Page 1 |

1. INTRODUCTION

Services markets are central to the EU

economy as they account for 71% of EU value added and 68% of EU

employment1. Well-functioning and competitive services markets are

therefore essential for growth and jobs in the EU.

In order to realise the significant growth and jobs potential of services markets,

regulation must keep up with the digitisation of services and the increased

integration of services and manufacturing industries.

Several factors are holding back the performance of services markets in

Europe today. These include low competitive pressures, slow productivity

growth, a lack of cross-border investments and trade and low labour

mobility (see section 2).

These challenges are partly due to

regulatory restrictions and costly administrative procedures resulting from

the services policies and regulation of EU Member States (see section 3).

Numerous analyses show that reforming Member States' services regulation and

administrative procedures leads to positive economic outcomes. Reducing

regulatory and administrative restrictions on services markets leads to stronger

competition, higher productivity, more

1 The countries covered by data in this

factsheet are the EU-28, unless otherwise specified.

affordable services and greater choice for consumers. Increasing productivity in

this growing sector is imperative to

ensure quality jobs and high wages and to give easier access to labour markets,

in particular to young people.

Productivity in the services sector has important repercussions for Europe's

manufacturing industry. Manufacturing

industries are among the largest consumers of services in Europe and

anti-competitive regulation in the services sector increases the cost of the

services they purchase2.

The digitisation of services is both

changing the way they are delivered and creating demand for new services,

including in the collaborative economy. It has also made services more tradable as

it is easier to provide them at a distance.

Regulation plays an important role in

protecting public policy objectives, consumer protection, public security and

the protection of health and the environment. Cross-country assessments

show that these objectives can be met with different levels of regulation

imposing fewer or more restrictions on service providers (see section 4).

Intelligent pro-growth regulation ensures

that policy objectives are met while

2 The values of multipliers for services,

ranging from 1.6 (real estate) to 2.5 (air transport), are considerable for the priority sectors of construction (2.3), business services (1.9) and retail services (1.8). Calculated for

2011 for the EU-27. Data source: World Input-Output Database (WIOD).

EUROPEAN SEMESTER THEMATIC FACTSHEET

SERVICES MARKETS

Page 2 |

keeping the economic costs of regulatory restrictions to a minimum.

Business services, construction and retail services are among the most

economically important in the EU.

Business services include a range of

professional, scientific and technical activities as well as administrative and

support services3. A major part of the EU economy, they account for 12.8% of EU

value added and 13.7% of total employment, representing 31 million

jobs. They constitute key inputs into the manufacturing sector. Today, 16% of the

average value of a good produced in the EU is generated from the activities of

business services4. Many of the high

value-added business services are provided by regulated professions (see

below).

Construction services are vital for the EU economy. Construction works

undertaken by builders and developers

account for 5.3% of EU value added and 6.3% of EU employment. The EU

construction sector gives jobs to 14 million people.

Retail services represent 4.5% of total

EU value added and employ 8.6% of the

workforce with a significant representation of employees in the 15-

24 age range. Over 3.5 million retail companies act as intermediaries between

thousands of product suppliers and millions of consumers. Growing at 12% a

year, e-commerce provides opportunities for traditional retail, but also some

challenges. It has increased the potential

market for retailers and the range of products available to consumers5.

3 Business services are defined as sectors M, N77-78, N80-82 and J62-63 using 'Nace Rev.2

— Statistical classification of economic activities in the European Community', Eurostat, Luxembourg, 2008. 4 European Consortium for Sustainable

Industrial Policy (ECSIP), 'Study on the relation between industry and services in terms of

productivity and value creation', 2014. 5 In 2016, 22% of retail companies sold online, against 18% for the EU economy as a whole. This has been steadily increasing since

Around 22% of those employed in the EU work in a regulated profession6. The

regulation of professional services exists

in all sectors of the economy. The health and social service sector, including

doctors and dentists, accounts for 40% of all regulated professions (by number

of professions). After that, business services, such as lawyers, accountants,

engineers and architects, account for 15% of that total, followed by the

transport sector (close to 10%), the public service and education sector

(9%), and construction (7%)7.

