EU Public Procurement Revision: Addressing Excessive Subcontracting in Construction
Europe's construction sector is plagued by excessive subcontracting, leading to fragmented responsibility, worker exploitation, and unfair competition. The upcoming EU Public Procurement Directives revision aims to address these issues. It seeks to ensure public money rewards responsible companies, excludes fraudulent operators, and holds main contractors accountable for their subcontracting chains, preventing further tragedies and economic distortions.
Europe's construction sector, vital for housing, climate resilience, and infrastructure, faces significant challenges including labor shortages, low productivity, criminal infiltration, and high accident rates. The upcoming revision of the EU Public Procurement Directives offers a chance to reform the sector, which is currently undermined by business practices that erode fair competition, accountability, and job quality.
Excessive subcontracting has transformed from a tool for specialized work into a business model that allows main contractors to offload risks and responsibilities. This fragmentation of accountability leads to severe consequences, as seen in the 2021 Antwerp school collapse, where five workers died and responsibility remains unestablished five years later, and the December 2023 Sundbyberg lift collapse, also killing five, with all accused acquitted. Europol identifies construction as highly susceptible to criminal infiltration, with networks using complex subcontracting to facilitate fraud and exploitation.
Construction accounts for 9% of EU GDP, employs 18 million, and comprises 3 million companies. However, long subcontracting chains create unfair competition, allowing some operators to avoid labor, tax, and social obligations. Enrico Letta's report, «Much More Than a Market», highlights how unchecked subcontracting undermines labor standards and distorts competition, urging proper regulation. Public procurement, representing 20-38% of construction activity in many EU countries, often prioritizes the lowest price, inadvertently rewarding models based on cheap labor and fragmented responsibility.
The revision should ensure public money rewards companies that create quality jobs, invest in skills, directly employ workers, and take full responsibility. Fraudulent companies must be excluded, and main contractors held jointly and severally liable throughout their subcontracting chains. Belgium, Spain, and Norway have already limited subcontracting to two levels in public procurement, and other entities are adopting similar policies, reflecting a growing consensus that unlimited subcontracting is problematic. Effective rules are crucial to prevent abuse, protect responsible businesses and workers, and ensure society doesn't bear the hidden costs of the lowest price.