Procurement for the public good

Member organiser and cleaner, Lulu Lowe, tells ministers about the importance of the Living Wage in government procurement

Securing decent wages involves bargaining between employers and workers, represented by a union. That is the case unless you are contracted out to deliver services like cleaning and security. For these and many other workers, the funder is the ‘economic employer’, in other words the funder holds the money and controls the price. It may be the Government, a bank, a school, or a police station that purchases, or procures the service for their business and they choose their provider through a competitive tendering process that keeps costs down. This results in a race to the bottom that leaves little room for workers to bargain for decent wages because the price of the wages is set by the funder. That’s why social or ethical procurement is such an important part of a Decent Work agenda, as it holds the funder accountable for the consequences of their actions.

The Living Wage Movement calls for all businesses to pay a Living Wage to directly employed and contracted out workers delivering regular and ongoing services, for example, cleaning. It is the business that decides the terms of procurement contracts and so businesses have the power to deliver decent lives for all workers. In fact, they can include many terms such as positive outcomes for Māori employment; equity for women, Pasifika and people with disabilities; and environmental and sustainability standards.
Procurement is one of the main ways governments implement their policy and when they focus on social procurement they can use their buying power to back good employers who demonstrate worker-friendly business practices. Currently, the Government has $41 billion of procurement spend and they describe their vision as supporting “people, communities and businesses to thrive and grow.”

In September 2021, the Government announced that contracted cleaners and security guards in the core public service would be paid a minimum of the current Living Wage when the contracts for services were renewed. By joining together with our community allies, E tū has been on the front line of the campaign to make funders accountable for the workers, who are contracted to deliver their services, and we are winning in the private and public sectors.

Decent incomes are a key result of social procurement, but we know Decent Work also means workers have a voice in all the big decisions that impact on them. This is the case when it comes to procurement and investment decisions and is part of our campaign for a Just Transition in Southland. E tū has called for a union voice in the important decisions about the future of work, as technology transforms the local Southland economy. Specifically, E tū proposes some guiding principles for the application of an ethical investment and procurement approach including:

  • transparency being embedded in decision making and reporting
  • key stakeholder engagement, including iwi/hapū, unions and community
  • collaboration, to leverage scale
  • monitoring, including assessing the impact of an approach on local economy and communities and ensuring tender is meeting obligations
  • independent reporting and evaluation
  • legacy and sustainability of programmes beyond current investment.

Ensuring the Government is accountable for spending public money is a long process that entails our community campaigns through the Living Wage Movement, our Just Transition project for a flourishing economy in Southland, and a political strategy that ensures social procurement is at the heart of all government policy. We are calling on the Government to use their procurement power to deliver concrete outcomes. This means:

  • fair and safe employment practices, including the payment of the Living Wage throughout the state sector
  • continuity of employment for workers affected by the change of a contract for services
  • supporting employment opportunities for Māori
  • advancing safety, equality, and opportunity for women and people with disabilities
  • meeting national and international standards for ethical and environmentally sustainable business.