At EU level, the Services Directive

adopted in 2006, covering 47% of EU value added, provides a framework for

national services regulation. It resulted in the removal of many regulatory

barriers by Member States, as well as

simplified administrative procedures. The Professional Qualifications Directive,

revised in 2013, supports the mobility of professionals by enabling the recognition

of professional qualifications across Member States and has set up a

framework to ensure that national regulation of professional services is

proportionate.

In January 2017, the Commission

presented the Services Package that included reform recommendations to

Member States and three legislative proposals to improve the functioning of

2010, when it stood at 11.7%. The value of

online sales almost doubled between 2011 and 2016, reaching EUR 204 billion in 2016. However e-commerce is still only a fraction of

the retail market. The value of store-based sales in 2016 was close to EUR 2 300 billion, 11 times the value of online sales. Sources: Euromonitor and Eurostat. 6 TNS Opinion, 'Measuring the prevalence of occupational regulation: ad-hoc survey for the European Commission', April 2015, publication

forthcoming. As analysed in M. Koumenta and

M. Pagliero, 'Measuring Prevalence and Labour Market Impacts of Occupational Regulation in

the EU', 2016. 7 European database of regulated professions (http://ec.europa.eu/growth/tools-databases/regprof/).

Page 3 |

the services single market8. Other recently presented initiatives include a

communication on the development of

the collaborative economy, a proposal for a regulation regarding geo-blocking,

to which a forthcoming Commission initiative setting out best practices

facilitating the establishment and operation of retail services should be

added.

2. POLICY CHALLENGES: AN

OVERVIEW OF PERFORMANCE IN EU COUNTRIES

EU services markets still face a number of

challenges that hinder the sector's growth. These include low competitive pressures,

slow productivity growth, cross-border

services integration and low labour mobility for professionals.

2.1. Low competitive pressures

Competitive pressures drive innovation and performance, giving consumers

access to a wider range of services at lower prices. Competition drives

productivity by ensuring that less productive firms are replaced by

productive new ones over time, and by creating incentives for firms to invest in

reducing costs and in innovative

productivity-boosting services and products.

Among indicators that can be used as

proxies for competition forces are market churn rates

9 and gross operating

rates10

. Churn rates and profit rates

disaggregated by service sectors vary

significantly among Member States and services sectors. Large differences in

churn rates or profit rates reflect varying degrees of competitive pressure. A more

integrated market would be expected to

8 European Commission, 'A services economy

that works for Europeans', 2017, http://europa.eu/rapid/press-release_IP-17-23_en.htm. 9 Market churn rates are defined as the sum

of birth and death rates expressed as a percentage of the total number of active firms

in an industry. 10 The gross operating rate is defined as the ratio of gross operating surplus to turnover and is a proxy for profits.

see a convergence of these indicators between Member States.

For selected economic activities with high level of regulatory restrictions,

Figure 1 shows the average business churn rate at the EU level compared to

that of the total business economy. With the exception of construction and retail,

all other services sectors have a lower business churn rate than the total

business economy, i.e. a lower turnover

of companies. This may indicate relatively lower dynamism or lower

competition in these sectors than in the rest of the economy.

Figure 1 — Business churn rate in selected

economic activities, EU-28, 2014 (%)

Source: Eurostat, own calculations.

10,0 15,0 20,0

Legal activities

Accounting and relatedactivities

Real estate activities

Architectural activities

Engineering and relatedactivities

Travel agency, touroperator reservationservice and related…

Retail trade

Construction

Business economy exceptactivities of holding

companies

Page 4 |

Another indicator of competition intensity is the profits generated at sector level.

Relatively higher profits indicate that

companies are generating higher margins, i.e. higher price mark-ups over the cost of

their services/products, at the expense of consumers.

For the EU as a whole, Figure 2 shows the

gross operating rates in selected sectors, compared with the average rate for the

whole business economy. The gross

operating rate is a proxy measuring a company's profit over its turnover. Most

EU services sectors have higher gross operating rates than the economy as a

whole, suggesting lower levels of competition.

