Conceptualizing the Regulator‐Buyer State in the European Union for the Exercise of Socially Responsible Public Procurement in Global Production Networks

• Published date: 01 May 2022
• Author: Gale Raj‐Reichert,Cornelia Staritz,Leonhard Plank
• Date: 01 May 2022
• DOI: http://doi.org/10.1111/jcms.13285

Conceptualizing the Regulator-Buyer State in the European

Union for the Exercise of Socially Responsible Public

Procurement in Global Production Networks

GALE RAJ-REICHERT,

1

CORNELIA STARITZ

2

and LEONHARD PLANK

3

1

Social Sciences Research Center Berlin, Berlin, Germany

2

Department of Development Studies, University of Vienna, Vienna, Austria

3

Technical University of Vienna, Vienna, Austria

Abstract

Labour rights violations and poor working conditions are rife in global production networks

(GPNs). Until now research on labour governance in GPNs has been dominated by private mea-

sures. We ignite discussions on the role of the state in governing labour conditions in GPNs by

focusing on a less well-known public governance instrument –socially responsible public pro-

curement (SRPP). SRPP is the inclusion of social criteria on working conditions in public procure-

ment contracts. Revised European Union (EU) directives on public procurement widened the

space to exercise SRPP including for outsourced and offshored production. Understanding how

states can exercise SRPP as a labour governance instrument requires a conceptualization of state

powers. We present a conceptualization of the hybrid regulator-buyer state and show that an

effective SRPP approach requires both strong regulator powers, differentiated as legislative,

institutional, judicial and discursive, and buyer power which depend on purchasing volumes and

supplier and market characteristics.

Keywords: public procurement; state power; labour governance; global production network; European

Union

Introduction

For many countries of the Global South integration into global production networks

(GPNs) as host locations for outsourced manufacturing is a key development strategy

(Coe and Yeung, 2015). However, GPNs contribute to poor working conditions and la-

bour rights violations, such as low wages, deaths from building collapses, worker sui-

cides, and forced labour (Barrientos et al., 2011; Raj-Reichert, 2019; Yasmin, 2014).

These outcomes are due to pressures supplier f‌irms face in highly competitive GPNs to

lower labour costs and production country governments face to either weaken or forego

strengthening regulatory oversight over workingconditions (Anner et al., 2013).

Research on labour governance in GPNs

1

has largely focused on private governance

measures ref‌lecting the smaller role attributed to governments in improving working

conditions in globalized industries (Büthe and Mattli, 2011). In this paper, we reignite

discussion of the state as a labour governance actor in GPNs by exploring a less

well-known public governance instrument –socially responsible public procurement

(SRPP). SRPP is the inclusion of social criteria or labour conditions, such as the Interna-

tional Labour Organization (ILO) Core Labour Standards (CLS), fair trade certif‌ications,

1

We also consider the cognate global value chains literature in our discussions.

JCMS 2022 Volume 60. Number 3. pp. 759–782DOI: 10.1111/jcms.13285

© 2022 The Authors. JCMS: Journal of Common Market Studies published by University Association for Contemporary European Studies and John Wile y&Sons

Ltd.

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium,

provided the original work is properly cited.

or private codes of conducts,

2

in public procurement contracts which f‌irms must comply

with and which can be enforced down to outsourced and offshored suppliers in GPNs.

We focus on SRPP in the European Union (EU) for two reasons. First, from a regula-

tory perspective, revisions to the EU Directives on Public Procurement in 2014 widened

the space to exercise SRPP across member states (Pircher, 2020). Second the EU, as the

largest public procurer globally,

3

can exercise signif‌icant buyer power over f‌irms that out-

source production in GPNs. Many goods, such as food, computers, clothing, and medical

instruments, purchased by public buyers are produced in outsourced and offshored loca-

tions of GPNs. For so-called ‘lead f‌irms’which organize GPNs and outsource production

to supplier f‌irms, including in locations in the Global South, public procurement contracts

can be lucrative business due to their higher volumes, larger value, and longer contract

durations in comparison to sales to the private market. Thus, the exercise of SRPP raises

important questions on its potential to inf‌luence sourcing behaviours of lead f‌irms for im-

proved working conditions amongst outsourced and offshored suppliers including in the

Global South.

Understanding how states can exercise SRPP as a labour governance instrument in

GPNs requires a conceptualization of the instruments of state power which can bring

about changes to lead and supplier f‌irm decisions and behaviours which affect working

conditions. In this paper, we present a conceptualization of the hybrid regulator-buyer

state for the exercise of SRPP. It counters traditional understandings of state power

through public procurement as solely buyer power (Cox, 2004; Martin-Ortega and

O’Brien, 2019; McCrudden, 2007). We show that regulatory instruments of power are

necessary and intertwined with the exercise of buyer power for SRPP. Our conceptual

framework to understand the regulator-buyer state combines concepts from political sci-

ence and public administration. Regulator power is based on the exercise of legislative,

institutional, judicial and discursive instruments; and buyer power depends on purchasing

volumes and supplier and market characteristics. Because public procurement is exercised

at different scales of government, we examine the regulator-buyer state powers at national

and sub-national levels by EU member states. We illustrate this with examples based on

qualitative research in Germany and Sweden –two countries with different regulatory,

administrative and public procurement systems that have a relatively strong engagement

in SRPP –and quantitative analyses of procurement data from the EU Tenders Electronic

Daily (TED) database.

While our research occurred before Covid-19, we write this paper in the midst of the

global pandemic whose responses by governments have increased the importance of dis-

cussions surrounding SRPP. An EU response to the Covid-19 crisis was the approval of

the European Public Procurement Framework in April 2020 for a ‘f‌lexible’fast-track ap-

proach for public procurement foregoing requirements of transparency during times of ur-

gency. Yet, risks of labour rights violations can be heightened when standards on working

conditions (for example during the production of vital personal protective equipment) are

neglected in return for faster delivery (EC, 2021). Indeed, during the early months of the

Covid-19 pandemic, the Canadian, United Kingdom and United States governments

2

SRPP as a public governance instrument can rely on private standards on working conditions which governments enforce

with sanctions for non-compliance (see Fransen and Burgoon, 2017).

3

At least 14 per cent of GDP is spent on public procurement in the EU (https://ec.europa.eu/growth/single-market/public-

procurement_en (accessed 21.03.2021).

Gale Raj-Reichert, Cornelia Staritz and Leonhard Plank760

© 2022 The Authors. JCMS: Journal of Common Market Studies published by University Association for Contemporary European Studies and John Wile y&Sons

Ltd.