Public Procurement and Human Rights in Poland – can a source of a problem become its solution?

November 28, 2016 •

GP Kwadrat

By Grzegorz Piskalski
Institute for Sustainable Public Procurement

B-Kozek

By Bartłomiej Kozek
Communications Specialist,  Institute for Sustainable Public Procurement

Public procurement in Poland accounted for 8.7% of the country’s GDP in 2013. Although under the EU average (19%), it still thus accounts for a substantial part of the overall Polish economy.

Moreover, in sectors such as cleaning and private security, public institutions and their tenders represent respectively 60% and 40% of the market share. Public buyers therefore wield great influence over the terms and conditions of service delivery in these areas.

These are also sectors where significant human rights abuses occur, given the situation in the Polish labour market. Many workers do not receive a living wage, and may work up to 350-400 hours per month, while often lacking social insurance, paid holidays or proper and safe working conditions.

How have public tenders led to this situation?

Low-cost mindset and its social impact

During the last two decades of Polish capitalism, the “lowest cost = best offer” formula came to dominate the minds of public buyers. The onset of this problematic vision of public procurement coincided with high unemployment and the proliferation of outsourcing practices, in line with the “New Public Management” approach to public services.

The high level of precarious work – or “junk jobs” (umowy śmieciowe), that is, civil contracts to which the Polish Labour Code does not apply – has thus taken its human toll.

Labour costs account for the greater part of contracting costs in security services. Despite the growing costs of living, however, for the past 10-15 years, the wage levels of the army of 200,000 Polish security guards have not changed much.

For most of them – ordinary security guards – the average hourly wage has remained at the extraordinarily low level of 1.25EUR (5 PLN). At the same time, is very common for such personnel to remain at work for 400 hours per month (out of a total of about 720 hours in a typical month), which means that their lives are almost entirely consumed either by work or sleep.

The minimum wage in Poland applies only to fixed contracts and is currently set at 1850 PLN (417EUR) gross for 160 hours.  In practice, security guards’ salaries usually combine this “legal” work with a mandatory junk job, in other words, additional work under a civil rather than a labour contract,  or even an “under the table” payment from the contractor. In many cases, such extra junk jobs are in practice mandatory, in the sense that workers cannot reject proposals from contractors for fear of losing their job altogether.

Year after year, Polish public buyers have enjoyed the falling costs of such services, while regulatory authorities have turned a blind eye to the problem, all at the expense of workers’ rights. According to research by Poland’s Public Procurement Office, in only 4% of public tenders in 2015 did buyers use social clauses demanding labour rights protection.

At the same time, the unionization rate in Poland hovers around 12.7% (it is three times smaller in the private sector than in the public sector) and remains one of the lowest in Europe.  Labour inspections are underfinanced and lack a mandate to tackle junk jobs. Accordingly Polish workers get little help in standing up for their rights in court and their access to justice is severely restricted.

Winds of change?

The economic conditions for the provision of private security and cleaning services to the public sector eventually have become unbearable, not only for workers, but also for their employers, as their profit margins have sunk to levels too low to allow them to survive in such a market.

Amendments to the Public Procurement Law have been passed this year. Under the new legislation, public procurers must now use criteria other than the lowest price and demand fixed contracts of subcontractors’ employees, not “junk jobs”.

These changes sparked enormous controversy amongst public buyers, who have traditionally not felt responsible for their contracted workers, but also because they lack the legal tools to implement such regulations, for instance, in terms of controlling the contract conditions offered to workers by contractors.

In addition, GIODO the public watchdog tasked with protecting personal data, stated in its latest opinion that demanding work contracts from subcontractors employees breaches privacy laws. Such an opinion further complicates the already fragile situation regarding the promotion of social clauses in Poland.

Monitoring public procurement in Poland

Under the new regulations, the application of social and environmental clauses in public procurement will remain voluntary, dependent on public authorities’ determination of how best to tackle social and ecological challenges – as well as non-legislative incentives, such as public advocacy actions.

Our monitoring of sustainable public procurement at Polish universities, municipalities and regions has shown that, while the incorporation of social and environmental clauses in public contracts is increasing, such clauses are not being used in a thought-through manner.

From our analysis of over 2,500 tenders we identified huge differences both between different cities (for example, sustainable public procurement measures are more prevalent in Kraków and Poznań than in Wrocław) and types of public institutions (national public bodies apply social measures more often than local or regional ones).

Furthermore, in our current monitoring project, running to November 2017, we are still encountering examples of tenders that result in abuses of basic human rights through low levels of pay for often very hard work.

As a result, in September we decided to launch an intervention towards the Polish Ministry of Justice along with the biggest Polish trade union, NSZZ “Solidarność” through a formal letter.

For months we have been gathering information on tenders from around the country. What emerged was that, in several cases, the hourly wages that will be paid to workers (such as security guards or cleaners) under relevant contracts would be far lower than the new hourly minimum wage, which is set at 13 złoty (2.92EUR) per hour.

How much lower? The examples presented by our Foundation and “Solidarność” ranged from 5.79 (1.30EUR) to 8,54 złoty (1.91EUR), so that even if paid the highest wage in this bracket a security guard would earn less than 2EUR per hour, which is not remotely close to a minimum or living wage.

On the other hand, we are already now witnessing some new successes in Poland towards more sustainable public procurement.

For instance, the University of Poznań recently committed to guarantees for fixed employment contracts for construction/renovation workers re-fitting buildings such as a sports hall or Collegium Iuridicum, after over 1,500 people decided to sign a petition promoted by the Akcja Demokracja (Action Democracy) Foundation.

Similar clauses have also been included in a new tender for a hospital in Nowy Sącz.

CentrumCSR.PL has even intervened with a formal letter sent to the Ministry of Development, which decided not to promote safe and well paid labour in a tender regarding transport and removal services – even though it promotes innovative public procurement in its “Strategy for Responsible Development” developed this year.

We are committed to continuing this work in future, both to help public authorities in fulfilling their “obligation to protect” human rights in the procurement context, and to support civil society and an informed public opinion that can hold them fully to account for their progress towards more sustainable public purchasing.

Grzegorz Piskalski Grzegorz Piskalski is the Chair of the Board of CentrumCSR.PL Foundation – an independent think-tank focusing on business, human rights and sustainable public procurement which lauuched the Institute for Sustainable Public Procurement.

Bartłomiej Kozek works as a Communications Specialist in the Institute for Sustainable Public Procurement.