Figure 2 — Gross operating rate in selected economic activities, EU-28, 2014 (%)

Source: Eurostat, own calculations.

2.2. Slow productivity growth

Despite some improvements in labour

productivity per person employed from 2008 to 2013 in some countries,

labour productivity growth in the EU services sector has been outperformed

by other sectors, including manufacturing

11.

OECD data12

shows average annual

manufacturing labour productivity growth (2001-2013) of 2.6%, whereas

most service sectors experienced growth below 1%, or even decline, over

this period.

11 European Commission SWD(2015) 203, 'Report on Single Market Integration and Competitiveness in the EU and its Member

States', accompanying the Communication

COM(2015) 550, 'Upgrading the Single Market: more opportunities for people and business'. 12 OECD statistics on Productivity and ULC by main economic activity (http://stats.oecd.org/Index.aspx?DataSetCode=PDBI_I4).

10,1

5,7

9,4

11,2

17,8

27,8

29,0

42,1

44,0

0 20 40 60

Total business economyexcept financial andinsurance activities

Retail trade

Travel agency, touroperator reservationservice and related…

Construction

Engineering activities

Accounting and relatedactivities

Architectural activities

Legal activities

Real estate activities

Page 5 |

Figure 3 — Sectoral productivity growth per person, EU-28 (average annual change in %, 2011-2016)

Source: Eurostat, own calculations.

Figure 3 compares labour productivity

growth in the EU across services sectors and in manufacturing. Not only is

services labour productivity lower than

that of manufacturing. Its growth has also

been lagging behind manufacturing productivity growth.

Figure 4 — Sectoral ULC growth, EU-28 (average annual change in %, 2011-2016)

Source: Eurostat, own calculations.

Figure 4 presents unit labour costs (ULC) at sectoral level in services as well as

those in manufacturing. The comparison

between productivity developments and labour compensation trends can be seen

as an indicator of competitiveness gains. In terms of the relationship between

labour productivity developments and

0,0 0,5 1,0 1,5 2,0 2,5

C - Manufacturing

G-I - Wholesale and retailtrade, transport,

accomodation and food…

J - Information andcommunication

L - Real estate activities

M-N - Professional,scientific and technical

activities; administrative…

0,0 0,5 1,0 1,5 2,0 2,5

C - Manufacturing

G-I - Wholesale and retail trade, transport,accomodation and food service activities

J - Information and communication

L - Real estate activities

M-N - Professional, scientific and technicalactivities; administrative and support service…

Page 6 |

labour compensation, recent evidence13 shows that labour productivity in market

services has only outpaced labour

compensation in countries such as Portugal, Spain, Cyprus and Greece14.

These countries have experienced strong market pressures and have been

undergoing major competitiveness adjustments. Pre-crisis competitiveness

losses were caused by large ULC increases in services. Important services sectors still

show some resistance to adjustment, as can be seen by comparing Figures 3 and

4. This is particularly the case in business

services and retail.

2.3. Lack of cross-border services integration

Even though by nature services are less tradable than goods, trade in services has

been growing worldwide in recent years.

Trade integration can be used as a measurement of the extent to which

businesses are able to access potential

customers in other Member States. At 6.6%, the trade integration15 of services

across the EU lags considerably behind that of goods (20.6%).

Cross-border investments16 in services

stand at 12% and are also

disproportionately low compared to goods (17%).

While some of these differences are due to

the lower tradability of services, the figures indicate that service providers are

unable to make full use of the potential

offered by the single market.

13 European Commission, 'Quarterly Report on

the Euro Area', Volume 14, No 2, 2015. 14 Although the strong wage adjustment in Greece has not been accompanied by improvements in services labour productivity. 15 Defined as the average of intra-EU imports and exports divided by GDP (2015, EU-28) (Source: Single Market Scoreboard 2017). 16 Share of value added generated by

enterprises controlled by another EU Member State — secondary establishment. Nace Rev. 2

service sectors included are D-J, L-N and S95 (source: Eurostat, 2014). No data is available on cross-border service provision without prior establishment.

