EUROPEAN SEMESTER THEMATIC FACTSHEET SERVICES MARKETS

1. INTRODUCTION affordable services and greater choice for consumers. Increasing productivity in Services markets are central to the EU this growing sector is imperative to economy as they account for 71% of EU ensure quality jobs and high wages and value added and 68% of EU to give easier access to labour markets, 1 employment . Well-functioning and in particular to young people. competitive services markets are therefore essential for growth and jobs Productivity in the services sector has in the EU. important repercussions for Europe's manufacturing industry. Manufacturing In order to realise the significant growth industries are among the largest and jobs potential of services markets, consumers of services in Europe and regulation must keep up with the anti-competitive regulation in the digitisation of services and the increased services sector increases the cost of the integration of services and services they purchase2. manufacturing industries. The digitisation of services is both Several factors are holding back the changing the way they are delivered and performance of services markets in creating demand for new services, Europe today. These include low including in the collaborative economy. It competitive pressures, slow productivity has also made services more tradable as growth, a lack of cross-border it is easier to provide them at a distance. investments and trade and low labour mobility (see section 2). Regulation plays an important role in protecting public policy objectives, These challenges are partly due to consumer protection, public security and regulatory restrictions and costly the protection of health and the administrative procedures resulting from environment. Cross-country assessments the services policies and regulation of EU show that these objectives can be met Member States (see section 3). with different levels of regulation imposing fewer or more restrictions on Numerous analyses show that reforming service providers (see section 4). Member States' services regulation and Intelligent pro-growth regulation ensures administrative procedures leads to that policy objectives are met while positive economic outcomes. Reducing regulatory and administrative restrictions on services markets leads to stronger 2 The values of multipliers for services, competition, higher productivity, more ranging from 1.6 (real estate) to 2.5 (air transport), are considerable for the priority sectors of construction (2.3), business services 1 The countries covered by data in this (1.9) and retail services (1.8). Calculated for factsheet are the EU-28, unless otherwise 2011 for the EU-27. Data source: World Input- specified. Output Database (WIOD).

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keeping the economic costs of regulatory Around 22% of those employed in the EU restrictions to a minimum. work in a regulated profession6. The regulation of professional services exists Business services, construction and retail in all sectors of the economy. The health services are among the most and social service sector, including economically important in the EU. doctors and dentists, accounts for 40% of all regulated professions (by number Business services include a range of of professions). After that, business professional, scientific and technical services, such as lawyers, accountants, activities as well as administrative and 3 engineers and architects, account for support services . A major part of the EU 15% of that total, followed by the economy, they account for 12.8% of EU transport sector (close to 10%), the value added and 13.7% of total public service and education sector employment, representing 31 million (9%), and construction (7%)7. jobs. They constitute key inputs into the manufacturing sector. Today, 16% of the At EU level, the Services Directive average value of a good produced in the adopted in 2006, covering 47% of EU EU is generated from the activities of value added, provides a framework for 4 business services . Many of the high national services regulation. It resulted value-added business services are in the removal of many regulatory provided by regulated professions (see barriers by Member States, as well as below). simplified administrative procedures. The Professional Qualifications Directive, Construction services are vital for the revised in 2013, supports the mobility of EU economy. Construction works professionals by enabling the recognition undertaken by builders and developers of professional qualifications across account for 5.3% of EU value added and Member States and has set up a 6.3% of EU employment. The EU framework to ensure that national construction sector gives jobs to 14 regulation of professional services is million people. proportionate.

Retail services represent 4.5% of total In January 2017, the Commission EU value added and employ 8.6% of the presented the Services Package that workforce with a significant included reform recommendations to representation of employees in the 15- Member States and three legislative 24 age range. Over 3.5 million retail proposals to improve the functioning of 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 2010, when it stood at 11.7%. The value of market for retailers and the range of 5 online sales almost doubled between 2011 and products available to consumers . 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 3 Business services are defined as sectors M, times the value of online sales. Sources: N77-78, N80-82 and J62-63 using 'Nace Rev.2 Euromonitor and Eurostat. — Statistical classification of economic 6 TNS Opinion, 'Measuring the prevalence of activities in the European Community', occupational regulation: ad-hoc survey for the Eurostat, , 2008. ', April 2015, publication 4 European Consortium for Sustainable forthcoming. As analysed in M. Koumenta and Industrial Policy (ECSIP), 'Study on the relation M. Pagliero, 'Measuring Prevalence and Labour between industry and services in terms of Market Impacts of Occupational Regulation in productivity and value creation', 2014. the EU', 2016. 5 In 2016, 22% of retail companies sold 7 European database of regulated professions online, against 18% for the EU economy as a (http://ec.europa.eu/growth/tools- whole. This has been steadily increasing since databases/regprof/).

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the services single market8. Other see a convergence of these indicators recently presented initiatives include a between Member States. communication on the development of the collaborative economy, a proposal For selected economic activities with for a regulation regarding geo-blocking, high level of regulatory restrictions, to which a forthcoming Commission Figure 1 shows the average business initiative setting out best practices churn rate at the EU level compared to facilitating the establishment and that of the total business economy. With operation of retail services should be the exception of construction and retail, added. all other services sectors have a lower business churn rate than the total 2. POLICY CHALLENGES: AN business economy, i.e. a lower turnover OVERVIEW OF PERFORMANCE IN EU of companies. This may indicate COUNTRIES relatively lower dynamism or lower competition in these sectors than in the EU services markets still face a number of rest of the economy. challenges that hinder the sector's growth. These include low competitive pressures, Figure 1 — Business churn rate in selected slow productivity growth, cross-border economic activities, EU-28, 2014 (%) services integration and low labour mobility for professionals. Business economy except activities of holding 2.1. Low competitive pressures companies Competitive pressures drive innovation Construction and performance, giving consumers access to a wider range of services at lower prices. Competition drives Retail trade productivity by ensuring that less productive firms are replaced by Travel agency, tour productive new ones over time, and by operator reservation creating incentives for firms to invest in service and related… reducing costs and in innovative productivity-boosting services and Engineering and related activities products.

Among indicators that can be used as Architectural activities proxies for competition forces are market churn rates9 and gross operating rates10. Churn rates and profit rates Real estate activities disaggregated by service sectors vary significantly among Member States and Accounting and related services sectors. Large differences in activities churn rates or profit rates reflect varying degrees of competitive pressure. A more Legal activities integrated market would be expected to

10,0 15,0 20,0 8 European Commission, 'A services economy that works for Europeans', 2017, Source: Eurostat, own calculations. 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.

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Another indicator of competition intensity 2.2. Slow productivity growth is the profits generated at sector level. Relatively higher profits indicate that Despite some improvements in labour companies are generating higher margins, productivity per person employed from i.e. higher price mark-ups over the cost of 2008 to 2013 in some countries, their services/products, at the expense of labour productivity growth in the EU consumers. services sector has been outperformed by other sectors, including For the EU as a whole, Figure 2 shows the manufacturing11. gross operating rates in selected sectors, 12 compared with the average rate for the OECD data shows average annual whole business economy. The gross manufacturing labour productivity operating rate is a proxy measuring a growth (2001-2013) of 2.6%, whereas company's profit over its turnover. Most most service sectors experienced EU services sectors have higher gross growth below 1%, or even decline, over operating rates than the economy as a this period. whole, suggesting lower levels of competition.

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

Real estate activities 44,0

Legal activities 42,1

Architectural activities 29,0

Accounting and related activities 27,8

Engineering activities 17,8

Construction 11,2

Travel agency, tour operator reservation 9,4 service and related…

Retail trade 5,7

Total business economy except financial and 10,1 insurance activities 11 European Commission SWD(2015) 203, 0 20 40 60 'Report on Single Market Integration and

Source: Eurostat, own calculations. 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?DataSetCod e=PDBI_I4).

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

M-N - Professional, scientific and technical activities; administrative…

L - Real estate activities

J - Information and communication

G-I - Wholesale and retail trade, transport, accomodation and food…

C - Manufacturing

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

Source: Eurostat, own calculations.

Figure 3 compares labour productivity that of manufacturing. Its growth has also

growth in the EU across services sectors been lagging behind manufacturing and in manufacturing. Not only is productivity growth. services labour productivity lower than

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

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

L - Real estate activities

J - Information and communication

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

C - Manufacturing

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

Source: Eurostat, own calculations.

Figure 4 presents unit labour costs (ULC) as an indicator of competitiveness gains. at sectoral level in services as well as In terms of the relationship between those in manufacturing. The comparison labour productivity developments and between productivity developments and labour compensation trends can be seen

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labour compensation, recent evidence13 2.4. Low labour mobility for shows that labour productivity in market professionals services has only outpaced labour compensation in countries such as Labour mobility is a key determinant of 17 , , and Greece14. growth-enhancing productivity . Not only These countries have experienced strong does it help close skills gaps and reduce market pressures and have been labour shortages. It also balances demand undergoing major competitiveness for labour between Member States. adjustments. Pre-crisis competitiveness losses were caused by large ULC increases In the case of regulated professions, in services. Important services sectors still professionals from other Member States show some resistance to adjustment, as may have to go through the recognition can be seen by comparing Figures 3 and process. This often requires paying 4. This is particularly the case in business substantial fees and can be time- services and retail. consuming and cumbersome. This directly affects the mobility of professionals, which 2.3. Lack of cross-border services has a knock-on effect on the amount of integration skills available to businesses.

Even though by nature services are less Despite the high recognition rates of tradable than goods, trade in services has professional qualifications facilitated by been growing worldwide in recent years. the modernised EU Professional Qualifications Directive18, the mobility of Trade integration can be used as a workers remains low. In 2015, across the measurement of the extent to which whole business economy, 3.6% of those businesses are able to access potential employed in the EU were EU citizens from customers in other Member States. At another Member State. This is lower than 6.6%, the trade integration15 of services the figure for architects (6.5%), but across the EU lags considerably behind higher than for accounting activities that of goods (20.6%). (3.2%), real estate activities (2.8%), civil engineering (2.3%) and legal activities 16 Cross-border investments in services (1.6%). stand at 12% and are also disproportionately low compared to goods 3. POLICY LEVERS TO ADDRESS THE (17%). POLICY CHALLENGES

While some of these differences are due to The challenges described above are to a the lower tradability of services, the significant extent a result of the regulatory figures indicate that service providers are and administrative policies of the EU unable to make full use of the potential Member States. offered by the single market. 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. 13 European Commission, 'Quarterly Report on the Area', Volume 14, No 2, 2015. 14 Although the strong wage adjustment in has not been accompanied by 17 OECD, 'The future of productivity', 2015. 18 improvements in services labour productivity. From 2013 to 2015, of the 175 900 cases of 15 Defined as the average of intra-EU imports recognition applications recorded in the and exports divided by GDP (2015, EU-28) database on regulated professions, almost 84% (Source: Single Market Scoreboard 2017). (147 500) concluded with a decision, either 16 Share of value added generated by positive (78.7%) or negative (5.1%). The enterprises controlled by another EU Member remaining 16% (28 400 cases) were unsettled State — secondary establishment. Nace Rev. 2 (no decision), under examination or subject to service sectors included are D-J, L-N and S95 appeal. Source: European database of (source: Eurostat, 2014). No data is available regulated professions on cross-border service provision without prior (http://ec.europa.eu/growth/tools- establishment. databases/regprof/).

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3.1. Reforms in the services sector temporarily providing cross-border building upon the implementation of services. This is notably the case where the Services Directive sectoral laws have not been amended to make a clear distinction between Economic evidence shows that there is requirements applicable to companies significant scope for services reforms seeking to establish themselves and those beyond the minimum legal requirements seeking to temporarily provide cross- of the Services Directive. border services. The resulting uncertainty means that authorities often apply Authorisations required from businesses authorisation requirements for service to offer their services may serve public providers established in a Member State to interest objectives, but must be businesses providing cross-border proportionate to achieving them so as not services. The resulting disproportionate to unduly restrict competition. Many regulatory requirements can make it very Member States have implemented far- difficult to provide cross-border services in reaching reforms aiming to abolish practice. authorisations or replace them with less onerous notification or declaration Following the adoption of the Services obligations, but there is scope for further Directive in 2006, Member States reforms in many other Member States and implemented far-reaching reforms, sectors. The Services Directive stipulates adopting more than a thousand laws. In that Member States may not duplicate 2012 a Commission assessment found requirements equivalent to those the that the reforms implemented up to that service provider has already had to fulfil in point would yield a 0.8% GDP increase another Member State. This is over the coming years19. insufficiently applied in practice however, because service providers often have to The assessment also found that if Member fulfil the same requirements as domestic States were more ambitious in companies, despite the fact that they may implementing reforms (to reach the already have fulfilled equivalent or similar average of the 5 least restrictive Member requirements in their home country. States), the additional growth potential was estimated at 1.8% of EU GDP. Legal form and shareholding requirements greatly hamper the In an updated assessment in 2015, freedom of establishment in the business estimating the impact of reforms from services sector. A peer review on the 2012 to 2014, it was found that only a subject showed that these requirements fraction (0.1%) of the 1.8% GDP potential affect both primary and secondary had been realised. These results are not establishment. They limit investment surprising given that reform during this possibilities, reduce choices for business period was uneven, mainly implemented in models and may make it difficult or even Member States subject to financial impossible to set up multidisciplinary assistance programmes or as part of professional practices and secondary comprehensive national reform establishment. The wide variation in legal programmes20. 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 19 J. Monteagudo, A. Rutkowski and D. professional indemnity insurance Lorenzani, 'The economic impact of the cover when seeking to offer their services Services Directive: A first assessment following in another Member State. implementation', European Commission Economic Paper 456, 2012. National legislation is still unclear about 20 European Commission SWD(2015) 202, 'A the rules that are applicable to businesses Single Market Strategy for Europe — Analysis and Evidence'.

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Reducing regulatory barriers in services productivity and export growth in has been shown21 to increase sector- downstream service-intensive industries25. specific churn rates, which in turn leads to increased allocative efficiency and 3.2. Reforms of regulation in decreased profitability, resulting in lower professional services prices for consumers. This substantiates the theoretical assumption that more In the absence of harmonisation at EU dynamic markets put greater competitive level, the regulation of professional pressure on profit rates while contributing services is a prerogative of the Member to a more efficient use of production States. Regulation can create obstacles for factors. the single market and can thwart growth and job creation in the EU economies. According to the World Bank study Obstacles to growth and trade may published in 2016, limiting service sector originate in restrictions that seem to have restrictions to the level of the three least less of an impact but whose cumulative regulated Member States (the UK, effects may be pernicious. and ) would increase the productivity of services and manufacturing In its recent Communication on reform recommendations for regulation in firms by up to 5.3% within two years of 26 implementation22. professional services , the Commission offered guidance on the potential for IMF assessments conclude that product economically appropriate reforms that market reforms, in particular in business could make a real difference in seven services and retail, have positive effects significant professions. For example, it on capital, output and employment, advocates that reconsider the increasing over time. Product market proportionality of its restrictions on reforms also promote firm entry and tend multidisciplinary activities for architects; to have positive effects on firms in that reassess the broad scope of downstream sectors that make intensive reserved activities for civil engineers; that use of intermediate inputs from re-examine the incompatibility deregulated sectors23. rules prohibiting the simultaneous exercise of any other economic activity for OECD studies have shown that reducing accountants; and that review barriers in the services sector strengthens shareholding requirements in architecture, productivity growth throughout the engineering and legal services, to name economy because of the role of services as but a few. intermediate inputs24. A lower level of service regulation increases value added, 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 21 E. Canton, D. Ciriaci and I. Solera, 'The Economic Impact of Professional Services across seven professions. Liberalisation', European Commission Economic Papers 533, 2014. An econometric analysis done by the 22 World Bank, 'Growth, jobs and integration: Commission shows that lower levels of Services to the rescue', World Bank EU Regular regulatory restrictions on professional Economic Report, 2016. services go hand-in-hand with better 23 P. Gal and A. Hijzen, 'The short-term impact economic outcomes, specifically lower 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 25 G. Barone and F. Cingano, 'Service and G. Nicoletti, 'Do Product Market Regulation and Growth: Evidence from OECD Regulations in Upstream Sectors Curb Countries', 2010. Productivity Growth? Panel Data Evidence for 26 European Commission COM(2016) 820, OECD Countries', OECD Working Paper No 791, 'Communication on reform recommendations 2010. for regulation in professional services'.

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incumbent rents and a higher increase in would lead to the entry and survival of the number of enterprises27. more efficient and innovative firms. Consumers could enjoy lower prices, Another analysis of the economic effects of more variety, innovation and higher regulation showed that depending on the quality30. This would also have positive profession, there could be between 3 and spill-over effects in other sectors of the 9% more people working in a given EU economy. profession if access requirements were made less stringent. Regulation is Physical and online retailers face estimated to result in an aggregate wage different barriers. The cross-border premium of about 4% on average, expansion of companies in the physical increasing the price of services for retail sector happens through the consumers28. opening of physical shops in other Member States. The competent national Research shows that making regulation authorities impose requirements relating more proportionate and adapting it to to the size of retail outlets or their market reality, e.g. by relaxing the most location. These requirements may result restrictive and unjustified requirements, in market entry barriers for certain shop has improved allocative efficiency and formats or business models and may reduced observed larger-than-average affect secondary establishment. profitability by intensifying business dynamics29. In addition to establishment restrictions, retailers face operational restrictions that 3.3. Removing barriers in the retail affect their day-to-day business activities sector and hamper their efficiency. Such restrictions can affect both physical and Overall, the retail sector is quite online retailers. dynamic. However this might hide a large variety of situations. The sector is The growth of e-commerce is made up of big, medium-sized and small fundamentally changing the retail sector. shops, each of which faces different Therefore, regulatory frameworks should challenges. The situation also differs at the same time fairly address both significantly from one country to physical and online retail. another. Retailers serve customers through increasingly diverse channels. For businesses to fully reap the benefits This is an opportunity for some of the single market, it is crucial that companies but it may be difficult for Member States respect the free others to seize it. Stepping up reforms to movement of goods and freedom of reduce regulatory barriers in the retail establishment. sector would have a number of positive effects. Increased competitive pressures In the Single Market Strategy the Commission announced its intention to propose best practices for facilitating retail establishment and reducing 27 European Commission SWD(2016) 436, operational restrictions in the single 'Communication on reform recommendations for regulation in professional services', section market. Such best practices should serve 6 of the Staff Working Document. as guidance for reforms in the Member 28 M. Koumenta and M. Pagliero, 'Measuring States. 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 30 European Commission SWD(2015) 202, 'A Liberalisation', European Commission Economic Single Market Strategy for Europe — Analysis Papers 533, 2014. and Evidence'.

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4. CROSS-EXAMINATION OF have gone through a systematic POLICIES: STATE OF PLAY assessment of their national regulation of professional services based on the revised 4.1. Persistent barriers in the Professional Qualifications directive, services markets providers in several service sectors still face many barriers to establishing Even though Member States have fulfilled themselves in another Member State or the obligations relating to the providing services on a temporary cross- transposition of the Services Directive and border basis.

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

4

3,5

3

2,5 Lawyers

Engineers 2 Architects

Accountants 1,5

1

0,5

0 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

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

Taking the example of business services, Member States took an ambitious the largest services sector falling under approach in its transposition and the Services Directive, accounting for introduced more comprehensive almost 12% of EU GDP and employment, reforms in the services sector. The the administrative and regulatory burden cases of two such Member States, varies significantly from one Member and Spain, are presented below. State to another. Figure 5 shows the overall restrictions in four key  In Estonia, the reforms associated professions forming part of business with the Economic Activities Code services — accountants, architects, entered into force in 2014. The engineers and lawyers, based on a 2015 reform streamlined the fragmented study of barriers in business services31. requirements across sectors and clearly provided that authorisation All Member States were legally obliged to and notification requirements do not transpose the Services Directive. Some apply to providers of cross-border services. Estonia has higher entry rates and lower average gross operating rates in services compared 31 European Commission, 'Business services — to the EU average. Assessment of barriers and their economic impact', 2015.

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 In 2013, Spain adopted the Law on principle of the nationwide validity of Market Unity. Its main aim was to authorisations. This creates legal tackle the fragmentation of the uncertainty for service providers and domestic market resulting from the may undermine the economic differences between and overlapping progress achieved to date. of central, regional and local 4.2. State of play in regulated regulation. The law introduced the professions principle of nationwide validity. This means that goods and services The indicator of the restrictiveness lawfully produced or provided in one of the regulation of professional region can be supplied without any services has been designed to support additional formalities throughout the qualitative analysis of the barriers national territory. The screening referred to in section 3.2. It provides a accompanying the reform identified cross-country performance comparison more than 6000 regulations that in the following seven professions: needed to be addressed. In the architects, engineers, lawyers, period following the adoption of the accountants, patent agents, real estate law, Spain has benefited from an agents and tourist guides. increase in cross-border trade and investment as well as an increase in Figure 6 shows how countries perform in competition, productivity growth, relative terms with regard to the and the moderation of price profession of architect: the higher the increases in the sectors concerned. score, the higher the level of However, in June 2017, the Spanish restrictiveness. Constitutional Court declared null and void a selected number of articles of the law, including the

Figure 6 — Restrictiveness indicator for architects

3.5

3.0

2.5 Exercise requirements 2.0 Other entry requirements 1.5 Qualification requirements

1.0 Regulatory approach

0.5

0.0 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

Source: European Commission, 2016.

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Case studies of reforms at national level32 Major novelties include (1) introducing have analysed the impact that reforms non-lawyer ownership of law firms, a of the conditions for accessing and welcome change, given the high exercising regulated professions can restrictiveness indicator score of legal have on the sector. professions (see above); (2) increasing the number of notaries while their  In , the recent clarification of territorial scope is extended; the criteria for admitting lawyers and (3) introducing a 20% market share legal advisers to the profession in the capital for pharmacies and liberalising context of the reforms implemented in their opening hours; etc. 22 regulated professions between 2005 and 2014 was followed by a 4.3. Retail sector major increase in the number of lawyers and legal advisers. This was Over the past few years Member States accompanied by a less-than-average have carried out reforms to remove increase in the price of legal services certain establishment and operational and a reduction in the earnings of restrictions and improve the functioning of lawyers and notaries. the retail sector. Some of these reforms  In Germany, in 2004 the aimed to simplify and streamline requirements based on qualifications authorisation procedures, shorten the were made less stringent for a number authorisation process and lessen the of craft professions. As a result, the administrative burden on retailers number of new entrants into these establishing a shop (e.g. Belgium, Greece, professions doubled between 2002 and , Portugal and Spain and very 2008. Five years after the reform there recently Denmark and ). Other were still more start-ups than reforms aimed to make operational companies going out of business. conditions less stringent. Shop opening  Greece implemented an extensive hours have been liberalised in a number of legislative reform in 2011 aiming to lift Member States (e.g. Denmark, Finland, restrictive regulations on entering and Italy, Portugal and Spain) and rules on practising many professions. Positive promotional sales and sales below cost effects were recorded for the regulated have been relaxed (e.g. Cyprus, Greece, professions, in the form of significantly Luxembourg, Portugal, and lower prices for consumers of the Spain). services of real estate agents and legal professionals, while the number of However, a number of restrictions remain start-ups for notaries, auditors, etc. in place and the level of restrictiveness more than doubled in 2014, compared still varies greatly from one Member State to the yearly average before to another. In addition, there is a trend in liberalisation. some Member States to introduce measures that in practice mainly affect In Italy authorities engaged in an annual foreign retailers. 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 Date: 22.11.2017 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.

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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.

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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

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