An ultraliberal directive proposal relating to the liberalisation of services

On 13 January 2004, the ultraliberal European commissioner Frits Bolkestein submitted a directive proposal relating to services in the internal market. The title alone of this proposal points to the far-reaching liberalisation and deregulation of all service activities in Europe.  

Which services?

The draft directive applies to all services offered to companies and consumers, ranging from advertising, recruitment, including employment agencies, to trade, cleaning services and construction, but with the exception of certain transport sectors (+3.5 tons), telecommunication, financial services and services directly offered by the government at no charge.

With the exception of the police service, legal system (not lawyers, of course) and the armed forces, no public services whatsoever would be free: we all ourselves pay for our stamps, pay our hospital invoices, as well as registration fees for higher education.

So this indeed has a very wide scope!

The directive is consequently also applicable to public services. Accordingly, health, education, culture, audiovisual media, the services of the local authorities, etc. will also be regarded as pure merchandise that are fully dependent on the laws of the market, without account being taken of their specific character and their social aims. It is unacceptable for services as diverse as architect's firms and hospitals to be treated in the same way.

The European social model: a death announcement?  

Commissioner Bolkestein wants to eliminate all obstacles to the development of service activities and the completion of the internal market.

These 'obstacles' are, however, often rules imposed by the government with the intention of guaranteeing everyone better services, to protect employees, to ensure the sound management of public resources, to impose price standards, guarantee everyone access to services, and guarantee the quality of the services.

These rules can prevent free services from turning into a sort of jungle in which the only rule that matters is immediate profit!

In the longer term, the consequences of this directive threaten to be catastrophic for all of us:

•  dumping practices at social, fiscal and environment level threaten to be encouraged;

•  social attainments come under pressure: lower pay, longer working hours, increasing flexibility;

•  health, education, culture and audiovisual resources will just become merchandise, so subject to the laws of the market;

•  public service sectors run the risk of automatically and irrevocably becoming privatised and/or liberalised.

This directive proposal therefore comprises a direct threat to the European social model without taking account of democratic rules. Indeed, the right of the government to defend and expand specific social models is made dependent on marketing interest and the competition.  

The directive: basic principles

Among other things, the directive puts forward two principles for the completion of the internal market: the abolition of licences and requirements deemed unnecessary, and the principle of the country of origin.

•  The directive first of all wants to prohibit all kinds of obstacles for which no compelling reason   of general importance exists and that slow the establishment of a company on the territory of a Member State.

The impact will be particularly perceptible in health care. Indeed, very many requirements threaten to be put to question here: quantitative and territorial limitations for pharmacists, subsidies associated with a particular statute, price standards, etc.

In this way, the government is denied all means of action at all levels (local, regional, etc.) to conduct a health policy of high quality that also remains accessible for everyone.

The whole social economic sector is also threatened, in particular the integration of underprivileged groups in the employment market. Activities within the framework of the social economy are associated with accreditations with the purpose of ensuring that measures do indeed reach the underprivileged. There is, however, no guarantee whatsoever that these regulations will remain in existence if the directive relating to services becomes reality. And should this happen, the government will have lost an important tool of employment policy relating to the social integration of the people.

One can also ask questions about consequences on the guidance and training of employees (training cheques, guidance organised by decree in the Regions, outplacement, etc.).

•  The second principle is that of the "country of origin". This entails service providers only being subjected to the national provisions of the country of origin, and not to the laws of the country where the services are provided.

This comes down to a legal incentive to move to countries with the least strict legislation at social, fiscal and environment level, and the setting up of letterbox companies which at rock-bottom prices will be able to swarm out from their registered offices over the whole territory of the Union.

The consequence will be enormous pressure on countries with social, fiscal and environmental standards that protect the general interest.

Posting of workers: a demonstrative example .

Posting of workers offers service companies the opportunity of posting employees to a country of the Union to temporarily work there.

This may be, for example, a Polish construction company building the structural work for a flat building in Brussels using Polish employees.

There is a directive already regulating such case in practice, in our case with the Polish construction company making a declaration to the Belgian inspection services, appointing a representative in Belgium, with the Polish workers being subjected to the employment conditions in force in our country: hourly wages, working hours, social documents, etc.

At first sight the Bolkestein directive proposal appears reassuring, because the regulation is retained and it only concerns an exception to the principle of the 'country of origin'.

But because an aim of the proposal is to eliminate the administrative rigmarole that impedes the free traffic of services, control possibilities in guest countries are made more difficult if not impossible. The directive relating to the posting of employees immediately becomes fully undermined. In other words, if the Bolkestein directive comes into force, it will no longer be possible to apply the employment conditions in force in Belgium to the Polish employees, for example.  

The same problem arises for temporary employment from agencies .

At present, temporary employment agencies have to be accredited to operate in Belgium.

Because of this accreditation, only high quality employment agencies can start operating in our country. The directive threatens to bring an end to the accreditation procedure. This would immediately throw the door wide open to malafide companies with dishonest practices which threaten to destabilise the working of the sector.

