Companies must be denied contracts if they refuse to respect workers’ rights.
More than 100 members of the European Parliament, drawn from six political groupings, are backing calls to change the rules on public procurement in the European Union, to allow only those companies which have collective agreements with their workers to secure public contracts.
This measure would counter ‘social dumping’ and enduringly lift the pay and conditions of some of the most precarious and poorly-paid essential workers. Representing the European federation for many of these workers, we are determined to see this through.
Cold shower
Tourists enjoying the beautiful canals in the Netherlands were in for a cold shower in 2019. Their little boats were facing closed bridges due to staff shortages. The bridge keepers ran from one bridge to another to keep the boats moving, but to little avail.
The lack of bridge keepers related directly to a provincial decision to give this public contract to a new company, which promised to do the work for a lot less money. With the authority blinded by cost-cutting, the company was awarded the contract—and that’s when the bridges stopped opening.
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In line with the low price, the contractor proposed the bridge keepers transfer companies, taking a 25 per cent wage cut—many refused. But new recruits didn’t have the competences or left quickly, leading to closed bridges. An authority looking only at the price tag had brought about a drop in wages, poorer working conditions, less employment and the implosion of a public service.
Clear risks
This is unfortunately not an isolated case. Recently in the Netherlands, Covid-19 call-centre operators were found to be grossly underpaid. In Norway, nursing-home staff were being paid wages below the collectively-agreed standards and had to sleep in bomb shelters. In Belgium, train stations were being cleaned by bogus self-employed individuals and staff without contracts. The scandals we know about are only the tip of the iceberg.
According to European Commission data, half of all tenders in the EU are allocated only because they offer the lowest price. This has clear risks: the story of the Dutch bridge keepers graphically illustrates how this advantages companies which don’t care much about quality—let alone social or environmental concerns.
Paradoxically, this may even decrease competition. In the context of a periodic survey on corruption, Eurobarometer asks companies about the main obstacles they face in submitting bids for public contracts. Reading between the lines, it appears that one is that price is too important in the award.
Public money should be a lever for social progress. Public contracts should go to high-quality companies, which respect democracy at work, collective agreements, health and safety and environmental regulation.
Soft approach
The thing is that the commission actually agrees—at least in words. It often declares that it wants to stimulate public authorities to include social, environmental and quality criteria in procurement. Yet the actions implied do not follow, with a very soft approach taken.
Whether a company receiving public money respects fundamental labour rights, applies collectively-agreed wages and upholds employee representation should not be optional. Yet all of this is left to the discretion of public authorities.
The commission only publishes best-practice guides to nudge the authorities in the right direction. That is not enough.
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Under current rules, bad employers and under-cutters often have a competitive advantage and public money foments negative wage competition. Over 90 per cent of Europeans think that procurement should take into account social aspects, even if it makes the contracts more expensive.
Denied contracts
Companies which do not respect democracy at work, follow collectively-agreed wages or engage in collective bargaining should simply be denied public contracts. More than 100 MEPs have supported this demand from UNI Europa.
In its work on a minimum-wages directive, the commission has realised the value of collective bargaining. According to its president, Ursula von der Leyen, ‘Collective bargaining is crucial.’
To make progress on collective bargaining, however, the EU needs to leverage its own spending policies. It’s time to put its money where its mouth is.
Oliver Roethig heads UNI Europa, the European service workers’ union.
Stan De Spiegelaere is a policy and research director at UNI Europa and guest professor at the University of Ghent.