Regulaton & Policy
Sweden May Introduce Collective Labour Agreements for Public Procurement Contracts

Swedish suppliers may be obliged to pay employees in line with collective agreements, if the Scandinavian nation agrees on new public procurement rules. Last year the Swedish government appointed a commission to tackle labour conditions in public procurement, according to an article in the Nordic Labour Journal. The commission has recommended that Swedish authorities follow the example of Denmark, Finland and Norway by including mandatory labour clauses in procurement contracts.

The clauses state that as a minimum suppliers must guarantee employment conditions in line with the collective agreement covering the workplace where the work will be carried out. Until now Swedish authorities have not had to abide by such rules, but the appointed commission suggests that some public contracts should include certain labour conditions. Suppliers in industries where there is a “risk of unfair working conditions” should be obliged to abide by the collective agreement’s minimum rules on wages, working hours and annual holidays. Sectors such as construction, cleaning, and taxi services, are known to have such problems and could soon be required to abide by these rules. As long as these conditions are followed, authorities can decide whether or not to make further contractual demands regarding labour conditions.

Harmonising the Swedish labour market model with EU public procurement rules was a challenge for the new commission. The EU’s strict procurement rules on transparency and predictability require tender documents to be precise and unambiguous. Tenderers should not have to seek out further information to find out what they should be paying employees. This means that authorities must outline conditions in the tender document and cannot simply refer to a collective agreement. As these agreements don’t exist in Sweden, such details are not normally accessible to anyone other than contracting parties and their members. To solve the issue of how authorities may be able to access the correct collective agreement conditions, the commission has recommended that the recently established Procurement Authority assist public authorities in the procurement process. The central authority will decide what industries labour clauses apply to, and which collective agreement conditions public authorities should include in contracts.

The proposal has already generated some criticism from trade unions and businesses. Unions argue that labour clauses should be included in all contracts, regardless of industry, and that the proposal should not just refer to the bare minimum levels required in the collective agreement. A few businesses have also claimed that the proposal would violate the principle of equal treatment in EU law, as it will be possible for contracting authorities to demand more from domestic suppliers than foreign companies. As Sweden’s minimum wage is higher than the majority of EU nations, foreign suppliers would also be required to pay their employees more under the collective agreement.

The new commission disagrees with the claims made by companies, saying that it is a consequence of the case law of the EU Court of Justice. The Swedish commission will aim to follow in the footsteps of its Scandinavian neighbours by ratifying the International Labour Organisation’s convention 94, which says workers as a minimum should be guaranteed the same conditions as found in collective agreements covering their place of work.