Conditions of labour law in public procurement

Taking labour law into account is essential in public procurement – both for employees’ social protection and because it contributes to fair competition. The Swedish National Audit Office notes that central government agencies do not ensure decent working conditions for employees in publicly procured activities. Only one in three of the examined procurements included conditions of labour law, which is a low percentage given that high-risk industries are involved.

Government agencies often make dubious legislative interpretations and use general wording instead of specifying pay, working hours and holidays, which makes requirements ambiguous to suppliers and impedes monitoring.

When agencies impose conditions of labour law, in-depth monitoring to verify compliance is rarely performed, for example by visiting workplaces and examining salary statements. Without monitoring, there is a risk of poor compliance. In recent years, more agencies have made some attempts to improve follow-up, which indicates increased commitment to the issue.

Other ways of promoting decent working conditions include rejecting abnormally low tenders and excluding suppliers that have previously had poor working conditions. However, these methods have proved difficult to apply in practice.

Agencies find it difficult to apply the legislation. It takes both time and knowledge to assess whether – and which − requirements should be imposed. Checking whether suppliers comply with the requirements imposed by agencies is also challenging and requires both resources and knowledge that many agencies lack. It is not effective for each procuring agency to possess the skills and allocate the necessary resources.

This is why the support of the National Agency for Public Procurement is crucial to enable agencies to effectively impose conditions of labour law. Once the National Agency for Public Procurement has developed contract terms, agencies will no longer need to individually perform that same task. However, support has not been sufficiently extensive.

There is no structure in place to ensure that agencies make progress in imposing conditions of labour law. The Government has not required reporting back since 2018, and follow-ups that have been performed are mostly based on agencies’ assessment of their own efforts, which may give an overly positive picture. The Swedish Competition Authority has conducted only limited supervision of agencies’ compliance with the rules on labour law conditions, and cannot impose sanctions on agencies that fail to comply with the law either.

The Swedish National Audit Office sees potential to improve the effectiveness of work on labour law conditions. To this end, central government agencies need to develop labour law conditions and follow-up methods. Public procurement accounts for about 18% of Sweden’s GDP and affects many employees, especially in high-risk industries like construction and cleaning. To improve efficiency, the National Agency for Public Procurement needs to publish risk analyses and contractual terms for additional professions, and there must be a structure in place to create forward momentum. A further opportunity to improve efficiency lies in centralising monitoring of labour law conditions.