TRADE UNION DESK: Public procurement must promote collective bargaining
It is time for a transformation of how public money is spent, writes the General Secretary of the European Trade Union Confederation (ETUC), Esther Lynch.
Public procurement is one of the most powerful tools at the disposal of governments. In the EU, public procurement accounts for over 15 per cent of GDP – more than €2.5 trillion annually. Yet, this immense financial power is currently being squandered. Too often, public contracts are awarded to companies that undermine labour standards, bypass collective agreements, and ignore the fundamental right to collective bargaining. These practices not only exploit workers but also erode the social fabric that holds our economies together. It is time for a bold reset.
As the EU considers revising its Public Procurement Directives, we face a pivotal moment. The ETUC is calling for a transformation in how public money is spent. We demand that the revised EU procurement rules ensure that public money only goes to organisations that respect workers’ and trade union rights, that negotiate with trade unions, and whose workers are covered by collective agreements.
Why collective bargaining matters
Collective bargaining is the bedrock of Europe’s social model and one of the most effective tools for achieving fair pay and reducing inequality. Workers covered by collective agreements earn more on average than those without, and enjoy greater job security, improved working conditions, and a better quality of life. In contrast, workers excluded from collective bargaining often face stagnant wages, poor working conditions, and growing insecurity.
Yet, despite its importance, collective bargaining is under attack. Over the past two decades, its coverage has dropped by over 20 percentage points in several EU countries. This decline is driven by deregulation, employer resistance, and inadequate policy action. The result is an increasing prevalence of low-wage, precarious jobs and a widening gap between the rich and the poor.
The role of public procurement in supporting workers
Public procurement represents a unique opportunity to reverse these trends. It is one of the most direct ways that governments can influence labour standards. Unfortunately, the current EU legal framework undermines this potential by continuing to prioritise the lowest price in procurement decisions. More than half of public procurement procedures across the EU rely exclusively on cost, with some countries seeing this figure soar to an alarming 97 per cent.
This ‘race to the bottom’ harms workers, undercuts quality jobs, and weakens collective bargaining. When public contracts reward companies that cut wages and sidestep labour rights, they create a vicious cycle of exploitation. Worse still, the existing legal framework offers insufficient guarantees for contracting authorities that want to prioritise social responsibility in their purchasing decisions, leaving many hesitant to act.
Public money should promote fairness, not exploitation
Public money should never support companies that disregard workers’ rights or undermine collective bargaining. Public procurement should not be a race to the lowest possible wage; it should be a race to the top – promoting decent jobs, social justice, and sustainable growth.
The ETUC is calling for the following changes to the EU Public Procurement Directives:
- Mandatory criteria for collective bargaining: Introduce significant, mandatory award criteria that give preference to companies whose workers (and subcontractors) are covered by collective agreements.
- Legal clarity for public authorities: Giving legal certainty to contracting authorities that want to promote quality jobs and collective bargaining through public procurement.
- Respect for collective agreements: Ensuring that all bidders comply with relevant collective agreements, at sectoral, regional, or national level.
- Exclusion of non-compliant bidders: Exclude companies that violate workers’ and trade union rights from public procurement processes.
- Ban the use of price-only contracts: Eliminate the ability to award contracts based solely on price and introduce conditions that prioritize quality jobs and collective bargaining.
Additionally, we call for stricter regulation and limits to subcontracting, which often serve as a loophole for avoiding labour standards.
“Public money should never support companies that disregard workers’ rights or undermine collective bargaining.”
Esther Lynch, General Secretary, European Trade Union Confederation (ETUC)
The power of public procurement: Hundreds of thousands of opportunities
In the EU, there are 250,000 public buyers who issue hundreds of thousands of tenders each year. That is hundreds of thousands of opportunities to set labour standards, promote collective bargaining, and improve working conditions across the continent.
Countries are already starting to move in the right direction. Through the tireless advocacy of trade unions, new laws and policies are emerging that embed collective bargaining as a prerequisite for public contracts. These steps must be scaled up and mainstreamed across the EU.
A recent study by the European Trade Union Institute (ETUI), led by professor Niklas Bruun, demonstrates that integrating collective bargaining requirements into public procurement is fully legal under EU law. The time has come to put these findings into practice.
Public procurement should be a tool for social progress
Public procurement is not just about ‘value for money’ in the traditional sense. It is about delivering value for workers, too. Public procurement should reward companies that invest in their people, respect workers’ rights, and negotiate with trade unions – not those that exploit labour to cut costs.
The European Commission must take this opportunity to align EU procurement policy with the EU’s broader social goals, including the European Pillar of Social Rights. The next revision of the EU procurement rules must champion collective bargaining, quality jobs, and social fairness.
A call for a social procurement strategy
The ETUC urges the EU to adopt a social procurement strategy that leverages public spending to create fairer, more just economies. This is not just about improving the lives of workers today; it’s about securing a fairer future for all Europeans.
With the support of the Irish Congress of Trade Unions (ICTU), which has been a leading force in pushing for social procurement policies that prioritise fair wages and workers’ rights, not just in Ireland, but across Europe, I have no doubt that we will win improvements.
Let’s use the immense power of public procurement to strengthen collective bargaining and deliver on the EU’s promise of social fairness. Now is the time to act.