2.4. Low labour mobility for professionals

Labour mobility is a key determinant of growth-enhancing productivity17. Not only

does it help close skills gaps and reduce labour shortages. It also balances demand

for labour between Member States.

In the case of regulated professions,

professionals from other Member States may have to go through the recognition

process. This often requires paying substantial fees and can be time-

consuming and cumbersome. This directly affects the mobility of professionals, which

has a knock-on effect on the amount of skills available to businesses.

Despite the high recognition rates of professional qualifications facilitated by

the modernised EU Professional Qualifications Directive18, the mobility of

workers remains low. In 2015, across the whole business economy, 3.6% of those

employed in the EU were EU citizens from

another Member State. This is lower than the figure for architects (6.5%), but

higher than for accounting activities (3.2%), real estate activities (2.8%), civil

engineering (2.3%) and legal activities (1.6%).

3. POLICY LEVERS TO ADDRESS THE POLICY CHALLENGES

The challenges described above are to a

significant extent a result of the regulatory and administrative policies of the EU

Member States.

Tackling these challenges will have many

positive effects. A number of policy levers can be used to advance the modernisation

of services regulations across the EU.

17 OECD, 'The future of productivity', 2015. 18 From 2013 to 2015, of the 175 900 cases of

recognition applications recorded in the database on regulated professions, almost 84% (147 500) concluded with a decision, either

positive (78.7%) or negative (5.1%). The

remaining 16% (28 400 cases) were unsettled (no decision), under examination or subject to

appeal. Source: European database of regulated professions (http://ec.europa.eu/growth/tools-databases/regprof/).

Page 7 |

3.1. Reforms in the services sector building upon the implementation of

the Services Directive

Economic evidence shows that there is

significant scope for services reforms beyond the minimum legal requirements

of the Services Directive.

Authorisations required from businesses

to offer their services may serve public interest objectives, but must be

proportionate to achieving them so as not to unduly restrict competition. Many

Member States have implemented far-reaching reforms aiming to abolish

authorisations or replace them with less onerous notification or declaration

obligations, but there is scope for further

reforms in many other Member States and sectors. The Services Directive stipulates

that Member States may not duplicate requirements equivalent to those the

service provider has already had to fulfil in another Member State. This is

insufficiently applied in practice however, because service providers often have to

fulfil the same requirements as domestic

companies, despite the fact that they may already have fulfilled equivalent or similar

requirements in their home country.

Legal form and shareholding

requirements greatly hamper the freedom of establishment in the business

services sector. A peer review on the subject showed that these requirements

affect both primary and secondary

establishment. They limit investment possibilities, reduce choices for business

models and may make it difficult or even impossible to set up multidisciplinary

professional practices and secondary establishment. The wide variation in legal

form and shareholding requirements across Member States shows that there is

scope for further proportionality

assessments.

Companies offering business services or

construction services have great difficulties obtaining legally required

professional indemnity insurance cover when seeking to offer their services

in another Member State.

National legislation is still unclear about

the rules that are applicable to businesses

temporarily providing cross-border services. This is notably the case where

sectoral laws have not been amended to

make a clear distinction between requirements applicable to companies

seeking to establish themselves and those seeking to temporarily provide cross-

border services. The resulting uncertainty means that authorities often apply

authorisation requirements for service providers established in a Member State to

businesses providing cross-border services. The resulting disproportionate

regulatory requirements can make it very

difficult to provide cross-border services in practice.

Following the adoption of the Services

Directive in 2006, Member States implemented far-reaching reforms,

adopting more than a thousand laws. In

2012 a Commission assessment found that the reforms implemented up to that

point would yield a 0.8% GDP increase over the coming years

19.

The assessment also found that if Member States were more ambitious in

implementing reforms (to reach the average of the 5 least restrictive Member

States), the additional growth potential

was estimated at 1.8% of EU GDP.

In an updated assessment in 2015, estimating the impact of reforms from

2012 to 2014, it was found that only a fraction (0.1%) of the 1.8% GDP potential

had been realised. These results are not

surprising given that reform during this period was uneven, mainly implemented in

Member States subject to financial assistance programmes or as part of

comprehensive national reform programmes

20.

