaining, and the boost goes to unfair competition, says UNI Europa.

More than 160 MEPs from five different political groups have already joined the union's Procuring Decent Works campaign, which calls for these rules to be changed to provide legal clarity to improve conditions for essential workers.

"Public contracts should not go to companies that seek a competitive advantage by suppressing workers' say and driving poverty wages and substandard working conditions", says their joint statement.

On Wednesday (March 15), the European Parliament will vote on its economic and social recommendations for the next European Semester, a framework for the coordination of the EU economic and social policies. These include a call for the commission to review this directive (it has been postponed until 2024) and strengthen the social clause and collective bargaining, boosting companies that respect the labour and social rights of their workers.

Moreover, it adds a provision to exclude from tenders "those companies which have been sanctioned for having engaged in union-busting practices".

UNI Europa's demand is simple: only companies that comply with the working conditions set out in collective agreements should be allowed to receive public contracts.

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