Last Thursday the Committee on Internal Market and Consumer Protection discussed the service initiative “A service economy that works for Europeans”, presented by the European Commission on 10.01.2017 with the EU Commissioner for Internal Market, Industry, Entrepreneurship and SMEs, Elżbieta Bieńkowska.

The service sector is one of the largest economic sectors of the European Union and important employer. As such the service sector is part of the Single Market Strategy that complements the European Investment Plan, aiming to strengthen investments, growth and employment across Europe. The service initiative works towards making it easier to offer cross-border services by reducing so-called administrative hurdles and by revisiting occupational requirements. To do so, the European Commission proposed four different measures: The Notification Directive requires that Member States notify the Commission of legislative changes and new proposals in the area of cross-border services and branches at least three months prior to enactment in order to overcome potential conflicts with European law and any objections by other Member States at an early stage of the legislative process. Similarly, a new proportionality assessment is introduced to ensure that new national regulations do not create additional barriers in the service sector. Where necessary, recommendations for the Member States may also be submitted.

Finally, the electronic services e-card should reduce uncertainties for service providers regarding formal requirements in the host country and speed up application processes. The e-card can directly be applied for in the home country and is then submitted to the respective host country. It is directed towards business services (company service providers such as IT companies, industrial cleaning, call centres and temporary employment agencies) and the construction sector. Nevertheless, the Member States will be able to expand the e-card to additional sectors on a voluntary basis. The services e-card covers both the temporary provision of cross-border services and the setting up of new branches. While the e-card is not compulsory for service provides, Member States are obliged to develop and provide an appropriate application system.

Most MEPs welcomed the proposal of the Commission highlighting the simplification of the procedures, in particular for service providers. However, there were also critical voices, which addressed important concerns expressed by AK and trade unions. For instance, the initiative was generally questioned in light of the still not fully implemented Services Directed. The Notification Directive was perceived as ambiguous but not yet fully developed as well as highly interfering with national legislative processes. Also, concerns were raised that the e-card could potentially support quasi self-employment, wage dumping and tax evasion, as it would make controls in the host country more difficult. A possible future expansion to other sectors, such as public services and health services, which currently are still exempt, was also considered problematic.

The Commissioner regarded the concerns as unsubstantiated, in particular concerning the lowering of labour and social standards, and argued that controls would rather be strengthened instead of weakened. Nevertheless, the upcoming processes should be closely followed by the employees' side. A first reading in the European Parliament and the Council has already taken place and the Commission intends to present an enforcement package as early as the end of March.

Further information:

Commission page for “A service economy that works for Europeans”

Press release of the European Commission

Fact Sheet Service Economy der European Commission (EN)

Legislative proposal of the Commission on the e-card (EN)