When Efficiency Results in Redistribution: The Conflict over the Single Services Market

Abstract

The discussion of the Services Directive from 2004 onwards showed an unprecedented extent of politicisation of a single-market issue. Coinciding with the Eastern enlargement in 2004, the easing of the services freedom through the Directive raised significant redistributive issues, given the differences in labour costs. The article analyses why mutual recognition is so controversial in services, by contrast with its acceptance in developing the internal market in goods. It is shown that the problem of trust in the regulatory systems of other member states that arises under mutual recognition is being addressed through administrative cooperation, but the problem of inequality between workers that arises from the application of home country regulations has not been resolved.

Acknowledgements

Funding under the ‘NewGov’ Project of the European Union's 6th Framework programme and under the Collaborative Research Centre 597 of the German Science Foundation is gratefully acknowledged. I would like to thank Tanja Börzel, Burkard Eberlein, Josef Falke, Alexia Herwig, Christian Joerges, and Florian Rödl for comments, and Deborah Mabbett and Waltraud Schelkle for their very detailed suggestions. I have profited greatly from unusually helpful comments by an anonymous reviewer.

Notes

1. See the report of the European industrial relations observatory at http://www.eurofound.europa.eu/eiro/2004/07/feature/eu0407206f.html (accessed 2 June 2008).

2. Davies (2007a: 241f) critically discusses the fact that the directive combines transborder and domestic administrative reforms, even though the Treaty does not give the competence to regulate purely internal matters. This problem remains with the adopted directive but its discussion is outside the scope of this article.

3. Rapid press release IP/04/37, 13 January 2004.

4. Several economic studies make the point. See the webpage of the Commission, available at http://ec.europa.eu/internal_market/services/services-dir/studies_en.htm (accessed 2 June 2008).

5. At the time, a minimum wage existed only for the construction industry and sea transport.

6. FTD, 9 February 2005, p. 27; ‘Der Osten kommt’, Der Spiegel, 7/2005, pp. 32–5; Hamburger Abendblatt, 26 February 2005, p. 23.

7. I omit the freedom of labour given the transitory regime.

8. Practical Guide for the Posting of Workers in the Member States of the European Union and the European Economic Area and in Switzerland, p. 4, available at http://ec.europa.eu/employment_social/social_security_schemes/docs/posting_en.pdf (accessed 2 June 2008).

9. ‘Für Fairness am Arbeitsmarkt – Kabinett beschließt Änderung des Arbeitnehmer-Entsendegesetzes’, Bundesministerium für Wirtschaft und Arbeit, 11 May 2005.

10. In the following, I partly draw on unpublished work and interviews by Wendelmoet van den Nouland in the context of our NewGov project ‘The Domestic Impact of European Law’.

11. Task Force to fight the abuse of the freedom of services and of establishment.

12. Communication from the Commission: posting of workers in the framework of the provision of services – maximising its benefits and potential while guaranteeing the protection of workers, available at http://ec.europa.eu/employment_social/news/2007/jun/communication_en.pdf (accessed 2 June 2008).

13. Deutscher Bundestag, Drucksache 16/5098, 25 April 2007; ‘Dienstleistungsfreiheit nach der EU-Osterweiterung’, Deutscher Bundestag, 27 May 2005, p. 18, available at http://dip.bundestag.de/btd/15/055/1505546.pdf (accessed 2 June 2008).

14. Bundesgerichtshof, Pressestelle, N. 143/2006; Keine Strafbarkeit wegen Nichtabführung von Sozialversicherungsbeiträgen bei Vorlage einer durch einen Mitgliedstaat ausgestellten ‘E 101-Bescheinigung’. Urteil vom 24.10.2006, 1 StR 44/06.

15. Interview BMAS, 29 March 2006; Interview BMWi, 29 March 2006; ‘Lohndumping: Regierung verhandelt mit Polen’, Die Welt, 12 April 2005; ‘Rüge aus Polen; Dienstleistungen’, Financial Times Deutschland, 26 April 2005.

16. Interview BMWi 29 March 2006.

17. Interview Zoll-FKS, 17 March 2006; ‘Gemeinsam für Deutschland. Mit Mut und Menschlichkeit’, Koalitionsvertrag von CDU, CSU und SPD, 11 November 2005, p. 39, available at http://www.bundesregierung.de/nsc_true/Content/DE/__Anlagen/koalitionsvertrag, templateId=raw,property=publicationFile.pdf/koalitionsvertrag (accessed 2 June 2008).

18. Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market, see http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32006L0123:EN:NOT (accessed 2 June 2008).

19. Interview European Commission, DG Internal Market, 27 September 2005.