Greater ambition for corporate responsibility
Compliance with employment conditions must be strengthened by improving public procurement legislation
Public procurement accounts for a significant share of gross domestic product in Finland and in Europe as a whole.
Objectives
- The Public Procurement Act should give greater consideration to quality, and to environmental, social and labour law aspects in all public procurement projects.
- Legislation should mandate not only central government, but also municipalities to ensure that procurement contracts include a special condition on compliance with Finnish law and collective agreements.
- The competition and consumer authorities should be given regulatory control powers, including the power to monitor realisation of societal objectives, particularly in the sphere of social affairs and labour law.
- The scope of the statutory notification obligation of subcontractors should be broadened to give the client better opportunities to monitor the compliance of tenderers with contractual terms and conditions.
- The public procurement Directives of the European Union should be reformed, as they lack any effective means of addressing breaches of labour law. The next Government must actively signal the need to reform these Directives to the European Commission, Council and Parliament.
- The in-house external sales of a contracting entity must be increased to 10 per cent.
Grounds
Both in Finland and in Europe as a whole, public procurement accounts for a significant share of GDP. It is important for all public procurement to reinforce sustainable development and deal with businesses that meet their social obligations. The grey economy must be eradicated, and the project activities of central and local government must be exemplary in respect of responsibility.
Neither the principles of developing work life and ensuring decent working conditions, nor implementation of these principles are sufficiently enshrined in legislation. Even though the voluntary measures of contracting entities and tenderers are welcome, they do not suffice. Special terms and conditions on the use of a social clause must be clearly stipulated in a procurement contract. Monitoring of societal objectives in procurement, such as working conditions, suffers from a lack of resources, especially in municipalities.
A contracting entity may currently procure supplies, construction contracts or services from an affiliate with no competitive tendering procedure only if no more than five per cent or EUR 500,000 of that affiliate’s business is directed elsewhere than to the contracting entity that owns the said affiliate. This provision is not in line with the EU Directive, which would allow up to 20 per cent in external sales of the affiliate. The current provision hampers meaningful cooperation between public entities.
Other SAK objectives related to corporate responsibility
- Contractor liability must be expanded and subcontracting chains restricted.
- Finland must enact ambitious legislation on corporate responsibility.
- Societal responsibility must be global.