19 J. Monteagudo, A. Rutkowski and D.

Lorenzani, 'The economic impact of the

Services Directive: A first assessment following implementation', European Commission

Economic Paper 456, 2012. 20 European Commission SWD(2015) 202, 'A Single Market Strategy for Europe — Analysis and Evidence'.

Page 8 |

Reducing regulatory barriers in services has been shown21 to increase sector-

specific churn rates, which in turn leads to

increased allocative efficiency and decreased profitability, resulting in lower

prices for consumers. This substantiates the theoretical assumption that more

dynamic markets put greater competitive pressure on profit rates while contributing

to a more efficient use of production factors.

According to the World Bank study published in 2016, limiting service sector

restrictions to the level of the three least regulated Member States (the UK,

Denmark and Sweden) would increase the productivity of services and manufacturing

firms by up to 5.3% within two years of implementation22.

IMF assessments conclude that product market reforms, in particular in business

services and retail, have positive effects on capital, output and employment,

increasing over time. Product market reforms also promote firm entry and tend

to have positive effects on firms in

downstream sectors that make intensive use of intermediate inputs from

deregulated sectors23.

OECD studies have shown that reducing barriers in the services sector strengthens

productivity growth throughout the

economy because of the role of services as intermediate inputs24. A lower level of

service regulation increases value added,

21 E. Canton, D. Ciriaci and I. Solera, 'The Economic Impact of Professional Services Liberalisation', European Commission Economic

Papers 533, 2014. 22 World Bank, 'Growth, jobs and integration: Services to the rescue', World Bank EU Regular Economic Report, 2016. 23 P. Gal and A. Hijzen, 'The short-term impact of product market reforms: A cross-country firm-level analysis', IMF Working Paper

WP/16/116, 2016. 24 R. Bourlès, G. Cette, J. Lopez, J. Mairisse and G. Nicoletti, 'Do Product Market

Regulations in Upstream Sectors Curb Productivity Growth? Panel Data Evidence for OECD Countries', OECD Working Paper No 791, 2010.

productivity and export growth in downstream service-intensive industries25.

3.2. Reforms of regulation in professional services

In the absence of harmonisation at EU

level, the regulation of professional

services is a prerogative of the Member States. Regulation can create obstacles for

the single market and can thwart growth and job creation in the EU economies.

Obstacles to growth and trade may originate in restrictions that seem to have

less of an impact but whose cumulative effects may be pernicious.

In its recent Communication on reform recommendations for regulation in

professional services26, the Commission offered guidance on the potential for

economically appropriate reforms that could make a real difference in seven

significant professions. For example, it advocates that Austria reconsider the

proportionality of its restrictions on

multidisciplinary activities for architects; that Italy reassess the broad scope of

reserved activities for civil engineers; that Belgium re-examine the incompatibility

rules prohibiting the simultaneous exercise of any other economic activity for

accountants; and that Germany review shareholding requirements in architecture,

engineering and legal services, to name

but a few.

The Commission developed a new restrictiveness indicator to back up its

recommendations. It compares the Member States’ regulatory approaches,

qualification requirements, other entry

requirements and exercise requirements across seven professions.

An econometric analysis done by the

Commission shows that lower levels of regulatory restrictions on professional

services go hand-in-hand with better

economic outcomes, specifically lower

25 G. Barone and F. Cingano, 'Service Regulation and Growth: Evidence from OECD

Countries', 2010. 26 European Commission COM(2016) 820, 'Communication on reform recommendations for regulation in professional services'.

Page 9 |

incumbent rents and a higher increase in the number of enterprises27.

Another analysis of the economic effects of regulation showed that depending on the

profession, there could be between 3 and 9% more people working in a given

profession if access requirements were made less stringent. Regulation is

estimated to result in an aggregate wage premium of about 4% on average,

increasing the price of services for

consumers28.

Research shows that making regulation more proportionate and adapting it to

market reality, e.g. by relaxing the most restrictive and unjustified requirements,

has improved allocative efficiency and

reduced observed larger-than-average profitability by intensifying business

dynamics29.

