Would Government imposition of “Living Wage” breach EU procurement rules?

In this Guardian article reporting on Boris Johnson’s vocal support of the Living Wage, the Government is quoted as saying that attempts to impose a requirement on Government suppliers to pay the Living Wage as a condition of securing government contracts would breach EU procurement rules.

Clearly the underlying argument is that in order for markets to be properly open to competition pricing must be allowed to take its own path informed only by the judgements of bidders in the process.

That is an argument which runs well where the disruption to competition results from artificially holding prices down. Does it hold true where price is effectively subject to a floor below which it may not fall and in respect of which all bidders are treated entirely equally? Are different classes of bidders (eg SMEs) impacted any more adversely in those circumstance than they are at present?

There is also a “freedom of movement” argument – pegging prices above the level which the market would dictate if left to its own devices may have the effect of distorting the ability of labour to move freely.

However, if it is possible to impose a “minimum wage” why is it not possible to impose. “Living Wage” – even if that means simply adjusting the former so that it effectively becomes the latter?


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