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Labour Clauses (Public Contracts) Convention, 1949 (No. 94) - Norway (Ratification: 1996)

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Observation (CEACR) - adopted 2020, published 109th ILC session (2021)

The Committee takes note of the supplementary information provided by the Government in light of the decision adopted by the Governing Body at its 338th Session (June 2020). The Committee proceeded with the examination of the application of the Convention on the basis of the supplementary information received from the Government this year, as well as on the basis of the information at its disposal in 2019.

The Committee notes the observations of the International Organisation of Employers (IOE) and the Confederation of Norwegian Enterprise (NHO), jointly submitted in October 2020. It further notes the additional observations of the Confederation of Norwegian Enterprise (NHO) and the observations of the Norwegian Confederation of Trade Unions (LO), both communicated together with the Government's report. The Government is requested to provide its comments in this respect.

Article 2 of the Convention. Insertion of labour clauses in public contracts. In its previous comments, the Committee requested the Government to provide updated detailed information on the manner in which Regulation No. 112/2008, as amended, is applied in practice, and to communicate a summary of the evaluation concerning the Regulation. The Government refers once again to the evaluation of the Regulation carried out by the Office of the Auditor General of Norway and that the results of the evaluation were published in an official report in 2016. The 2016 report found that public authorities do not always have adequate procedures and systems in place to prevent social dumping in their procurement processes. In this context, the 2016 report noted a clear correlation between the development of such procedures and systems and compliance with the Regulation. The Government reiterates that, while in some 86 per cent of procurements, public authorities include information indicating that the contract would contain a labour clause, compliance is generally higher among central authorities in comparison to smaller municipalities. The Government indicates that, according to the 2016 report, lack of understanding of the requirements of the Regulation seems to be an important reason for inadequate compliance, and there is potential for improving the information and guidance on how to apply the Regulation. The Committee notes that, following the advice of the Office of the Auditor General, the Government has taken a number of measures to ensure a work-life without social dumping in public procurement. The Committee further notes that, in September 2018, the Government developed and published a new online guide on the Regulation on Pay and Working Conditions in Public Contracts. The Government reports that the Ministry of Labour and Social Affairs has requested the Agency for Public Management and eGovernment (Difi) to take measures to develop the online guide further, as well as to familiarise the public authorities with its contents. The Committee notes with interest that a similar guide has also been developed with respect to the public procurement legislation with the objective of limiting the number of subcontractors in the contract chain in sectors that are particularly vulnerable to social dumping. In their observations, the NHO and the IOE express their support of the Ministry of Labour and Social Affairs' initiative in tasking Difi with developing the online guide further to assist the public authorities in giving effect to the Convention. Nonetheless, they point out that any measures taken to disseminate information about the Regulation must ensure transparency and distinguish between best practices and applicable mandatory law. The Committee notes the Government's indication that it plans to evaluate compliance with the Regulation once the guide on the Regulation on Pay and Working Conditions in Public Contracts has been accessible online for some time. In addition, in its allocation letters to all governmental agencies for 2018 and 2019, the Government has urged that public procurements be carried out in such a way as to combat work-related crime. With respect to the LO observation on including pension schemes as a part of the employees’ wage and working conditions, the NHO and the IOE concur with the Government's view that the Convention does not imply any obligations concerning occupational pension schemes. The Government indicates that it has appointed a committee of experts to examine several issues related to public procurement and public financing of welfare services. This committee will also look into questions related to pay and working conditions and pension schemes for employees employed by providers of welfare services. The Government reports that the Labour Inspection Authority's resources have been increased by 110 million Norwegian kroner from 2013 to 2019, including approximately 34 million kroner for combating work-related crime. The Government adds that several public authorities have developed their own models for public procurement that aim to promote decent work and fight work-related crime, social dumping and the exploitation of workers across supply chains. These models implement standard contract terms, including terms relating to labour rights that are stricter than those currently required by procurement regulations. The Committee notes that the Government has initiated the making of a guide for public authorities who want to use such stricter standards in their public contracts. In its observations, the Norwegian Confederation of Trade Unions (LO) indicates that the European Surveillance Authority (ESA) has sent a letter of formal notice to the Government concerning restrictions on subcontracting in the field of public procurement in Norway, in which it expresses the view that the relevant Norwegian public procurement law does not comply with EEA-law. ESA has also requested information concerning the municipal public procurement policies (models) used to combat work-related crime. The LO further observes that the Norwegian Government has rejected a proposal from the Labour Party to change the national public procurement law based on the new ruling of the EC-court (Case C 395/18- Tim SpA). The ruling stated that the requirement to ensure that providers comply with environmental, social and labour provisions in public procurement is a cardinal value equal to the other basic principles such as transparency, competition, predictability and non-discrimination. The Committee notes that the LO will continue to work to include the new ruling in national law. It also notes the observations of the IOE and the NHO, indicating that any measures taken to give effect to Convention No. 94 must be subject to an assessment of relevant EEA/EU Law on free movement and rules concerning public procurement. The Committee requests that the Government continue to provide information on the manner in which the Convention is applied, including, for instance, labour inspection reports, indicating the number of inspections of public administration contracts carried out, the number and type of violations detected and the sanctions imposed, if any. It further requests the Government to keep the Office informed of any developments in the relevant national legal and regulatory framework as well as with respect to evaluations of the Regulation on Pay and Working Conditions in Public Contracts.