3.3. Removing barriers in the retail sector

Overall, the retail sector is quite dynamic. However this might hide a

large variety of situations. The sector is made up of big, medium-sized and small

shops, each of which faces different challenges. The situation also differs

significantly from one country to

another. Retailers serve customers through increasingly diverse channels.

This is an opportunity for some companies but it may be difficult for

others to seize it. Stepping up reforms to reduce regulatory barriers in the retail

sector would have a number of positive effects. Increased competitive pressures

27 European Commission SWD(2016) 436, 'Communication on reform recommendations

for regulation in professional services', section 6 of the Staff Working Document. 28 M. Koumenta and M. Pagliero, 'Measuring Prevalence and Labour Market Impacts of

Occupational Regulation in the EU', 2016. Wage premiums and high profit margins are a common indicator of monopoly rents. These in

turn lead to high prices for consumers and an

overall lack of competition in the profession in question. 29 E. Canton, D. Ciriaci and I. Solera, 'The Economic Impact of Professional Services Liberalisation', European Commission Economic Papers 533, 2014.

would lead to the entry and survival of more efficient and innovative firms.

Consumers could enjoy lower prices,

more variety, innovation and higher quality30. This would also have positive

spill-over effects in other sectors of the EU economy.

Physical and online retailers face

different barriers. The cross-border expansion of companies in the physical

retail sector happens through the

opening of physical shops in other Member States. The competent national

authorities impose requirements relating to the size of retail outlets or their

location. These requirements may result in market entry barriers for certain shop

formats or business models and may affect secondary establishment.

In addition to establishment restrictions, retailers face operational restrictions that

affect their day-to-day business activities and hamper their efficiency. Such

restrictions can affect both physical and online retailers.

The growth of e-commerce is fundamentally changing the retail sector.

Therefore, regulatory frameworks should at the same time fairly address both

physical and online retail.

For businesses to fully reap the benefits

of the single market, it is crucial that Member States respect the free

movement of goods and freedom of establishment.

In the Single Market Strategy the Commission announced its intention to

propose best practices for facilitating retail establishment and reducing

operational restrictions in the single market. Such best practices should serve

as guidance for reforms in the Member States.

30 European Commission SWD(2015) 202, 'A Single Market Strategy for Europe — Analysis and Evidence'.

Page 10 |

4. CROSS-EXAMINATION OF POLICIES: STATE OF PLAY

4.1. Persistent barriers in the services markets

Even though Member States have fulfilled

the obligations relating to the

transposition of the Services Directive and

have gone through a systematic assessment of their national regulation of

professional services based on the revised

Professional Qualifications directive, providers in several service sectors still

face many barriers to establishing themselves in another Member State or

providing services on a temporary cross-border basis.

Figure 5 — Overall restrictiveness scores per Member State (business services)

Source: European Commission, ‘Business services — Assessment of barriers and their economic impact’, 2015

.

Taking the example of business services,

the largest services sector falling under the Services Directive, accounting for

almost 12% of EU GDP and employment, the administrative and regulatory burden

varies significantly from one Member State to another. Figure 5 shows the

overall restrictions in four key professions forming part of business

services — accountants, architects,

engineers and lawyers, based on a 2015

study of barriers in business services31

.

All Member States were legally obliged to transpose the Services Directive. Some

31 European Commission, 'Business services — Assessment of barriers and their economic impact', 2015.

Member States took an ambitious

approach in its transposition and introduced more comprehensive

reforms in the services sector. The cases of two such Member States,

Estonia and Spain, are presented below.

In Estonia, the reforms associated

with the Economic Activities Code entered into force in 2014. The

reform streamlined the fragmented requirements across sectors and

clearly provided that authorisation and notification requirements do not

apply to providers of cross-border services. Estonia has higher entry

rates and lower average gross

operating rates in services compared to the EU average.