Employment agencies will therefore have every interest in establishing themselves in countries where they have to pay the lowest taxes, and where social contributions also are lowest. They can then send out temporary employees across the whole of Europe for dumping pay, while the Belgian agencies will not be able to compete. These Belgian companies will then simply have no other choice than to decentralise to be able to survive, or put pressure on social partners in dialogue and politicians to reduce wage costs. These are extreme situations to which a combination of the principle of the country of origin and the blind elimination of obstacles to the establishment of service providers can lead.

Finally, the inspection services will also become powerless here: an employment agency established in Lithuania can send a hundred female workers to Belgium a month as secondment. The inspection services are not able to in each case examine whether appropriate salaries are being paid, or if overtime worked is actually paid. And if pay conditions are being complied with, this does not guarantee that the workers will have received their full pay. It is indeed often the case that accommodation costs are deducted from the pay!  

No adequate control: the door wide open to malafide practices?

One way to prevent the total breakdown of the employment market in Europe is to establish compulsory rules of co-operation between the national inspection services. This would entail setting up a real network of inspection services (a sort of social "Europol") at European level!

In the current situation the coordination of the inspection services of the 25 Member States of the Union is barely conceivable: they must already exist, and if they do exist they must also be efficient! So this is more wishful thinking at the present.

But in anticipation, the door remains wide open for Mafia groups who are already operating in various sectors and will profit from the lack of controls and political coordination to exploit employees.

The harmonisation of the employment conditions in all EU countries is therefore urgently required, obviously with harmonisation upwards, intended to harmonise with the legislation of the country that offers employees the greatest protection.

Privatisation of social security?

In the longer term, the directive proposal also threatens to have disastrous consequences for health care.

The directive proposes the scrapping of a large number of licensing procedures, although they actually comprise the fundaments of most national health systems and guarantee their quality, accessibility and financial stability.

If the Bolkestein directive came into force, it would be impossible to impose the following on providers of health services

•  compulsory minimum and/or maximum prices for medicines and fees;

•  minimum standards for personnel in hospitals and rest homes;

•  subsidisation standards taking into account the specific way of financing health care;

•  quality standards relating to care.

Member States would also lose a large part of their autonomy when making fundamental choices concerning the organisation of health care. In other words: this would ultimately mean the end of any public health policy worthy of the name.

The directive also thwarts other European processes and even the Treaty

Besides the threat the directive proposal poses to the abovementioned fields, it also thwarts other current or announced initiatives and is incompatible with the Treaty on certain points.

•  For the derogations provided by the directive proposal for the principle of the country of origin, reference is made to a future directive of the Parliament and the Council on the accreditation of professional qualifications.

•  In compliance with article 152 of the Treaty, health is an exclusive competence of the Member States. The directive proposal contains coordination rules that contradict regulation 1408/71 relating to the social security of mobile employees. A study is currently taking place at high level into the mobility of patients and the evolution of health care in the European Union. In 2004 these activities should result in a notification from the European Commission in which a general strategy is determined with proposals to meet the recommendations from the study.

•  As regards services of general interest, the directive proposal anticipates the White Paper of the Commission on this subject. So far the Commission has not appeared able to speak out on a framework directive on services of general interest which exactly describes what these are to be understood as. The directive proposal has no relation to services of non-economic               general interest, but to services of economic interest. Reference is however made to the definition of the concept of "services", that is very broad and evolutive !

•  A directive proposal relating to temporary labour has currently reached deadlock, and it threatens to lose all relevance if the Bolkestein directive comes into force.

The issue must also be raised as regards the actual precedence relationship between the Bolkestein directive proposal and the other proposals it thwarts and detracts from.

Because the Bolkestein directive would work like a steamroller, all the initiatives threaten to lose their political relevance and not be successfully completed, although they do provide for locks and are quite a bit more ambitious.

GATS

This directive proposal suspiciously resembles the GATS agreement in which at international level the liberalisation of all services in all sectors is negotiated on the basis of supply and demand.

So far, the EU has resisted the opening up of sectors such as health, education, secondment of employees, culture and audiovisual resources. Now these sectors are also being threatened by the Bolkestein directive, the standpoint defended by the EU is also coming under pressure.

It may be feared that the philosophy at the basis of the Bolkestein directive could signify a course change for the EU's standpoint in the World Trade Organisation. If this would be the case, the EU would be cooperating on the spiral of increasingly thorough liberalisation, without attention to the social aspect that is completely neglected within the World Trade Organisation.  

Liberalization of port services: a new disguised attempt

The text of the directive proposal, even if in other words, adopts the content of the directive proposal with respect to the liberalisation of the harbour services that in November 2003 was ultimately voted down in the European Parliament under pressure of the European trade unions. The approval of this directive proposal would signify the end of the Major law.

There can be no question of going back on a decision that was the result of democratic voting in the European Parliament, where the liberalisation of the harbour services was rejected in all clarity.

In the text of the Bolkestein proposal it is anything but clear if the harbour services would fall under the area of application of  this directive.   The lack of clarity is also one of the problems with the directive. It is as good a certain that the pilot services would fall under the directive, and if the harbour services are being targeted, the Major law would again appear to be under threat  !

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