Observation (CEACR) - adopted 2017, published 107th ILC session (2018)

The Committee notes the observations of the Norwegian Confederation of Trade Unions (LO), received together with the Government’s report. The Government is requested to provide its comments in this respect.

Article 2 of the Convention. Insertion of labour clauses in public contracts. The Committee refers to its previous comments, in which it requested the Government to keep the Office informed of any new developments in the procedure initiated by the Surveillance Authority of the European Free Trade Association (EFTA) against Norway with regard to Regulation No. 112/2008 of 8 February 2008, as amended, and to provide information on the manner in which the Regulation gives effect to the Convention. The Committee notes the Government’s indication that the EFTA Surveillance Authority decided to close the case in December 2012, stating that “taking into consideration the development of this case since its opening in June 2008, in particular the amendments adopted to Regulation No. 112/2008, together with the increase in the number of universally applicable agreements, the scope of the infringement has been significantly reduced. The Authority considers it therefore appropriate, at the present stage, not to proceed further with this case. This decision is, however, without prejudice to any future decision by the Authority to open a new case on this issue or on a related issue. Such a decision could be taken, for example, in the light of new information concerning the implementation, interpretation or application of the national measures under consideration, receipt of a new complaint, or developments in EEA or EU law.” The Government indicates that, while there have been no amendments in the Regulation itself during the reporting period, due to the revision of the public procurement legislation to implement EU Directive 2014/23 of 26 February 2014 on the award of concession contracts, the Regulation’s scope of application has been extended to cover such contracts as of 1 January 2017. Moreover, the Government adopted new legislation which as of 1 January 2014 gives the Labour Inspection Authority competence to supervise and enforce the contracting authority’s compliance with the Regulation. The Government adds that a recent evaluation of the Regulation showed that, while most contracting authorities include labour clauses in their contracts, many, particularly smaller municipalities, fail to follow up on compliance with the clauses once they have been inserted into the contracts. In its observations, the LO expresses concern that the threshold for application of the Regulation is very high, and urges application of the Convention to public procurement contracts under this threshold, and that it be applied in all sectors to prevent social dumping. The LO also states that the Government has not increased the Labour Inspection Authority resources and asks that it do so to strengthen compliance. The Committee requests the Government to provide updated detailed information on the manner in which Regulation No. 112/2008 is applied in practice, and to communicate a summary of the evaluation concerning the Regulation.

Observation (CEACR) - adopted 2012, published 102nd ILC session (2013)

Article 2 of the Convention. Insertion of labour clauses in public contracts. The Committee refers to its previous comments, in which it noted with interest the adoption of Regulation No. 112/2008 of 8 February 2008 regarding wages and working conditions in public contracts, which gives effect to the Convention. It notes that the Surveillance Authority of the European Free Trade Association (EFTA) sent to the Norwegian Government, on 29 June 2011, a reasoned opinion in which it referred to the Rüffert decision delivered by the European Court of Justice (ECJ) on 3 April 2008. On the basis of this case law, the EFTA Surveillance Authority alleged that, by maintaining Regulation No. 112/2008 in force, Norway was in breach of the Agreement on the European Economic Area (EEA) and Directive No. 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services, this directive being applicable to Norway as a State party to the EEA. The Committee notes that, in the reply that it sent to the EFTA Surveillance Authority on 15 November 2011, the Government emphasized the importance of Regulation No. 112/2008 in its plan to combat social dumping and recalled that this instrument gives effect to Convention No. 94. Nevertheless, in order to guarantee better compliance with EEA law, the Government introduced a number of amendments to the Regulation, which came into force on 15 November 2011. The Regulation, as amended, in essence provides that the minimum wage rates which must be respected are those resulting from collective agreements concluded at the national level. For the sectors covered by regulations extending the application of collective agreements, Regulation No. 112/2008 henceforth refers to the wages and working conditions derived from these regulations. There is no longer any reference to wages and working conditions prevailing in the region and the occupation concerned. The amended Regulation also specifies which types of wages and working conditions are to be applied, namely minimum rates of pay, working time and compensation for travel, board and lodging. Furthermore, the contracting authorities have to make it clear in the call for tenders and in the contract documents that these conditions are to be complied with. Finally, the Committee notes the report prepared by the company KPMG on social dumping in public contracts awarded by municipalities, a copy of which was attached to the Government’s report and which examines in particular Regulation No. 112/2008 and the procedure initiated by the EFTA Surveillance Authority against Norway, and which explicitly refers to the Convention.

