Leveraging the potential of local government procurement to promote socially responsible supply chains

On 4 February 2021, on the invitation of the Trade Union Advisory Committee to the OECD (TUAC), PSI addressed OECD officials, local government representatives and business leaders on the transformative potential of public procurement for workers and trade unions along supply chains in a session titled “Due Diligence in the Public Procurement of Garment & Textiles”. This event was part of the OECD’s Public Procurement Forum on Due Diligence in the garment and Footwear Sector, 1-5 February 2021.

In 2018, public procurement amounted to 11 USD trillion out of global GDP of nearly 90 USD trillion, amounting to 12 percent of global GDP. Local and Regional Governments (LRGs) are major public procurement agents, accounting on average for almost 50% of public procurement in the OECD. This figure goes up to 62% in federal countries.

LRGs, public utilities and public services are therefore large buyers of textile products and clothing.

Public service workers need textile products, uniforms, Personal Protective Equipment (PPE) and work materials daily, including towels, mops, mats and linen to deliver public services, from municipal waste services to, sanitation and health care. These products are needed more than ever at this time of pandemic.

How can workers and trade unions be best involved in public procurement-led supply chain governance and how can social responsibility and labour rights be upheld along LRG contracting chains?

“Traceability, hi-tech fixes and questionnaire filling may not be the most adequate systems to ensure human rights compliance along supply chains, as social responsibility is about people” said Daria Cibrario, PSI Local and Regional Government Officer addressing the OECD Forum.

“If environmental responsibility may involve more of a technical dimension and box-checking, when it comes to social responsibility, workers and trade unions what matters is building trust among people; redressing imbalances of power among the actors in the supply chain; and forging reliable, long-term relationships, so that you can go through the good and the bad times together and resolve issues on a continuous basis” she added.

Public procurers can craft contract specifications strategically to go beyond price-only considerations and encourage SRPP practices. LRGs can exercise a powerful lever for implementing the UN Sustainable Development Goals (SDGs). The inclusion of labour and environmental clauses in public procurement tenders and contracts enables local authorities to promote socially responsible and sustainable sourcing practices along both long and short supply chains. While the former stretch globally across continents, the latter can fuel backyard economies and benefit their local communities.

“Local authorities can insert clauses in their contracts requiring suppliers to pay a living wage, to recognize trade unions in the most expedite way, to negotiate and uphold collective bargaining agreements, or to hire quotas of vulnerable workers throughout their operations, such as disabled workers or long-term unemployed” said Cibrario.

“They can also require that the supplier agrees to undergo the mediation process provided for in the OECD MNE Guidelines in case of labour dispute”.

To view the full virtual roundtable on the OECD platform, click on the image below and register on the OECD events website.

However, to ensure that supply chains are responsible, it is key that LRGs – especially rural and small towns, have access to adequate resources and powers so they can pursue social and environmental objectives over price-based considerations and build the capacity to design SRPP contract specifications through adequate staffing levels and training for their procurement officials, including through peer-learning.

“Powers and resources often are the missing link between LRGs and SRPP. Central governments must empower and set out a framework conducive of SRPP in LRGs” said the PSI Officer.

Finally, price and supply chain length are key.

“If you want to procure in a socially responsible manner, you must pay a fair price. When prices are exceedingly low, it is the workers who get the crumbs. There is also a strong case to shorten supply chains. Indeed, the higher the number of subcontracting tiers, the higher the risk”.

And concluding on a provocative note:

“do we really need to procure so many basic goods that far away? With the Covid crisis, we may want to consider the question: do we really need to procure certain goods or services at all? Can’t they be produced in-house, instead?” she ended.