Government agencies rarely demand decent working conditions among suppliers
Government agencies must impose requirements for decent working conditions in certain procurements. The Swedish National Audit Office’s audit shows that this rarely happens, and that government agencies thus risk adding to wage dumping, poor working conditions and unfair competition.
Every year, the central government and local government procure goods and services for over SEK 900 billion, which is about 18% of GDP. If there is a risk of unfair working conditions and the procurement value is sufficiently high, government agencies must impose minimum requirements in terms of salary, holiday and working hours. This promotes social protection and contributes to fair competition on equal terms.
However, the Swedish National Audit Office’s audit shows that efforts to impose labour law requirements in public procurement are not effective. Only half of the examined procurements included an assessment of whether labour law requirements were needed. Only one in three of the contracts included conditions for pay, holidays and working hours. These figures are low, given that the examined procurements are above the threshold and are among high-risk industries.
“The findings are in violation of laws governing public procurement. At worst, government agencies are thereby contributing to wage dumping and poor working conditions for their suppliers’ employees,” says Auditor General Christina Gellerbrant Hagberg.
The audit also shows that government agencies rarely follow up on labour law conditions. Among the audited agencies, only the Swedish Transport Administration regularly monitors labour law conditions in detail.
“Without follow-up and sanctions, the requirements risk merely becoming an on-paper product that does not contribute to better working conditions in practice,” says Yvonne Thorsén, project leader of the audit.
These shortcomings are mainly due to legislation that is difficult to apply as well as inadequate support for government agencies. Assessing whether or not to impose labour law conditions – and if so, which ones – requires both time and specialist knowledge, which is often lacking at small government agencies.
Although the National Agency for Public Procurement offers agency support, which is appreciated, it has not been able to produce ready-to-use risk assessments and conditions for all relevant industries and professions.
The Swedish National Audit Office also notes that the central government lacks a structure for ensuring government agencies’ compliance with legislative requirements. The Swedish Competition Authority has only performed limited supervision of government agencies’ work on labour law conditions – and agencies that do not impose requirements concerning labour law conditions do not risk any sanctions. The Government has not taken sufficient steps to bring about improvements, which has led to poor legislative compliance.
Recommendations
The Swedish National Audit Office considers that the most effective approach would be to centralise development of parts of labour law requirements in public procurement, and that certain tasks should be gathered at expert agencies rather than performed at each agency.
Therefore, recommendations to the Government include ensuring that procuring agencies receive increased support on labour law conditions, and investigating how monitoring labour law conditions can be centralised.
Recommendations to the National Agency for Public Procurement include developing risk analyses and labour law conditions for more professions, and updating support for monitoring labour law conditions.
Recommendations to the Swedish Competition Authority include expanding supervision of agencies’ compliance on labour law conditions.
It is recommended that procuring agencies ensure that procedures and working methods are in place that impose labour law conditions and ensure compliance therewith by suppliers and subcontractors in relevant procurements.
Read the summary