ELA report backs collective agreements as award criteria in public tenders

A new report by the European Labour Authority (ELA) argues that “collective agreements are a key quality criterion”, which can help prevent undeclared work in public procurement. This document provides the latest evidence that the EU’s current public procurement rules – which favour price over all other criteria – are not fit for purpose. Instead, they promote undeclared work with all its negative consequences for workers, businesses and public services.

The authors find that “the extent of undeclared work […] is not strongly associated with the type of public procurement procedure, but rather related to the extent to which more qualitative criteria are used (e.g., whether the candidate applies a collective agreement).” In other words, when contracts are given to companies with collective agreements, there is less undeclared work. However, as UNI Europa research has shown, half of all tenders across the EU are awarded solely based on the lowest price.

Oliver Roethig, Regional Secretary of UNI Europa, commented: “This report underlines what UNI Europa has been campaigning on for a long time. Instead of being an engine of progress, the EU’s current rules on public procurement are an obstacle to promoting collective bargaining. We urge the upcoming European Commission to include public procurement at the top of their priorities for the next mandate.”

The report argues that collective agreements are one of the most effective ways of promoting decent working conditions, especially in labour-intensive sectors relying on manual labour, low wages and season and foreign workers: “Since collective agreements are negotiated and concluded by social partners, cooperation with trade unions on the ground is also key to ensure the respect and compliance with agreed labour standards. Trade unions and workers’ representatives in the workplace could be invaluable in bringing breaches of labour laws and standards to the attention of competent authorities.”

However, the report finds a “lack of appropriate measures to ensure compliance with applicable obligations established by Union law, national law, collective agreements, or international law provisions.”

Accordingly, the report makes several recommendations on public tendering practices  for policymakers:

• Public authorities should include “having a collective agreement” as an award criterion in public contracts.
• National legal and regulatory frameworks should be advanced with more or better-formulated requirements linked to labour law and social requirements, including in relation to collective agreements.
• Currently optional exclusion criteria, such as those related to collective agreements, should be used more widely. Continuous monitoring of labour conditions during contract execution, involving regular subcontractor reports and on-site inspections, is necessary to verify that social award and selection criteria, including collective agreements, are respected in practice.

Overall, the report identifies collective bargaining as an essential tool for ensuring decent work under public contracts: “A collective agreement is also an important tool to ensure decent work and fair competition based on a level playing field in the market among bidding companies, ensuring that they compete on other parameters than labour costs and sub-standard working conditions.”