The Committee also notes the comments made respectively by the Norwegian Confederation of Trade Unions (LO) and the Confederation of Norwegian Business and Industry (NHO), supported by the Enterprise Federation of Norway (VIRKE), which were attached to the Government’s report. The LO considers that the Government’s report on the application of the Convention is satisfactory. The NHO, however, considers that the amended Regulation does not apply to the private sector, as noted by the EFTA Surveillance Authority, and that it is therefore still not in compliance with the EEA Agreement. The NHO adds that including information on the contract clauses in the call for tenders and other documents is not sufficient, as the contracting authorities must also specify which collective agreement and which specific parts of the agreement shall apply.

The Committee notes the efforts made by the Government to continue to implement the Convention, despite the procedure initiated against it by the EFTA Surveillance Authority. While noting that it is not its role to comment on decisions of the ECJ on the compatibility of national legislation with Community law, the Committee recalls that the Rüffert decision, to which the EFTA Surveillance Authority referred in its reasoned opinion, concerned Germany, which has not ratified Convention No. 94. The situation of Norway is therefore different in legal terms as it is bound by the Convention.

The Committee understands that, in November 2011, the Office contacted the EFTA Surveillance Authority expressing its willingness to engage in discussions on the issues raised in the reasoned opinion relating to Norway’s commitments deriving from the ratification of the Convention, but that the EFTA Surveillance Authority has not up to now taken up this opportunity. The Committee also notes that, in its resolution of 25 October 2011 on modernization of European Union public procurement policy, the European Parliament called for an explicit statement in the directives on public procurement that they do not prevent any country from complying with ILO Convention No. 94, and it called on the European Commission to encourage all European Union Member States to comply with the Convention. Moreover, the Committee notes with interest the terms of Regulation No. 112/2008, as amended, which aims to improve the information provided to applicants for tenders and co-contractors on the labour clauses which have to be complied with when executing public contracts. With regard to the terms of the labour clauses, however, the Committee recalls that the collective agreements referred to in Article 2(1) of the Convention are those concluded between organizations of employers and workers representative respectively of substantial proportions of the employers and workers in the trade or industry concerned, and not only collective agreements declared to be of general application. In light of the above considerations, the Committee requests the Government to keep the Office informed of any new developments in the procedure initiated by the EFTA Surveillance Authority against Norway and to provide information on the manner in which Regulation No. 112/2008, as amended, gives effect to the Convention, particularly concerning compliance with the wage rates and other working conditions set out in the collective agreements which have not been declared of general application.

Direct Request (CEACR) - adopted 2009, published 99th ILC session (2010)

Articles 1 (paragraph 2) and 2 of the Convention. Coverage of labour clauses in public contracts. The Committee notes with interest the adoption of Regulation No. 112 of 8 February 2008 regarding wages and working conditions in public contracts which replaces the 2005 circular on labour clauses in tenders and extends the scope of labour clauses to cover contracts awarded by public authorities other than the central authorities, i.e. municipal and county administrative authorities and bodies governed by public law. The Committee understands that the decision to extend the obligation constitutes part of the Government’s action plan against social dumping which was issued in 2006. Under the new administrative provisions, contractors should provide their employees with wages and working conditions that are no less favourable than those laid down in national collective agreements or than those prevailing in a given geographical area and relevant profession while the term “working conditions” should be taken to mean at the very least the working time regulations. The same requirement also applies to work carried out abroad. It is further provided that subcontractors are obliged to provide documentary evidence of compliance with the labour clause if and when required by the contracting parties. The new Regulation applies to central authority contracts exceeding 1.05 million Norwegian kroner (NOK) (approximately €134,000) and to other contracts exceeding NOK1.65 million (approximately €210,000) the same threshold values applying to contracts for both works and services. The Committee would be grateful if the Government would provide in its next report additional information on the application of Regulation No. 112 of 2008 in practice, including sample copies of public contracts, statistics on the contracts awarded by municipal and other non-central authorities, inspection results showing the number of contraventions observed and sanctions imposed, copies of any recent studies or reports addressing public procurement issues, especially in the light of recent case law of the Court of Justice of the European Communities and the ensuing debate regarding the compatibility of the Convention with EU law, etc.

