November 2006
On 13 January 2004, the European Commission presented a proposal for a directive on services in the internal market, which came to be known as the Bolkestein Directive, after the Dutch Internal Market Commissioner who launched the proposal, Fritz Bolkestein.
Trade unions, including the ETUC, believed the draft law would be damaging to both workers and consumers if adopted in its original form, and campaigned hard for comprehensive amendments.
On 16 February 2006, the European Parliament in plenary session in Strasbourg voted in favour of a compromise proposal that went a long way towards meeting the trade union demands. The ETUC called on the Commission and Council to act in line with the wishes of Parliament. Subsequently, the Commission put forward a new proposal adhering to the main principles of the EP compromise, and on 29 May the Council reached political agreement on a new draft following the same approach.
While welcoming this decision, the ETUC continued to push for improvements: notably the clearer exclusion of labour law and social services of general interest, and stronger support for fundamental rights. It therefore regretted the vote by the Parliament's Internal Market and Consumer Protection Committee on 24 October, rejecting amendments along these lines.
On 15 November, the European Parliament approved the amended Directive, paving the way for it to become law by the end of 2006. The ETUC greeted this outcome as a great success for the trade union movement, while pledging to push for further improvements in Member States.
What are ‘services in the internal market'?
The definition of services is vast. The European Commission wants to open up a wide range of different services to cross-border competition. Some of them are commercial activities like retailing, hotels and tourism, car rental, construction, estate agencies and advertising. The draft directive also covers advice provided by professionals such as architects, lawyers, engineers and consultants.
However, one of the problems with the draft has been lack of clarity in defining exactly how much should be opened to competition.
Some 'services' are essential, and define the quality of life for Europeans. They supply basic human needs, providing facilities that people cannot do without. These include, for example, health care, postal services, water and energy supply, social services, environmental and waste management.
Other important services in the EU are already covered by rules directed at specific sectors, such as transport, telecommunications, and audiovisual services.
What is the draft directive supposed to do?
The Commission wants to liberalise the cross-border supply of services, creating a single market across the EU and eliminating the so-called barriers between Member States. According to the Commission, these barriers include any measure that makes it more difficult, costly, or less profitable for a service supplier from one Member State to operate in another, including restrictions on nationality or residence, excessive red tape, onerous tax regulations, or requirements laid down by professional bodies to limit the number of people entering a particular profession.
Services are crucial to the European economy. They account for 56% of GDP and some 70% of employment, offering huge potential for economic growth and job creation.
What impact would it have on workers?
This law is aimed at areas of the economy with a high concentration of labour. Any attempt to revise the regulations will inevitably have a knock-on effect on employment conditions for millions of workers. That is why it is crucial that the trade union voice should be heard in reaching a workable proposal.
{{The ETUC believes that, apart from being determined by a high level of social security, the development of the internal market has to go hand in hand with sufficiently strengthened social protection and adequate workers' rights and working conditions, in order to maintain and enhance social cohesion across the EU.
New regulations must not interfere with workers' rights embodied in labour law, industrial relations and collective agreements.
The difference between commercial services and 'services of general interest'}}
The ETUC recognises the job potential of the service sector, especially in the new Member States, and the contribution that such growth could make towards achieving the targets set out in the Lisbon Strategy for a more competitive and dynamic European economy.
However, it is not appropriate to place commercial activities and essential services in the same legislative framework.
The ETUC believes there must be a separate legal framework for ‘services of general interest' (SGIs), which would identify and define the universal service obligations of Member States - crucial to equal opportunities, social cohesion and the development of the European Social Model. The European Parliament called for a similar framework in January 2004.
Country of Origin Principle (CoOP)
The original draft laid down that providers would be subject only to the laws and conditions applying in the country where they are based. This would encourage organisations to relocate to Member States with lower standards, and could spur a downward spiral in working conditions.
The ETUC strongly opposes this principle. Evidence to back its view comes even from the US, where each state regulates the businesses and professions operating within their own borders, regardless of place of establishment.
The dangers posed by the original draft have been vividly illustrated by the Vaxholm case in Sweden, where workers engaged by a Latvian construction company to build a school were employed on much poorer wages and working conditions than their Swedish counterparts.
Trade unions in the newer EU Member States of eastern and central Europe are equally opposed to the law as originally drafted, since it would do nothing to raise wages and working conditions in these countries to meet EU average levels.
Chronology
13 January 2004 European Commission issues its draft directive on services in the internal market.
January 2004 The European Parliament calls for a legal framework to define services of general interest (SGIs).
March 2004 The ETUC Executive Committee adopts a resolution welcoming moves aimed at making the internal market function more efficiently and promoting the free circulation of services, but drawing attention to the lack of proper consultation in drawing up the draft directive and warning that some of the proposed measures would threaten workers' rights and conditions, and damage the quality of services in the EU.
June 2004 The ETUC Executive Committee hardens its opposition to the Bolkestein Directive as growing evidence from national affiliates illustrates the potentially damaging impact of some elements.
November 2004 At the European Parliament Internal Market and Consumer Protection public hearing, the ETUC warns MEPs that fundamental amendments must be made to the draft.
November 2004 ETUC and CEEP (European Centre of Enterprises with Public Participation) issue a joint statement to the EU Competitiveness Council, calling for a more balanced approach to protecting public services and social welfare, taking account of the diversity of the services in question.
March 2005 ETUC assembles over 75,000 people on the streets of Brussels to demonstrate their opposition to the draft directive.
April 2005MEP Evelyne Gebhardt presents her report on the draft to the European Parliament IMCO Committee, proposing the exclusion of labour relations and services of general interest.
May 2005 European Parliament Employment Committee votes in favour of amendments from MEP Anne Van Lancker, including reversal of the Country of Origin Principle.
November 2005 ETUC affirms its strong disapproval of the outcome of the vote by the IMCO Committee, which fails to take on board some important changes to the draft.
16 February 2006 European Parliament plenary supports a compromise agreement meeting the majority of ETUC demands:
- labour law is excluded, and in particular issues linked to the posting of workers;
- sensitive sectors such as temporary work agencies and private security services are excluded;
- fundamental rights to collective bargaining and action are respected;
- services of general interest and some services of general economic interest, such as healthcare, are excluded;
- the country of origin principle has been abolished, enabling Member States to exercise better supervision and apply rules to protect the public interest.
4 April 2006 European Commission publishes a new draft taking account of the Parliament's amendments.
29 May 2006 Competitiveness Council reaches political agreement on a new text, which now goes to second reading in the European Parliament.
23 October 2006 European Parliament IMCO Committee rejects amendments - supported by the ETUC - which would have clarified the exclusion of labour law and social services from the directive, and reinforced workers' fundamental rights.
15 November 2006 European Parliament approves the amended Services Directive at second reading. The ETUC welcomes this outcome but pledges to campaign for further improvements as the law is applied in Member States.
The Directive is due to be adopted by the Council before the end of 2006. Member States then have three years, maximum, to transpose it into national law. The Directive should therefore be implemented across Europe by 2010 at the latest.