0

0,5

1

1,5

2

2,5

3

3,5

4

SE UK FI NL DK IE EE LT LV BG SK ES FR SI PL RO HU CZ BE HR EL PT CY IT DE MT AT LU

Lawyers

Engineers

Architects

Accountants

Page 11 |

In 2013, Spain adopted the Law on Market Unity. Its main aim was to

tackle the fragmentation of the

domestic market resulting from the differences between and overlapping

of central, regional and local regulation. The law introduced the

principle of nationwide validity. This means that goods and services

lawfully produced or provided in one region can be supplied without any

additional formalities throughout the national territory. The screening

accompanying the reform identified

more than 6000 regulations that needed to be addressed. In the

period following the adoption of the law, Spain has benefited from an

increase in cross-border trade and investment as well as an increase in

competition, productivity growth, and the moderation of price

increases in the sectors concerned.

However, in June 2017, the Spanish Constitutional Court declared null

and void a selected number of articles of the law, including the

principle of the nationwide validity of authorisations. This creates legal

uncertainty for service providers and

may undermine the economic progress achieved to date.

4.2. State of play in regulated professions

The indicator of the restrictiveness

of the regulation of professional services has been designed to support

qualitative analysis of the barriers

referred to in section 3.2. It provides a cross-country performance comparison

in the following seven professions: architects, engineers, lawyers,

accountants, patent agents, real estate agents and tourist guides.

Figure 6 shows how countries perform in relative terms with regard to the

profession of architect: the higher the score, the higher the level of

restrictiveness.

Figure 6 — Restrictiveness indicator for architects

Source: European Commission, 2016.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

DK SE EE NL FI UK LT HU EL BG PL FR LV MT CY IT SI IE SK ES CZ DE BE RO PT HR AT LU

Exercise requirements

Other entry requirements

Qualification requirements

Regulatory approach

Page 12 |

Case studies of reforms at national level32 have analysed the impact that reforms

of the conditions for accessing and

exercising regulated professions can have on the sector.

In Poland, the recent clarification of

the criteria for admitting lawyers and legal advisers to the profession in the

context of the reforms implemented in 22 regulated professions between

2005 and 2014 was followed by a

major increase in the number of lawyers and legal advisers. This was

accompanied by a less-than-average increase in the price of legal services

and a reduction in the earnings of lawyers and notaries.

In Germany, in 2004 the requirements based on qualifications

were made less stringent for a number

of craft professions. As a result, the number of new entrants into these

professions doubled between 2002 and 2008. Five years after the reform there

were still more start-ups than companies going out of business.

Greece implemented an extensive legislative reform in 2011 aiming to lift

restrictive regulations on entering and

practising many professions. Positive effects were recorded for the regulated

professions, in the form of significantly lower prices for consumers of the

services of real estate agents and legal professionals, while the number of

start-ups for notaries, auditors, etc. more than doubled in 2014, compared

to the yearly average before

liberalisation.

In Italy authorities engaged in an annual

exercise to further liberalise the economy. In this framework, the first annual

competition law was presented to the Parliament in 2015. It was eventually

adopted in August 2017. The purpose of that law is to remove regulatory obstacles

to make it possible for markets to open

up, promote competition and guarantee consumer protection.

32 'The effects of reforms of regulatory

requirements to access professions: country-based case studies', 2017, http://ec.europa.eu/growth/tools-databases/ newsroom/cf/itemdetail.cfm?item_id=9018.

Major novelties include (1) introducing non-lawyer ownership of law firms, a

welcome change, given the high

restrictiveness indicator score of legal professions (see above); (2) increasing

the number of notaries while their territorial scope is extended;

(3) introducing a 20% market share capital for pharmacies and liberalising

their opening hours; etc.

4.3. Retail sector

Over the past few years Member States

have carried out reforms to remove certain establishment and operational

restrictions and improve the functioning of the retail sector. Some of these reforms

aimed to simplify and streamline

authorisation procedures, shorten the authorisation process and lessen the

administrative burden on retailers establishing a shop (e.g. Belgium, Greece,

France, Portugal and Spain and very recently Denmark and Finland). Other

reforms aimed to make operational conditions less stringent. Shop opening

hours have been liberalised in a number of

Member States (e.g. Denmark, Finland, Italy, Portugal and Spain) and rules on

promotional sales and sales below cost have been relaxed (e.g. Cyprus, Greece,

Luxembourg, Portugal, Slovenia and Spain).

