Social conditionality has emerged as a key framework for elevating labour standards within the cultural sector of the European Union Member States. Central to this approach are social clauses: mandatory minimum standards integrated into public procurement, subsidy regulations, and funding agreements. These clauses require subcontractors to meet specific criteria – such as wage adequacy, diverse hiring, and formal employment contracts – as a condition of their partnership with the public sector. While these obligations are strictly monitored by local or central government authorities, “fair practices” offer a softer alternative. This approach utilizes non-binding guidelines and rulebooks to inform public tenders’ organizers about the values and goals, but without binding and enforceable mechanisms.
To grasp the logic of social conditionality, one must first recognize its role as a corrective measure against the effects of outsourcing guided by the principles of new public management. In sectors shaped by new public management-driven outsourcing, employment standards are frequently compromised. This erosion occurs not only through intensified competition over labour costs but also by circumvention of collective bargaining structures and trade unions that are usually stronger within the public sector. Furthermore, while public institutions offer relatively homogenous standards for wages, job security, and career opportunities, the private sector remains deeply fragmented. Consequently, research suggests that for social clauses to effectively restore these standards, they must be implemented with specific considerations.
First, social clauses within public tenders must be precisely defined to be enforceable. This can include for instance very specific contractual forms that subcontractors must utilize (e.g. labour code contracts), compliance with set, clearly established wages (e.g. minimum wages), as well as working time considerations (e.g. limits on overtime). These standards can be anchored in collectively bargained norms. A prime example is the 2024 Germany Film Subsidies Act, which stipulates that remuneration of the personnel employed for the publicly subsidized film must be governed by collective agreements or based on collective agreements.
Second, robust monitoring mechanisms are essential to prevent the erosion of labour standards. Private subcontractors are often incentivized to minimize labour costs to remain competitive in the tender procedures, potentially leading to abuses and violations of the standards. Social clauses must be accompanied with enforcement through by labour inspections, trade union collaboration, or at least independent audits. Creative Industries Fund NL, which is funded predominantly by the Dutch government, serves as a good example. The grants provided by the Fund employ extensive auditing mechanisms to ensure that grant recipients comply with the applicable codes of fair practices. However, the administrative burden of such oversight can be substantial. Public authorities should evaluate whether insourcing – eliminating private intermediaries altogether and organizing the same service by the public sector directly – would not be more cost-effective, apart from being more beneficial for the workforce.
Thirdly, enforcement must be guaranteed throughout the supply chain. To prevent subcontractors from circumventing social clauses via further outsourcing, these clauses should either restrict further subcontracting or include application of chain liability. Barcelona’s Social Public Procurement Guide, for example, adopts the latter approach.
These challenges suggest that a broad coalition of stakeholders is essential to ensure the practical application of the social conditionality principles in the complex and fragmented landscape of subcontracting. Such an alliance should unite organized labour (trade unions or other workers’ associations) and policymakers to ensure standards are rigorously established and monitored throughout the supply chain. Additionally, engaging media outlets and “noisy public” can increase attention to labour standards within the cultural sector. Finally, the coalition can also bring on board employers who seek to eliminate unfair wage competition or bolster their reputation as more sustainable, ethical actors.
These coalitions are far more likely to form at the local level, where stakeholders can collaborate closely on the specific design and execution of public tenders. This proximity allows trade unions to apply targeted pressure on policymakers by linking labour standards directly to the local community’s concerns regarding outsourced services.
The current regulatory environment in the European Union provides a vital foundation for social conditionality, but that foundation is shifting. The authority to introduce social clauses is rooted in the Directive 2014/24/EU on public procurement and its national transpositions. This framework allows contracting authorities to mandate special conditions for contract performance, specifically including social and employment-related considerations. Furthermore, the Directive outlines specific rules for social, educational, and cultural services, requiring Member States to prioritize quality, continuity, accessibility, and affordability. This ensures that providers are selected based on the best price-quality ratio rather than price alone. As the Commission currently revises these rules to simplify procedures and bolster EU economic security (including ‘Made in Europe’ initiatives), the exact trajectory of the new framework remains uncertain. Trade unions must remain vigilant against a potential pressure toward reintroduction of narrow cost-efficiency thinking, which could threaten labour standards within the cultural sector.