European trade unions and employers' organisations in sectors where workers work in cleaning, catering, security services, facility management, food industry, tourism, and agriculture have issued a joint statement calling for radical changes to European Union public procurement rules.
The statement is signed by FoodServiceEurope, EFCI, CoESS, EFFAT and UNI Europa Property Services. These are both employers' and trade union organisations in Europe. Efling is a member of UNI Global Union, a global umbrella organisation of trade unions, of which UNI Europa is a part.
The statement is a response to the ongoing revision of the European Union's public procurement directive and was submitted to the EU Commission for consultation at the end of January. With the statement, the organisations in question hope to try to influence forthcoming EU legislation.
Procurement at the expense of workers
The statement paints a clear picture of serious weaknesses in the current regulatory framework. Public procurement, which is intended to ensure quality and accountability in public services, is too often based solely on selecting the lowest price. The result is intense competition at the expense of workers, as companies compete to offer the lowest possible bids. Often, such bids are far below the actual cost.
According to data from the European Union, around two-thirds of public contracts of this type include no social responsibility requirements whatsoever. This means that in the majority of cases, there is no guarantee that companies awarded public contracts comply with collective agreements or provide decent working conditions. This weakens collective bargaining and fuels undercutting and poorer quality services.
This development is well known in Iceland and directly affects Efling members. In cleaning, catering and other service sectors where labour costs are the largest expense, competition in public procurement has repeatedly led to downward pressure on wages and working conditions. The current regulatory framework simply encourages this.
Would affect Iceland
If the recommendations presented in the statement are taken into account, it will be of significant importance to Efling members, due to Iceland's membership of the EEA Agreement. The European Union's rules on public procurement are part of the EEA framework and therefore have direct implications in Iceland. Changes adopted within the EU in this field will therefore, in one way or another, be incorporated into Icelandic law. Developments in Europe thus shape the rules that also apply to the Icelandic labor market.
The statement highlights that the lack of clear rules to discourage “abnormally low tenders” allows companies to bid below cost to secure contracts. The only way for companies that win such contracts to make them viable is by reducing wages, even through breaches of collective bargaining agreements, or by assigning work to far too few workers operating under unacceptable working conditions.
It is also criticized that contracts often fail to take into account wage increases, inflation, or rising operating costs. Companies awarded such contracts, therefore, are left with only two options: they are forced to either absorb cost increases or cut expenditure elsewhere. This primarily affects workers and the quality of service.
The organizations present clear demands for change.
- Compliance with collective agreements must be a condition for participation in public tenders
- It must be prohibited to award contracts solely based on price
- Service quality and workers’ conditions must carry greater weight in the award of contracts
- A clear definition of abnormally low tenders must be established
- Contracts must take account of wage increases and inflation
The statement also emphasizes that increased dialogue should take place between public contracting authorities and labour market partners before tenders are launched, in order to ensure realistic conditions and quality of service.
The situation is serious
What makes this statement particularly noteworthy is that it is a joint statement by both unions and employers. Such unity underlines the seriousness of the situation. When both sides of the labor market are calling for the same changes, it is clear that the system is not working.
For Efling, these are key issues. The current public procurement framework encourages undercutting, weakens collective agreements, and undermines the rights of workers. However, changes to these rules could have a significant impact for the better, by strengthening workers' rights, improving working conditions, and ensuring better and safer services for the public.
The fight for fair procurements is therefore not merely a technical issue within the European Union, but a core labour issue for Efling members.
