Interview with Elżbieta Bieńkowska, EU Commissioner: “One can say that we live in a services economy”

At the beginning of January this year, the European Commission presented a package of measures to support companies and professionals in providing services to 500 million people in the EU. The new impetus for the service sector is to provide consumers and businesses, as well as job seekers, generating economic growth across the European Union. The four concrete initiatives adopted by the Commission relate to: a) the introduction of a new European e-book on services; b) an assessment of the proportionality of national rules on professional services; c) guidelines for national reforms in the regulation of professions; d) improving the notification of draft national laws on services.

Elżbieta Bieńkowska, EU Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, describes the progress and the challenges of the EU package of measures need for ‘a services economy that works for Europeans’, in an interview given for Europunkt to Vladimir Adrian Costea.

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Vladimir Adrian Costea: To what extent a „services economy that works for Europeans” contribute to removing barriers to trade in services?

Elżbieta Bieńkowska: First of all, let me give you a general picture. The services sector is the largest component in our economy. 70% of the EU GDP is generated by services and the sector creates the great majority of the new jobs on the European market. One can say that we live in a services economy.

Services have also a decisive part in industrial production. Today, every good is manufactured and marketed with important services inputs. Think about research and design, accounting and advisory services, computer and information services, marketing services, or after-sale services. All those are services and contribute in an essential way to our European industry.

Barriers to trade in services within the Single market are therefore barriers to the overall competitiveness of EU manufacturing and are hampering job creation and growth in the EU. Since the beginning of its mandate, the Juncker Commission has made a formidable effort to stimulate the economy and unlock investment, in particular thanks to the Investment Plan for Europe. But, those efforts should go along structural changes to have a real positive impact on innovation and growth. That’s what this package aims at.

Which obstacles did the Commission identify and want to overcome (by creating/setting up a competitive economy at the level of EU labour market)?

EU rules to provide services within the Single Market do already exist. The Commission doesn’t want to change the existing Services Directive but rather to make sure it is fully implemented and able to unleash the full potential of our services’ economy.

Some national restrictions are necessary but other obstacles are not always justified. Of course, the decision to regulate a profession is and will remain the full responsibility of the Member States, but, for instance, the Commission offers to help them identify burdensome or outdated requirements on professionals which could prevent the newcomers to enter national markets.

This doesn’t just serve cross-border business. The Commission aims to support Member States in their efforts to have balanced regulation in place in the area of services and regulated professions that have a high growth and jobs potential like architects, engineers, or tourist guides.

Obstacles also include complex administrative procedures. In a digital age, it also makes sense to offer simpler, fully electronic ways for professionals to deal with all the administrative obligations when they want to offer services in another Member State and in conformity with national legislation.

But let be very clear: with these improvements, the Commission is certainly not introducing the country of origin approach. The authorities in the host country retain their power to decide if a service provider complies with all requirements to be able to provide services in its territory.

In which way the procedures have been simplified for the cross-borders services providers?

To facilitate cross-border activities, the Commission proposes to set up a new electronic procedure that will reduce administrative formalities for services providers operating abroad. Services providers will now deal with one single contact in their home country and in their own language, which would check the necessary data and transmit it to the host Member State. The host Member State retains the current power to apply domestic regulatory requirements and to decide whether the applicant can offer services on its territory.

The e-card would of course not affect existing employer obligations or workers’ rights.

What are the advantages which will benefit consumers?

By removing unjustified barriers, the Commission wants to ensure a wider choice for consumers, especially in the business services and construction sectors. Wider choice means more competition and better prices for consumers, but not on account of high quality. Our proposals aim at ensuring high standards for consumers and services at a fair price.

What are the consequences that this measure generates on the EU economy? What is the impact on employment in the Member States of the European Union?

It’s hard to evaluate what is the impact of current Services Directive on the EU economy or labour market, but it is estimated that its full implementation, thanks to the Commission’s proposals, could add 1.8% to EU GDP.

It is also important to remember that the services sector represents about 70% of EU GDP and employment. However, only a small share of services trade and investment in Europe takes place across borders – for instance, less than 5% for architecture or engineering services. Our proposal therefore aims to address this by facilitating those service providers that want to expand their services abroad to do so more easily.

Similarly, about 22% of the EU workforce is affected by regulations on professional services, which oblige a person to obtain an authorisation to perform a service from a public authority, usually linked to ensuring health and safety. Mostly this affects professions like accountants, lawyers, doctors and nurses, teachers, carpenters, sports instructors and many more. Our proposals aim to help Member States better assess which new rules are needed to protect important objectives like health and safety, while at the same time, avoid making it more difficult than necessary for people to offer their services. Various studies confirm that if requirements are made less complex, between 3 and 9% more people can access a given profession, while new businesses find it easier to offer their services and graduates more likely to find jobs.