NEW STUDY REVEALS SERIOUS SHORTCOMINGS IN EU PROCUREMENT RULES
Labour exploitation in Pakistani textile factories and how it is linked to European taxpayers’ money
A new report by Swedwatch reveals that public funds used to procure hospital textiles are linked to exploitative labour practices in Pakistan’s textile industry. The findings expose major gaps in the EU’s public procurement rules and urge the European Commission to propose binding due diligence standards to prevent public spending from enabling human rights abuse.
Pakistan is a major supplier of hospital linens and other textiles to the European market, including the Swedish healthcare sector. Yet Swedwatch’s new report, Public Money, Private Harm, based on interviews with 89 workers from 9 factories in Faisalabad and Karachi, finds that EU member states such as Sweden source from factories marred by labour rights abuses.
Workers report widespread exploitation. They earn far below the official minimum wage – which itself is less than half the estimated living wage – the majority work without formal contacts and receive little or no social protection if injured or sick, all while enduring excessive working hours and poor occupational safety. Workers also report about union busting and discrimination and harassment against women.
The exploitation of workers in supply chains is alarmingly high, says Zia ur Rehman, Founder and Chief Executive of the NGO AwazCDS-Pakistan, who partnered with Swedwatch for the on-site research.
“It is deeply concerning that the enforcement of local labor laws remains weak due to a crisis of governance and legitimacy in the country.”
He emphasized the urgent need for a combination of legal transparency in supplier contracts and purchasing agreements, targeted awareness campaigns for suppliers and workers, and participatory enforcement mechanisms to ensure full compliance with human rights due diligence standards.
Factories linked to bedlinen at Swedish hospitals
The factories included in the research produce items for European suppliers (among other clients) who have contracts with Swedish Regions responsible for procuring hospital and healthcare textiles.
Although the Regions have made commendable efforts by introducing sustainability codes of conduct and contract clauses, the findings show that, without binding sustainability requirements across EU countries, procurement practices still fall short of effectively preventing, mitigating, or addressing human rights violations.
“Enabled by flaws in the EU’s public procurement directive, European taxpayer money is effectively supporting a system that rewards exploitation — undermining both human rights and fair market competition. Public procurement should be a force for good, not a subsidy for abuse,” says Sofia Käll, Programme Officer at Swedwatch and leading researcher of the report.
From factories to hospitals
Pakistan is an important production hub for textiles used in European public health care. In the case of Sweden, items like bed linens and uniforms are procured by Sweden’s healthcare-managing Regions through EU-based suppliers — some large and operating across multiple countries, others small and medium-sized enterprises primarily based in Sweden.
The supply chain
Enabled by flaws in the EU’s public procurement directive, European taxpayer money is effectively supporting a system that rewards exploitation.
Driving past an industrial zone where several of Karachi’s textile factories are located. Photo: Swedwatch
A case study with European relevance
Public procurement in EU member states is governed by the EU’s Public Procurement Directive, adopted in 2014. While the directive allows for the inclusion of social and environmental criteria, its implementation remains voluntary and suffers from weak enforcement. As a result, companies contributing or linked to labour rights abuse can still win public contracts, with low-price bids often outcompeting more responsible suppliers.
“This makes the European public sector complicit in the perpetuation of exploitative working conditions”, says Sofia Käll.
Textiles sourced from Pakistan represent a small share of the EU’s €2 trillion in annual public procurement, but similar risks of labour rights abuses exist in many other sectors, including electronics, food and construction.
“The testimonials from Karachi and Faisalabad are just the tip of the iceberg when it comes to worker exploitation in global supply chains linked to European procurement. But this also presents an untapped opportunity for change. When procurement is designed and implemented responsibly, it can improve conditions for millions of workers across industries,” says Sofia Käll.
Swedwatch’s recommendations
Swedwatch’s research raises critical questions about the EU’s public procurement laws. With the European Commission currently reviewing the Public Procurement Directive, this is a crucial moment to address these concerns.
✔️Introduce mandatory human rights due diligence in EU procurement law to address harm in global supply chains.
✔️Ensure that due diligence processes align with international standards and include meaningful worker engagement to avoid superficial compliance.
✔️Strengthen the capacity of public procurers through training and support to ensure enforcement of sustainability requirements and build public trust.
Download the report
The report is authored by Swedwatch in collaboration with the NGO AwazCDS-Pakistan. It is based on 12 in-depth interviews with factory workers and eight focus group discussions involving 89 participants — both men and women — from factories in Faisalabad and Karachi.
Testimonies from the factory floor
