The planned reform of public procurement law would force municipalities to tendering
If the new legislation gets passed, it will drive municipalities to chaos, ruin services and damage security of supply.
The Finnish Government’s plan to reform public procurement law means hundreds of millions of euros of additional expenses for municipalities. The Government wants to open critical services for competition in a way that threatens to ruin the services in Finland and damage security of supply.
Trade Union JHL strongly objects to reforming public procurement law in this way and urges everyone to send the following message to the MPs of their district: “Don’t extinguish security of supply– vote ‘No’ to the reform of public procurement law.”
“The planned reform of public procurement law would force municipalities to tendering and drive them into chaos. The proposed change in legislation would mean radical deterioration of municipalities’, cities’ and wellbeing services counties’ finances and services”, warns the President of Trade Union JHL Håkan Ekström.
If the reform of public procurement law gets passed, in practice it will mean that in future municipalities or wellbeing services counties can purchase services from their in-house companies without a tendering process only if they own at least 10% of the company. This legislative proposal weakens municipal self-government.
Currently, a municipality or wellbeing services county can order services directly from its in-house company.
According to a report (in Finnish) commissioned by the Association of Finnish Cities and Municipalities, the change concerning in-house companies would mean additional expenses of about 600 million euros for municipalities. Small municipalities estimate that the legislative change would cost on average as much as 473 euros per resident, and medium-sized municipalities’ estimation is on average 41 euros per resident. For example the city of Tampere has criticised the increase of costs.
One step in the right direction
In-house companies are social enterprises that produce for example catering and cleaning services for early childhood education and care, schools, hospitals and services for older people. A lot of ICT system services are also produced by in-house companies.
“The proposed change of legislation risks the security of Finland’s hospitals and towns and cities, as well as security of supply. Privatised services cost more for the taxpayers. And should there be a crisis, private equity companies would no longer offer their services because they cannot make profit”, Ekström emphasises.
Furthermore, according to Ekström, vitality of regions and localities will lessen because private equity companies produce return on investment for their owners, and to achieve this, companies cut costs by cutting operations and thereby jobs.
Many municipalities have outsourced services to businesses some years ago, but the experience has often been quite negative. The prices of the services have gone up.
“Employees’ pays are cut by applying cheap collective agreements. Municipalities and cities get less tax revenue because lower pays mean less taxable income,” Ekström sums up.
The Government has told earlier that it will change its proposal on public procurement law by excluding water services and waste management. That is a step in the right direction, but it is not enough.
JHL recommends its members and everyone else to familiarise themselves with website hankintalaki.fi (in Finnish). You can also subscribe to hankintalaki.fi newsletter (in Finnish) from uutiskirje@hankintalaki.fi.
More information:
President of JHL Håkan Ekström, tel. 040 828 2865