Government to impose ILO minimum standards on public service suppliers

Public procurers in central and local government in Norway have an obligation to ensure that their service providers meet certain standards for the wages and working conditions of their employees. This responsibility is a result of the adoption of an International Labour Organization convention into the country’s legal framework. New regulations have now been put before the Norwegian Parliament to ensure public bodies comply with the convention.

Background

In October 2012, the Norwegian government submitted to parliament a bill, Changes to the law on public procurement (Government oversight of regulations on wages and working conditions in public contracts).

The proposal makes the Norwegian Labour Inspectorate responsible for ensuring that public procurers require their suppliers to meet minimum standards for employees’ wages and working conditions.

Setting the standards

Norway ratified the ILO Labour Clauses (Public Contract) Convention No. 94 in 1996, and made it applicable to the central government sector. From 2008, the government, as a part of its first Action Plan to combat social dumping, extended the convention to apply to the local government sector (NO0802049I).

The implication of this was that public procurers buying the services of suppliers, or entering into building and construction contracts with private companies, should place requirements on these suppliers to meet certain minimum wages and working conditions standards.

The convention states that wages and working conditions are to be consistent with any existing generally applicable collective agreement, and where such an agreement does not exist, with any existing nationwide collective agreement. These requirements are to be laid out in the tender process, and be included in the contract entered into with the supplier.

It is the job of the Public Commissioner of Services and Work to ensure that the requirements are complied with during the contract period. The Commissioner also has the right, under the 2008 Regulations on wages and working conditions in public contracts, to impose sanctions against the supplier if these demands are not complied with by, for instance, holding back payment under the contract. The obligation only applies to contracts that exceed NOK 1 million (€136,667 as of 14 November 2012) in relation to the central government authorities and NOK 1.6 million (€218,668) for local/municipal authorities.

Several studies, including Battle for relief workers: Employment Strategies in the municipal sector (in Norwegian, 658Kb PDF) and the Ministry of Labour’s Social dumping and other violations in connection with the public sector (in Norwegian, 368Kb PDF), suggest that public procurers only comply with these provisions to a limited extent. The government, however, says that the public sector has a particular responsibility to ensure decent wages and working conditions, and to prevent social dumping by not contributing to the exploitation of foreign workers in the Norwegian labour market. The Labour Inspectorate has registered cases involving social dumping in enterprises commissioned to carry out work in the public sector.

Proposal and reactions

Whether the Labour Inspectorate should have a role in monitoring compliance with established standards for wages and working condition among the suppliers of public contracts has been widely debated. However, vesting such powers in the inspectorate has been rejected on the grounds that the inspectorate should not control and monitor breaches of contract between two contracting parties.

This Government proposal gives the inspectorate the role of monitoring whether or not public procurers have complied with their duty to establish minimum standards of wages and working conditions when suppliers tender for contracts, and monitoring compliance with these requirements after a contract has been awarded.

The proposal has support from all organisations on the employee side, while there has been a largely negative reaction from employers.

Employers’ concerns

The opposition of the employers must be viewed against the backdrop of the controversies that have surrounded these regulations since they were introduced by means of an administrative procedure in 2008. Employers argue that the regulation violates the Agreement on the European Economic Area. The European Free Trade Association (EFTA) and its Surveillance Authority (ESA) share the view of the Norwegian employers. The government has responded by being explicit in specifying the type of wages and working conditions that are to be made applicable under the regulation.

However, whether this specification is sufficient has not yet been resolved by the ESA (NO0908049I, NO1201029I). The Confederation of Norwegian Enterprise (NHO) argues, among other things, that the procedure for selecting collective agreements has not yet been agreed, and neither has it been settled which body should make such decisions.

As a result, according to the NHO, the basis on which inspections by the inspectorate may take place is not clear.

Alsos Kristin, Fafo

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