Joint social partner conference highlights challenges facing European private security industry

At a joint conference held in Berlin on 10-11 June 1999, the social partners in the European private security industry took important steps towards a common approach regarding the challenges facing the sector. CoESS and Euro-FIET, representing employers and workers in the industry, signed three joint texts covering mutual recognition, the award of contracts to private security companies in the public sector, and the forthcoming accession of central and eastern European states to the European Union.

The European social dialogue in the private security industry between the European Confederation of Security Services (CoESS) on the employer side and the European Regional Organisation of the International Federation of Commercial, Clerical, Professional and Technical Employees (Euro-FIET) on the employee side, is a relatively recent addition to the sectoral social dialogue process, with an informal working group having been established at Community level in 1993 (EU9902150F). The initiation of a dialogue at the European level was partly a reflection of the increasing importance of the sector in providing internal security functions which had previously been provided by state authorities. The sector also featured among the "new sources of employment" pinpointed in the 1993 White Paper on Growth, competitiveness and employment. Between 500,000 and 1 million staff are currently employed in this sector, which includes diverse tasks such as the guarding of industrial sites, shops, public buildings and money transport. There is apparently a strong commitment among both sides of the industry to make progress in the European sectoral social dialogue and there are many common concerns, particularly in relation to the "professionalisation" of the sector and concern over damaging lowest-price competition.

In 1993, a study was carried out on the different certification systems applicable in the Member States, working conditions, vocational qualifications and the quality of service. Over 1993-4, the social partners cooperated on a FORCE project, concerned with the future of private security in Europe and standardised training methods.

The Berlin conference

On 10 and 11 June 1999, CoESS and Euro-FIET (with the support of the European Commission) jointly hosted the second European private security services conference in Berlin under the title "A European perspective". The conference was attended by over 300 participants from 18 countries, representing employers' and employees' interests, as well as public authorities and the press. The three main themes of the conference were

• public tendering and private security services;
• training, qualifications and the use of new technologies in the sector; and
• new challenges facing the sector and the opening up of markets to the East

The joint initiative by the social partners in hosting the conference and their years of fruitful cooperation were welcomed by Odile Quintin, deputy director general of DGV of the Commission. In her opening speech, she underlined the increasing importance of the sectoral social dialogue process and the contribution it could make to social Europe. On the occasion of the Berlin conference, CoESS and Euro-FIET signed a Joint declaration on the mutual recognition of CoESS and Euro-FIET and the social dialogue which applies at European level, but also to its member organisations at national and company level.

Private security and public tendering

Demand for private security services is, according to analysts, rising as a result of economic, demographic and political changes, which are leading to a greater polarisation in society. At the same time as these developments are taking place, the state and public authorities are taking a declining share of the direct responsibility in ensuring public safety. In order to ensure maximum flexibility and cost effectiveness, these functions are increasingly being delegated to the private security industry.

Private security contractors have therefore become responsible for ensuring public safety and protecting public and private property in a wide variety of locations, including high-risk areas such as nuclear power plants, banks, embassies and airports. They are also increasingly providing security services at public events and escorts for high-risk transports (including prisoner transport) and are taking over a number of functions previously supplied by police, fire and ambulance services.

Public authorities at European, national, regional and local level are finding themselves more and more in a position of having to contract for the external provision of staffed guarding services. Their "buying power" is therefore more and more important in determining the rules and quality of the security services provided. A survey carried out by CoESS and Euro-FIET in 1998 found that the market share of public tendering in the private security sector is rising constantly and in many Member States amounts to over 30% of the market (see table 1).

Source: CoESS and Euro-FIET, 1998.

Despite the sensitive nature of many of the public buildings and locations to be serviced, the CoESS/Euro-FIET survey found that the majority of public authorities today select security contractors solely on the basis of the lowest price (see Table 2).

Source: CoESS and Euro-FIET, 1998.

The increasing market share of public tendering means that the standards set by public authorities in terms of the price paid for guarding services have a significant impact on pay and working conditions in the sector, company infrastructure and, as a result, on the quality of the service provided. There is an increasing concern among the social partners representing employers and workers in the industry that the application of the principle of awarding contracts to the lowest bidder is leading to a gradual lowering of quality standards.

The social partners argue that awareness of the dangers of such practices is slow to emerge since the detrimental effect of lowest-price competition, which goes beyond the optimisation of costs, cannot immediately be detected, but is a gradual process. According to their experience, lowest price competition has been found initially to lead bidders to weaken the infrastructure of the performance system, which includes staff training, supervision, and quality management. In order to cut costs further, they will subsequently reduce service levels by employing cheaper labour, with a resulting detrimental impact on staff motivation and turnover rates. Wage and social costs are often cut by switching to fixed-term and part-time labour and ultimately to "shadow self-employed" agents in order to by-pass collective agreements. The use of "shadow guards" is also becoming more widespread (the provision of fewer guarding staff than is contractually agreed). As prices are cut, safety mechanisms become seen as luxuries and overheads, which increases the security risk for clients and the public. Evidence is increasingly being found among lowest-price bidders of neglect of collective agreements or legal regulations. Instances have also come to light of: the non-payment of taxes and social charges by disreputable security firms; non-compliance with the original contract in relation to the level of staffing provided; and the use of undeclared labour.