However, a number of restrictions remain in place and the level of restrictiveness

still varies greatly from one Member State to another. In addition, there is a trend in

some Member States to introduce measures that in practice mainly affect

foreign retailers.

Date: 22.11.2017

Page 13 |

5. REFERENCES

E. Canton, D. Ciriaci and I. Solera, ‘The Economic Impact of Professional Services

Liberalisation’, European Commission Economic Papers 533, 2014.

European Consortium for Sustainable Industrial Policy (ECSIP), ‘Study on the relation

between industry and services in terms of productivity and value creation’, 2014.

European Commission COM(2016) 820, ‘Communication on reform recommendations

for regulation in professional services’.

European Commission COM(2015) 550, ‘Upgrading the Single Market: more

opportunities for people and business’.

European Commission SWD(2015) 202, ‘A Single Market Strategy for Europe —

Analysis and Evidence’.

European Commission SWD(2015) 203, ‘Report on Single Market Integration and Competitiveness in the EU and its Member States’.

European Commission, ‘Business services — Assessment of barriers and their economic impact’, 2015.

European Commission, ‘Quarterly Report on the Euro Area’, Volume 14, No 2, 2015.

J. Monteagudo, A. Rutkowski and D. Lorenzani, ‘The economic impact of the Services

Directive: A first assessment following implementation’, European Commission Economic Paper 456, 2012.

M. Koumenta and M. Pagliero, ‘Measuring Prevalence and Labour Market Impacts of

Occupational Regulation in the EU’, 2016.

OECD, ‘The future of productivity’, 2015.

World Bank, ‘Growth, jobs and integration: Services to the rescue’, World Bank EU Regular Economic Report, 2016.

L. Chini, A. Minichberger, E. Reiner and H. Grafl, ‘Effects of Liberalisation in Austria using the Example of Liberal Professions’, Vienna University of Economics and

Business & Research Institute for Liberal Professions, 2016.

M. Rojek and M. Masior, ‘The effects of reforms liberalising professional requirements

in Poland’, Warsaw School of Economics, 2016.

D. Rostam-Afschar, ‘Regulatory Effects of the Amendment to the HwO [German Trade and Crafts Code] in 2004 in German Craftsmanship’, Free University of Berlin &

German Institute for Economic Research (DIW Berlin), 2015.

E. Athanassiou, N. Kanellopoulos, R. Karagiannis and A. Kotsi, ‘The effects of

liberalisation of professional requirements in Greece’, Centre for Planning and Economic Research (KEPE), Athens, 2015.

M. Koumenta and A. Humphris, ‘The Effects of Occupational Licensing on Employment, Skills and Quality: A Case Study of Two Occupations in the UK’, Queen

Mary University of London, 2015.

M. Pagliero, ‘The effects of recent reforms liberalising regulated professions in Italy’, University of Turin & Carlo Alberto College, 2015.

Page 14 |

6. USEFUL RESOURCES

Europa services webpage

http://ec.europa.eu/growth/single-market/services/services-directive/

Single Market Strategy

https://ec.europa.eu/growth/single-market/strategy_en

Summary of economic analysis of the functioning of the services single market

http://ec.europa.eu/growth/single-market/services/economic-analysis_en

Europa webpage on the implementation of the Services Directive

https://ec.europa.eu/growth/single-market/services/services-directive/implementation_en

Europa webpage on regulated professions

http://ec.europa.eu/growth/single-market/services/free-movement-professionals/

European database of regulated professions

http://ec.europa.eu/growth/tools-databases/regprof/

OECD product market regulation indicator

http://www.oecd.org/eco/growth/indicatorsofproductmarketregulationhomepage.htm

OECD statistics on Productivity and ULC by main economic activity

http://stats.oecd.org/Index.aspx?DataSetCode=PDBI_I4

World Bank, ‘Growth, jobs and integration: Services to the rescue’, World Bank EU

Regular Economic Report, 2016

http://pubdocs.worldbank.org/en/930531475587494592/EU-RER-3-Services-to-the-Rescue.pdf