Observation (CEACR) - adopted 2009, published 99th ILC session (2010)

Article 2 of the Convention. Insertion of labour clauses in public contracts. The Committee notes the observations of the Confederation of Norwegian Business and Industry (NHO) concerning the impact of recent legislative developments on the application of the Convention. More concretely, the NHO expresses its opposition to the terms of the new clause on wages and working conditions that came into effect in March 2008 and which is now applicable to all tenders both of central and municipal authorities. According to the employers’ Confederation, there are overlapping – and even contradictory – rules in the area of wages and working conditions applicable to foreign workers, including the Immigration Act, the regulations on posted workers, and the Act relating to general application of wage agreements, and the new regulations on labour conditions in public contracts can only create additional uncertainty as to which requirements are really applicable. The NHO adds that as a result it will be very difficult to interpret and apply the new clause in practice. The Committee requests the Government to communicate any comments it may wish to make in response to the observations of the NHO.

The Committee is raising other points in a request addressed directly to the Government.

Direct Request (CEACR) - adopted 2008, published 98th ILC session (2009)

The Committee notes with regret that the Government’s report has not been received. It hopes that a report will be supplied for examination by the Committee at its next session and that it will contain full information on the matters raised in its previous direct request, which read as follows:

The Committee notes the Government’s statement that following the recommendation of the law commission that assessed the new public procurement regulations (NOU 1997:21) to the effect that the Convention should be implemented in the form of a circular to central authorities, the Government has resolved that the Ministry of Trade and Industry should draw up a circular requiring government agencies to comply with the provisions of the Convention and that the circular should contain labour clauses that each government agency would be required to include in contracts with suppliers and contractors. While taking due note of the above information, the Committee requests the Government to transmit a copy of the circular as soon as it is issued and to continue to provide all available information on the practical application of the Convention, including samples of public contracts, statistics on public procurement and the number of workers concerned, copies of recent studies or official publications dealing with labour matters in public procurement, and any other particulars which would enable the Committee to evaluate the conformity of national law and practice with the requirements of the Convention.

Further, the Committee understands that there have been other legislative developments, such as the adoption of the Public Procurement Act 1999 and of the Working Environment Act 2005, which may have an impact on the application of the Convention. It would therefore appreciate receiving additional explanations in this regard.

Finally, the Committee takes this opportunity to refer to its 2008 General Survey on labour clauses in public contracts which contains an overview of public procurement practices and procedures in so far as labour conditions are concerned and makes a global assessment of the impact and present-day relevance of Convention No. 94.

For all useful purposes, the Committee attaches herewith a copy of a Practical Guide, prepared by the Office principally on the basis of the abovementioned General Survey, to help better understand the requirements of the Convention and ultimately improve its application in law.

Direct Request (CEACR) - adopted 2007, published 97th ILC session (2008)

The Committee notes that the Government’s report has not been received. It hopes that a report will be supplied for examination by the Committee at its next session and that it will contain full information on the matters raised in its previous direct request, which read as follows:

The Committee notes the Government’s statement that following the recommendation of the law commission that assessed the new public procurement regulations (NOU 1997:21) to the effect that the Convention should be implemented in the form of a circular to central authorities, the Government has resolved that the Ministry of Trade and Industry should draw up a circular requiring government agencies to comply with the provisions of the Convention and that the circular should contain labour clauses that each government agency would be required to include in contracts with suppliers and contractors. The Government further indicated that work on this circular was expected to be completed in the course of autumn 2004. While taking due note of the above information, the Committee requests the Government to transmit a copy of the circular as soon as it is issued and to continue to provide all available information on the practical application of the Convention, including samples of public contracts, statistics on public procurement and the number of workers concerned, copies of recent studies or official publications dealing with labour matters in public procurement, and any other particulars which would enable the Committee to evaluate the conformity of national law and practice with the requirements of the Convention.

Finally, the Committee seizes this opportunity to refer to this year’s General Survey which contains an overview of public procurement practices and procedures in so far as labour conditions are concerned and makes a global assessment of the impact and present-day relevance of Convention No. 94.

