Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Reversing the procurement race to the bottom

Oliver Roethig and Stan De Spiegelaere 30th November 2021

Companies must be denied contracts if they refuse to respect workers’ rights.

procurement,workers' rights,collective bargaining,collective agreements,democracy at work
Too often it just comes down to price (Jon Schulte / shutterstock.com)

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.


Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content. We will never send you spam and you can unsubscribe anytime.

Sign up here

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.

Picture 1 2
Source: TED contract notices (2019)

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.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

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.

Pics 2
Oliver Roethig

Oliver Roethig heads UNI Europa, the European service workers’ union.

Pics 1
Stan De Spiegelaere

Stan De Spiegelaere is a policy and research director at UNI Europa and guest professor at the University of Ghent.

You are here: Home / Economy / Reversing the procurement race to the bottom

Most Popular Posts

Russian soldiers' mothers,war,Ukraine The Ukraine war and Russian soldiers’ mothersJennifer Mathers and Natasha Danilova
IGU,documents,International Gas Union,lobby,lobbying,sustainable finance taxonomy,green gas,EU,COP ‘Gaslighting’ Europe on fossil fuelsFaye Holder
Schengen,Fortress Europe,Romania,Bulgaria Romania and Bulgaria stuck in EU’s second tierMagdalena Ulceluse
income inequality,inequality,Gini,1 per cent,elephant chart,elephant Global income inequality: time to revise the elephantBranko Milanovic
Orbán,Hungary,Russia,Putin,sanctions,European Union,EU,European Parliament,commission,funds,funding Time to confront Europe’s rogue state—HungaryStephen Pogány

Most Recent Posts

reality check,EU foreign policy,Russia Russia’s invasion of Ukraine—a reality check for the EUHeidi Mauer, Richard Whitman and Nicholas Wright
permanent EU investment fund,Recovery and Resilience Facility,public investment,RRF Towards a permanent EU investment fundPhilipp Heimberger and Andreas Lichtenberger
sustainability,SDGs,Finland Embedding sustainability in a government programmeJohanna Juselius
social dialogue,social partners Social dialogue must be at the heart of Europe’s futureClaes-Mikael Ståhl
Jacinda Ardern,women,leadership,New Zealand What it means when Jacinda Ardern calls timePeter Davis

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

Eurofound advertisement

Eurofound webinar: Making telework work for everyone

Since 2020 more European workers and managers have enjoyed greater flexibility and autonomy in work and are reporting their preference for hybrid working. Also driven by technological developments and structural changes in employment, organisations are now integrating telework more permanently into their workplace.

To reflect on these shifts, on 6 December Eurofound researchers Oscar Vargas and John Hurley explored the challenges and opportunities of the surge in telework, as well as the overall growth of telework and teleworkable jobs in the EU and what this means for workers, managers, companies and policymakers.


WATCH THE WEBINAR HERE

Foundation for European Progressive Studies Advertisement

The winter issue of the Progressive Post magazine from FEPS is out!

The sequence of recent catastrophes has thrust new words into our vocabulary—'polycrisis', for example, even 'permacrisis'. These challenges have multiple origins, reinforce each other and cannot be tackled individually. But could they also be opportunities for the EU?

This issue offers compelling analyses on the European health union, multilateralism and international co-operation, the state of the union, political alternatives to the narrative imposed by the right and much more!


DOWNLOAD HERE

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

The EU recovery strategy: a blueprint for a more Social Europe or a house of cards?

This new ETUI paper explores the European Union recovery strategy, with a focus on its potentially transformative aspects vis-à-vis European integration and its implications for the social dimension of the EU’s socio-economic governance. In particular, it reflects on whether the agreed measures provide sufficient safeguards against the spectre of austerity and whether these constitute steps away from treating social and labour policies as mere ‘variables’ of economic growth.


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube