Wary of backlash, Commission delays Services Directive update

Commission Vice President Jyrki Katainen and EU Internal Market Commissioner Elzbieta Bienkowska are responsible for the Services Directive review. [European Commission]

European Commission President Jean-Claude Juncker decided on Tuesday (13 December) to postpone measures to boost the mobility of service providers across the EU, aiming to avoid “unintended consequences” and a protectionist backlash, euractiv.com has learned.

Jyrki Katainen, Commission Vice-President for Jobs, Growth and Investment, and his colleague Elżbieta Bieńkowska, in charge of the Internal Market, were expected to announce a series of initiatives today (14 December) to improve the functioning of the decade-old Services Directive.

The goal of the review is to bring lower prices to consumers in a number of services, raise productivity in the European economy and increase job creation in Europe by better controlling how EU member states protect some business activities.

Instead, EU officials said the College of Commissioners had an in-depth debate where concerns were raised about the possible “unintended consequences” of a proposal that could be seen as another deregulatory effort by Brussels at a time of growing protectionism in some member states.

The Services Directive, also known as the Bolkestein Directive, drew heavy criticism in France when it was first introduced in 2000. People took to the streets to protest against what they regarded as social dumping from Eastern Europe – symbolised by the “Polish plumber”. The directive is believed to have played a significant part in the rejection of the draft EU constitution by French people in a shock 2005 referendum.

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Considering this was only the first time that Commissioners were discussing the revised text of the directive, they preferred postponing its adoption to 11 January in order to ensure that all the details are ironed out.

“In light of the debate, the President decided that the College will return to this file in their first meeting of the new year to ensure that all the many elements of this package are sufficiently addressed in a way that the appropriate balance between them is found,” a Commission spokesperson said.

This is a “complicated proposal”, another official added, pointing at the risk of a populist backlash and at the technical complexity of the text itself.

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“We do not want to modify the Services Directive proposal”, the official commented echoing some member states’ concerns about dismantling national regulations that protect some sectors in retail, tourism, and other businesses.

He said the goal was to improve the functioning of the ten-year-old Services Directive, which has failed to deliver its full potential.

European Service E-card

As part of this set of measures, the executive wants to adopt a European service e-Card to improve the coordination between the country of origin of a service provider and the host member state.

The e-card would bring a simpler and fully electronic procedure through which the worker will contact one single interlocutor in their home country and in their own language. The responsible authority in a member state would verify the data and transmit it to the host member state.

Officials stressed that this instrument would not affect the member states’ existing powers to apply national regulations and to decide whether service providers from another member state can work in the country. The new instrument would not affect either employers’ obligations or workers’ right.

The second proposal of the package will ensure a preventive enforcement of the services directive to guarantee that all new and amended national regulations are justified, proportionate and do not discriminate against professional workers from another EU member state.

This tool would help the executive avoid coming up with continuous infringement procedures against governments which put forward unjustified protections to shield some professions.

Finally, the EU executive is also expected to issue some guidance on what national reforms should be adopted to lift regulatory obstacles in the services sector.

As the Commission explained in its October communication, Upgrading the Single Market, the recommendations would be addressed to specific member states. In a first phase, the focus would be on selected professions in priority sectors. In a second phase, the reforms would be evaluated and the remaining barriers would be addressed.

Private sector unhappy

However, the private sector was not enthusiastic with parts of the Commission plan.

In a public consultation concluded last April, a majority of responses — most of them from the private sector — were “critical” about measures to avoid disproportionate restrictions.

But for the Commission, it is high time to review the directive given that businesses and professionals “still face too many difficulties operating across borders”.

Services Directive causes further EU headaches

Member states are struggling to bring the EU Services Directive into national law while carefully watching other countries' development, a EURACTIV round-up has found.

“They are hindered by differences — and sometimes inconsistencies — in the regulation of professions and ‘reserved activities’ across the EU, unnecessary regulatory barriers to the provision of services and a lack of clarity and predictability in certain key sectors for those who want to provide a service in other Member States,” the October communication said.

According to the Commission, Europe has 5,000 regulated professions, 19 of which include 50 million workers.

The executive believes that, while these jobs had a special status in the past to protect the public interest and consumers’ interest, many of these regulations are today “disproportionate” and block labour mobility across Europe.

The Services Directive was adopted in 2006 and is seen as a key tool to removing barriers to operating in Europe's internal market. Currently, only 5-10% of EU GDP is generated by cross-border services.

The original deadline for member states to fully implement the directive into national law was 31 December 2009.

The services sector makes up some 70% of Europe’s gross domestic product and total employment, yet discrimination, administrative burdens, red-tape, and the costs that come with selling services across the EU’s single market, are holding the sector’s growth, particularly among SMEs.

The freedom of establishment and the freedom to provide services are both central principles governing the single market for services. The rules entitle EU entrepreneurs to establish a business in any EU country or to temporarily supply services across borders, to other EU countries, without setting up an establishment there, for example by moving across borders, or via the internet, the Commission says.

  • 11 January: College of Commissioners expected to adopt revised proposal for Services Directive update.

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