Direct Request (CEACR) - adopted 2004, published 93rd ILC session (2005)

Further to its previous requests for more detailed information on the scope and content of implementing legislation, the Committee notes the Government’s explanations concerning the circular, currently under preparation by the Ministry of Trade and Industry, to give effect to the provisions of the Convention. The Government states that following the recommendation of the law commission that assessed the new public procurement regulations (NOU 1997:21) to the effect that the Convention should be implemented in the form of a circular to central authorities, the Government has resolved earlier this year that the Ministry of Trade and Industry should draw up a circular requiring government agencies to comply with the provisions of the Convention and that the circular should contain labour clauses that each government agency would be required to include in contracts with suppliers and contractors. The Government further indicates that work on this circular was expected to be completed in the course of autumn 2004. While taking due note of the above information, the Committee requests the Government to transmit a copy of the circular as soon as it is issued and to continue to provide all available information on the practical application of the Convention, including samples of public contracts, statistics on public procurement and the number of workers concerned, copies of recent studies or official publications dealing with labour matters in public procurement, and any other particulars which would enable the Committee to evaluate the conformity of national law and practice with the requirements of the Convention.

Direct Request (CEACR) - adopted 2003, published 92nd ILC session (2004)

The Committee notes the Government’s report. It recalls its previous comment in which it observed that in the absence of specific information on the measures taken and the text of any concrete provisions giving effect to the Convention, it was unable to examine the extent to which application is ensured. In its second detailed report, the Government again fails to provide clear answers as to the state of national law and practice with regard to labour clauses in public contracts and refers to certain laws, documents and collective agreements which are strictly irrelevant to the application of the provisions of the Convention.

The Committee understands that the Norwegian legislation governing public procurement consists at present of the Public Procurement Act No. 69 of 16 July 1999, which repealed the Public Procurement Act No. 116 of 27 November 1992, and two sets of regulations on the procurement of goods, services and building and construction work. The Committee asks the Government to specify whether any of the abovementioned instruments contains express provisions requiring the insertion of labour clauses in all public contracts covered by the Convention, their advertisement and the application of appropriate sanctions in case of non-observance, in accordance with Articles 2, 4 and 5 of the Convention. The Government is also requested to indicate whether the provisions of the Convention are given effect by means of an administrative circular or instructions, and if so, to furnish a copy of the relevant text(s).

Finally, the Committee transmits herewith a copy of an explanatory note established by the Office on the objectives of the Convention and the practical way in which legislative conformity may be ensured and expresses the firm hope that the Government will make every effort to take the necessary action in the very near future.

Part V of the report form. The Committee recalls that under Article 6 of the Convention and Part V of the report form governments are required to give a general appreciation of the manner in which the Convention is applied, including, for instance, extracts from official reports, information concerning the approximate number of workers covered by relevant legislation, etc. The report form, which was adopted by the Governing Body of the ILO, is the main channel through which the Committee may obtain all the necessary information in order to follow the evolution of the national law and practice in matters covered by the Convention. The Committee would therefore be grateful if the Government would supply in its next report detailed information on the practical application of the Convention, including, for instance, samples of public contracts, any standard text of a labour clause currently in use, information from inspection services on the supervision and enforcement of national legislation, recent studies on the social dimensions of the procurement process and any other particulars bearing on the measures designed to implement the Convention.

[The Government is asked to report in detail in 2004.]

Direct Request (CEACR) - adopted 1998, published 87th ILC session (1999)

The Committee notes the Government's first report. It notes that the report is composed of the positions of different Ministries concerning the application of the Convention: the Ministry of Trade and Industry states that it is currently revising the Government procurement regulations, and that a circular implementing the Convention has so far not been prepared. The Ministry of Transport and Communications states that neither the concerned agencies nor the Ministry has amended any regulations as a result of ratifying the Convention, and that it considers the requirements of the Convention will be fulfilled through the agencies' compliance with relevant laws, regulations and standards. The Ministry of Labour and Government Administration forwarded the report from the Directorate of Public Construction and Property, in which reference is made to their standard document regarding "Conditions of tenders -- Offers and terms of contracts" containing a subsection giving effect to a part of the Convention. However, this document is not attached to the report.

In the absence of further information on the measures taken and text of any concrete provisions giving effect to the Convention, the Committee has not been able to examine the extent to which its application is ensured. It requests the Government to provide detailed information, in accordance with the report form adopted by the Governing Body, concerning the application of each substantive Article of the Convention. The Committee asks the Government to include the text of any relevant provisions of a circular, regulation or document, such as the standard document regarding "Conditions of tenders -- Offers and terms of contracts" referred to by the Directorate of Public Construction and Property, as well as information on any progress made in adopting a new circular to implement the Convention.