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Sweden tightens public procurement rules

| Text: Kerstin Ahlberg, editor EU & Arbetsrätt

Swedish authorities could become obliged to make sure that public procurement suppliers pay their employees in line with collective agreements. A government appointed commission has just suggested how this could work.

Authorities in Denmark, Finland and Norway have long been obliged to include so-called labour clauses in their procurement contracts. These clauses mean the provider as a minimum must guarantee employment conditions in accordance with the collective agreement covering the workplace where the work will be carried out.

Swedish authorities are not obliged to make such demands. But this will now change, says the Swedish government. Just before Christmas it appointed a commission, which has now presented its recommendations. 

A risk of unfair working conditions

The commission suggests that in some cases authorities should be obliged to include certain labour conditions into the contract. This is when the procurement concerns a sector where there is a risk of unfair working conditions, e.g. the construction industry, cleaning or taxi services, where problems are known to exist. In those cases authorities should always demand that the provider applies the collective agreement’s minimum rules on wages, working hours and annual holidays. 

Beyond this authorities can decided whether to make further demands concerning labour conditions, for instance asking providers to pay occupational pensions and other kinds of collective agreement regulated insurances for their employees. Similarly, authorities should be able to make contractual demands in relation to labour conditions in cases of procurement from other sectors than the ones where this is obligatory. 

“Precise and unambiguous"

Perhaps the hardest nut to crack for the commission was finding a solution for uniting the Swedish labour market model with the transparency and predictability required by the EU’s public procurement rules. The procurement rules stipulate that the so-called tender documents issued by the authority looking for tenders must be so clear, precise and unambiguous that “all reasonably well-informed tenderers exercising ordinary care” understand what is expected from them. 

They should for instance not have to look elsewhere in order to find out what salaries they should be paying. It is therefore not enough for the authorities to simply refer to a certain collective agreement — the conditions which the providers must adhere to must be spelled out in the actual tender documents. But in Sweden, where there is no system of universally applicable collective agreements, these are not normally accessible for others than the contracting parties and their members.  

So the issue is how the authorities get hold of the correct collective agreement and identify which conditions should apply to a certain contract. 

A new authority

The commission proposes that this should be done by a recently set up central authority, the Procurement Authority, which is assigned with the task of supporting other authorities in their procurement processes. It will decide which kinds of procurements would trigger the obligatory introduction of labour clauses, as well as identifying which collective agreement conditions the procuring authority should include in its contract. Everything should be done in consultation the social partners. 

The proposal has now been referred for consideration, but it has already proven controversial. Trade unions had been hoping for a more radical proposal which would have made it obligatory to include labour clauses in all procurements, and that they would not only refer to the minimum levels stipulated in the collective agreement.   

Businesses are criticising the fact that it will be possible to demand more from domestic suppliers than form foreign companies, which would fulfil the contract using posted workers. That is in breach of the principle of equal treatment in EU law, they argue.

The Commission disagrees, saying that it is a consequence of the case law of the EU Court of Justice itself.

The commission will now continue its work. The reason why Denmark, Finland and Norway are so far ahead is that they long ago ratified the International Labour Organisation’s convention number 94, which says workers as a minimum should be guaranteed the same conditions as found in collective agreements covering their place of work. Thus, Denmark, Finland and Norway have, unlike Sweden, signed up to do just that. According to new directives the Swedish commission will look into whether Sweden too can ratify the convention.

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