Social public procurement hearing: “A change in the law would be necessary”

“The legal framework is not sufficient”; “A change in the law would be necessary”; “We need legal clarification”; “We have got to offer a legal basis [for higher standards]” 

Legal uncertainty is the problem, revision is the solution. This resounding call emerged during the European Parliament hearing conducted by the Employment and Social Affairs (EMPL) committee on 25 October 2023.   

The hearing on “The Social Impact of Public Procurement” delved into the potential of public procurement within the EU to serve as a catalyst for strengthening collective bargaining and promoting social advancement. It also discussed the necessary steps and measures at the EU level to address this issue effectively. 

UNI Europa Regional Secretary Oliver Roethig’s message was clear: “The conclusions drawn from the hearing are unmistakable. To ensure that public funds drive social progress, the EU must establish legal clarity and, ultimately, consider revising the existing legislation.” 

The hearing specifically discussed a study commissioned by the EMPL committee, which presented a number of powerful recommendations (see below) supported by speakers and MEPs alike. 

Decent work is not guaranteed under the current framework 

Just before the meeting, UNI Europa released the “Map of Misery”, a report listing a series of labour law violations and cases of indecent work under publicly financed contracts. “Unpaid and underpaid, forced to work overtime, and illegally dismissed and the list goes on.” This is the reality for workers in Europe, said Oliver Roethig.  

Karsten Skjellerup, who presented Copenhagen municipality’s efforts to combat social dumping, similarly underscored the prevalence of underpayment, excessively long working hours, and the problem of bogus self-employment.  

Moreover, the harsh price competition encouraged by the legal framework was also highlighted by the employer side: “The socially responsible public procurement [SRPP] horizontal social clauses are insufficient,” said Lorenzo Mattioli, President of European Cleaning and Facility Services Industry (EFCI). He also stated that in too many cases tenders are awarded only based on price. As a dominant criterion price is not enough to guarantee good quality of services and working conditions, he went on to say.  

Two further points emerged from the interventions. First, social public procurement faces a serious obstacle of legal uncertainty from the public procurement legal framework. And secondly, relying on voluntary uptake of social procurement is not enough. Instead, the EU needs to move towards a mandatory approach. 

Step 1: provide legal certainty to public authorities about social procurement 

Experts at the hearing consistently pointed to legal uncertainty as a driver of social odumping. It is an obstacle to the introduction of socially responsible public procurement (SRPP), including respect for collective agreements.  

Valentina Caimi, co-author of the EMPL study, was clear: “The legal framework is not sufficient for the implementation of the SRPP,” she said. 

Similarly, Karen Jaehrling, head of research at the Institute for Work, Skills and Training (IAQ) at the University of Duisburg-Essen, said: “A change in the law would be necessary. I very much doubt that much can be done by simply producing explanatory documents.” 

Likewise, Prof Dr Thorsten Schulten, Senior Researcher, Institute for Economic and Social Research (WSI), Hans-Böckler-Stiftung, Düsseldorf, concluded that “we need legal clarification that the promotion of collective bargaining with binding labour clauses does not violate EU law“. 

“If we want to guarantee higher standards, we have got to offer a legal basis,” said Lorenzo Mattioli, President of European Cleaning and Facility Services Industry (EFCI). He went on to explain the difficulty of raising salaries to reflect inflation when the directive does not allow for tenders to be adjusted.  

Many of the present Members of the European Parliament agreed. MEP Agnes Jongerius (S&D, The Netherlands) said: “The argument of lack of legal clarity is being used as a shield for those who don’t want to move towards more social conditionality.”  

MEP Nikolaj Villumsen (The Left, Denmark) made a similar point: “The EMPL study says it loud and clear: the legal uncertainty of the current rules makes it difficult for contracting authorities to set criteria for companies to ensure decent conditions through collective agreements.”  

Accordingly, Oliver Roethig made a clear call to “revise the public procurement directive so that there is an explicit push by public authorities to have no public contract without collective agreement.” 

Step 2: move beyond the voluntary approach  

The second point that emerged from the hearing was that the current voluntary approach to social procurement is not enough.  

“The voluntary approach is insufficient. At the EU we need to take a hard stance against the precarious work. Not using the 14 % of the GDP in the right way is even very irresponsible,” said MEP Kim van Sparrentak (Greens, the Netherlands). Karsten Skjellerup from the Social Procurement Department of the City of Copenhagen presented the good practice of the “Copenhagen against Social Dumping” campaign. With a considerable investment of political will and resources, the city is focusing on social procurement. That includes clear sanctions for contractors that do not respect labour rights and applicable collective agreements, not only in Copenhagen but throughout their supply chains. 

While impressive, such practices are unlikely to spread quickly. MEP Kim van Sparrentak (Greens, The Netherlands) asked how Copenhagen had overcome the “fear” of legal challenges. Mr Skjellerup’s answer was telling: “How did we get over the fear? We never did. But we are going ahead anyway. We see ourselves as pioneers, but there is a lot of legal uncertainty and we need a lot more clarity about what is allowed and what isn’t.” 

Subsequently, MEP Nikolaj Villumsen (The Left, Denmark) asked Mr Skjellerup to react to the example of Malta in UNI Europa’s report “Map of Misery”. In the island state, a contracting authorities gave points in the award criteria to companies with company-level collective agreement. But it is now being sued by an under-cutting competitor. The representative from Copenhagen Municipality responded clearly “I would not advise that, that would be too great a risk.” Mr. Skjellerup also highlighted that smaller municipalities in particular would have less resources and supported better. 

On the same point, Oliver Roethig pointed out that the EU knows that the voluntary approach to sustainable procurement is not working. “In the context of green public procurement, the EU Commission itself is arguing for a mandatory approach, because the voluntary way has little or no impact. What we do for green procurement, we should do for social procurement.” 

UNI Europa’s step-by-step plan toward #ProcuringDecentWork  

To reform public procurement in the European Union, UNI Europa urged the European Parliament and Commission to further the recommendations of the EMPL study, namely:  

• “Revise and clarify the mandatory social clause, by explicitly stating that collective agreements can never be considered a discriminatory measure in public contracts.” (p. 13) 
• “Exempt collective agreements as a general rule from the link to the subject matter” (p. 13) 
• “Develop specific Directives to regulate public procurement in specific sectors, such as in labour-intensive.” (p. 13) 

UNI Europa’s Regional Secretary Oliver Roethig presented four concrete ways for how the public procurement legal framework can be revised to strengthen collective bargaining:  

1. First, ILO standards should be a mandatory exclusion criterion. 
2. Second, respect for the applicable multi-company collective agreement should be a selection criterion. 
3. Third, having a more advantageous company collective agreement should give extra award points to contractors. 
4. All this would provide a solid basis, but to go beyond the bare minimum we need to set clear targets. 

Lastly, public procurement gives the EU huge leverage in reaching 80% collective bargaining coverage as set out in the minimum wage directive. 

Oliver Roethig’s full speech can be read here. 

Commission focuses on skills 

Although the call for legal clarity and shift away from the voluntary approach was made repeatedly, the Commission’s response was underwhelming. They suggested the main problem is a lack of skills and that public authorities should provide more training for procurement officers. 

For UNI Europa, this looks like putting a sticking plaster on a broken leg. The hearing clearly revealed structural deficiencies that cannot be solved by additional training. “The ball is in your court, European Union, to make public money work for the public good,” concluded Oliver Roethig. 

Oliver Roethig urged the political group to put this topic at the top of the EU’s social agenda. To this Chair of the EMPL committee MEP Dragoş Pîslaru (Renew, Romania) responded positively “clearly this hearing shows that there is interest and determination to that.”