Examples of the negative impact of such cost-lowering practices are increasingly becoming public, say the social partners, and are contributing towards lowering the image of the industry in the eyes of the public. This also necessarily lowers the public perception of the contracting authority.

While the awarding of contracts on the basis of lowest price is partly the result of declining public budgets, the social partners argue that it can also be attributed to a lack of available guidance which could assist contracting authorities in selecting a "best-value" provider.

In 1998, CoESS and Euro-FIET therefore decided to commission a manual which would help interested public authorities select a bid provided on the basis of quality as well as price. For this purpose, a scoring system had to be developed which would objectify quality and make it calculable. The tool had to conform with European public procurement legislation. EU Directive 92/50/EEC on the coordination of procedures for the award of public service contracts makes provision for public contracts to be awarded either on the basis of price only, or to the "economically most advantageous bidder" which combines quality with a favourable price. If the latter method of awarding contracts is chosen, the award criteria have to be stated in the tender documents.

The manual, which was drawn up in consultation with a high-level working group representing the social partner organisations, DGV and DGXV, was welcomed by CoESS and Euro-FIET at the Berlin conference as the first tool of its kind available to public contractors. The social partners are now planning dissemination activities in the Member States to encourage public authorities to use this manual when awarding contracts. A Joint memorandum on the award of contracts to private security companies in the public sector was signed by the social partners recommending this evaluation framework and stressing the importance of selecting quality when awarding public contracts for private security services. DGV is also keen to seen such a practice transferred to other publicly tendered services.

Qualifications, certification and new technology

The importance of developing qualification and certification systems was underlined by a number of speakers, as this significantly contributes to the professionalisation of the sector. Basic training requirements and standards of training differ significantly from country to country and there is a similar degree of variation in relation to the certification of training. CoESS and Euro-FIET are currently undertaking a LEONARDO project, which aims to set out an outline for a joint standard of basic training at European Union level. The project takes into account the experience of different countries and seeks to draw on good practice to develop a workable common standard.

The use of new technology is a significant feature which is already changing the face of private security services. Traditional communication tools are increasingly being replaced with advanced guarding control and satellite tracking systems. Changes in technology are also leading to the identification of new service markets. Speaking at the conference, Martin Bangemann, the Commissioner responsible for industrial affairs and information and telecommunications technologies, highlighted the role security services could potentially play in securing electronic transfers of information.

The opening of markets to the East

Graham Gibson, vice president of the Group 4 security company, provided an overview of the market for private security services in Poland, the Czech Republic and Hungary. He argued that in comparison with some EU Member States this is a very large and fairly tightly regulated market with strict rules on the licensing of individual guards and guarding companies and in many cases stricter requirements for training. While accession may therefore open up new markets in the East, companies from these countries appear equally well equipped to compete in the existing EU market, potentially at a lower cost.

In a Joint declaration on the future enlargement of the European Union to include the central and eastern European countries signed in Berlin, CoESS and Euro-FIET emphasise their support for the process of accession. However, in preparing for accession, the social partners emphasise that certain economic, social and political risks need to be avoided. They are particularly concerned about potential distortions of competition resulting the entry of providers into the EU market which have entirely different social and other legislative provisions than the rest of the Union. They argue that a suitable framework for "healthy competition" needs to be found in terms of basic regulation of the sector and minimum training. CoESS and Euro-FIET call for support for the development of free and independent social partner organisations in the sector. Such organisations should be encouraged to participate in the European social dialogue and similarly engage in fruitful dialogue at all other levels.

Conclusion

Private security is a sector where there is clearly a significant confluence of the interests of trade unions and employers/employers' organisations in relation to the threat posed to the sector by disreputable operators and lowest-price competition. It is an industry which suffers from a low public image which both sides of industry are keen to rectify by ensuring greater "professionalisation" through training and the provision of working conditions which meet the stipulations of legislation and collective agreements. The social partners are particularly concerned with reversing the overwhelming trend in the public sector towards awarding contracts for security services solely on the basis of price. An example was quoted at the conference where a German city had awarded a contract for night-time security services to a provider charging an employment cost price of DEM 16 per hour which, in terms of the guards' pay, would have amounted to less than half this amount. CoESS and Euro-FIET are therefore keen to disseminate their manual as widely as possible among public tendering authorities. The conference in Berlin was instrumental in pointing the way for further joint social partner actions in the sector, not only in relation to public tendering, but also in the areas of training and EU accession (Tina Weber, ECOTEC Research and Consulting).