Public procurement: ending the race to the bottom on workers’ conditions

On International Workers’ Memorial Day, it’s worth remembering that when workers don’t have a say they may lose more than their voice.

The essence of democracy is not just the freedom to speak—it is the freedom to have a say.

That is why unions across Europe are today launching a campaign to call for a simple but profound change to public-procurement legislation in the European Union, which would guarantee that working people have a say. We are calling for public contracts to be awarded only to companies that have collective-bargaining agreements with their workers.

Increasingly, corporations operating in Europe are deciding to suppress workers’ say at work. By doing so, our fresh research shows, they have removed collective-bargaining coverage for over 8 per cent of service-sector workers since 2010.

This has a cost, both to workers and society. Within the services sector, we show that workers excluded from collective-bargaining agreements in the EU are missing out on €25 billion per year in lost wages, while public revenue is down by €28 billion per year in lost tax and social-security contributions.

Determining role

Public procurement amounts to €2 trillion per year in the EU, 14 per cent of gross domestic product. This money, spent by governments and public institutions for services delivered by private contractors, can play a determining role in setting standards across whole sectors.

Currently, however, it is often allowed to fuel the race to the bottom. That is because the EU’s public-procurement rules are skewed to favour price above all other considerations. Under these circumstances, corporations consistently turn to undercutting working conditions, by suppressing their workers’ fundamental collective-bargaining rights.

Today is International Workers’ Memorial Day, a day of mourning for the workers’ movement. Remembering those who have lost their lives at work takes on an added, bitter perspective when we consider what could have been and how close it was.

We think of the care workers, cleaners, call-centre workers, logistics and postal workers, security guards and all the essential workers who have lost their lives. Had they had more of a say, protective equipment, safe staffing and paid sick leave for self-isolation would have been more of a priority and lives would have been saved.

Across Europe, these very workers have been raising their voices. In Italy, security and cleaning workers went on a national strike as employers yet again refused after eight years to renew the collective agreement in their sector . It’s a similar tale, of the suppression of collective bargaining, for hospital cleaners in Spain, tech workers in Finland, nursing-home workers in Poland and many, many more.

The situation is symptomatic of a deeper crisis—the crisis in workplace democracy. We know that when working people have a say they use it to protect themselves, their families and the communities in which they live and work. Rather than incentivising companies not to listen to their workers, public money must be used to ensure these workers’ demands are taken into account.

Low-paid and precarious

Workers in sectors in which public procurement accounts for large market shares—such as cleaning and security, but also call-centre work among others—are often low-paid and precarious. While this is a testament to the negative role public contracts have played, it also presents an opportunity.

Ensuring that public contracts only go to companies that have collective-bargaining agreements with their workers would set a floor of minimum decency for workers. One clear marker of this is pay: workers covered by collective bargaining—across the EU and all sectors—are paid on average 10 per cent more than workers who are not. Quite simply, when workers have a say, they can claim back an ever-fairer share of the wealth they are so essential to creating.

What’s more, it’s a win-win-win. As well as lifting conditions for workers, it would reward those companies who already have collective-bargaining agreements with their workers. For governments, it would bring in more social-security and tax revenue. In a time when reinvigorating the economy and shoring up public budgets is top of the agenda, expanding collective bargaining has to be a key part of the solution.

Pressure mounting

The good news is that broad pressure is mounting behind our demand. The European Parliament has adopted a report in which it recommends that the EU make public procurement conditional on collective bargaining. Now the Council of the EU and the European Commission need to be won over.

This is a simple change—a low-hanging fruit within grasp. It only requires political will. Given that companies that apply for public contracts also provide services in the private sector, it would have implications well beyond the 14 per cent of GDP directly invested through public procurement.

It is time to lay the foundations for a post-pandemic ‘new normal’, based on decent work. For service-sector unions, this is a core demand—we will not stop until it is met.