Content

Brigitte Zypries, II.1 in:

Oliver Holtemöller (Ed.)

How Can We Boost Competition in the Services Sector?, page 25 - 29

1. Edition 2017, ISBN print: 978-3-8487-4676-7, ISBN online: 978-3-8452-8902-1, https://doi.org/10.5771/9783845289021-24

Bibliographic information
The Practical View Brigitte Zypries Brigitte Zypries, Parliamentary State Secretary, Federal Ministry for Eco‐ nomic Affairs and Energy (BMWi) When we are talking in Germany about deregulation in the services indus‐ try, then we are essentially talking about professional services. But you have now touched upon many other topics as well: For example, the question about productivity gains of companies, the question about how to register a businesses, how does one handle the cadastral administration, how does one make fiscal declarations – without a doubt, we would all quickly agree that there is room for improvement in Germany. But what about the matter that you have raised now, Mr Kühnel, the situation with the Meister degree: Would it really make sense to deregulate the sector, so that a Meister degree would no longer be needed? What would then hap‐ pen to our dual education system, which we export with great success to all over the world. We must look at things carefully. There are also some historical issues that one could take into consideration. For example, the topic of equality in co-determination. Twenty years ago, everyone told us that in Germany the economy was in bad shape because we applied equal‐ ity in co-determination. But today, everyone knows that equality in co-de‐ termination is one of the guaranties for success of the social market econo‐ my. Another topic surely is the one of the publicly owned banks, in other words, the Sparkassen or savings banks. Ever since I started working, the issue has been that the European Commission wishes to put an end to the German system of public savings banks. It has already been an issue twen‐ ty years ago, when I was with Gerhard Schröder in the State Chancellery in Lower Saxony. But today we may say that our savings banks have sur‐ vived the financial crisis rather well, in other words, they do actually make sense. Talking about services: I believe that when we talk about changing the way that services are rendered, we must talk about smart and digital ser‐ vices, and we should not so much concern ourselves with whether we should actually have registers in Germany or not. The digitization is an II II.1 25 important key factor for the success of services and for the SMEs who ren‐ der them. We should mainly focus on this. Nevertheless, it is right for the Commission to say that it wants to dis‐ cuss everything that could be an obstacle for cross border services. Just like the Commission we believe that the internal market for services should be further strengthened. However, this certainly must be discussed in individual cases. Personally, I do not believe that our German architects do not build in France and the United Kingdom, just because we have the HOAI (honorarium code for architects and engineers) here in Germany. But I do rather believe that they do not build there (and vice versa), either because they do not speak the language and/or because they are not famil‐ iar with the contract legislation prevailing there. I think the actual impedi‐ ments are that we do not have uniform European contract law or at least some broad similarities. This is what makes it hard for some people to work across borders. And I strongly believe that deregulation will lead to large companies, such as big law firms and architectural offices. Those big firms can more easily afford to employ specialists, who can deal with these aspects. But one should then ask oneself, whether this is what is wanted. Do we really want the very small offices with two, three or four employees to close down or get absorbed by big firms? Do we want a deregulation which ac‐ tually leads to “monopolisation” or at least oligopolies? This would not be my idea of a sensible commercial development. The services sector is rather important in our economy, as you all know. Seventy percent of all value creation occurs in the services sector and it employs three quarters of the entire German workforce. A significant part of that what we refer to as services comprises inputs for other industrial sectors. The major points of criticism of the Commission concerns mostly the professional services. In Germany, professional services are seen as in‐ dependently exercised activities in the fields of science, authoring and ed‐ ucation. It is defined that way in the Income Tax Act, and by that defini‐ tion we have more than 1.3 million self-employed members of these pro‐ fessions in Germany. With us, many of the professions are governed by so-called codes of conduct and that is the stumbling block that is at issue here. These professions are architects, physicians, lawyers, fiscal consul‐ tants, auditors, notaries. However, employment is developing rather well in Germany. We have a growing number of self-employed as well as employees in the sector of the professional services; a growing number of new business activities in II The Practical View 26 Germany are established in the field of professional services, though the number of employees with mandatory social insurance has also risen by 3.7 % during the past year. We may have a rather high level of regulations, compared to some other countries. The Commission is now of the opinion that the professional ser‐ vices cannot develop their full potential on account of the laws as well as the regulations promulgated by professional associations or chambers. However, the existing regulations are not a purpose by themselves, but rather they serve a particular regulatory purpose that must be justified un‐ der constitutional categories (proportionality and freedom of choice of oc‐ cupation). I have myself looked for three years after legislation affecting solicitors and barristers at the Federal Constitutional Court. Any restric‐ tion on the free choice and exercise of occupation has to be justified and proportionate. And we find that precisely the professional services have regulations which serve to protect an important common good. In the case of physicians, it is rather obvious that this is about health care. The solici‐ tor or barrister is a constitutionally recognised body of judicature: He or she guarantees access to justice and as body of judicature they hold a spe‐ cial position in the legal system. Auditors carry out the legally prescribed audits of annual accounts. Those professional services do indeed differ from other services, precisely through their orientation on a common good. This clearly is the legitimisation of the regulations. Obviously, the regulated fees do also serve to protect consumers, because they have the comfort of knowing that they can consult a solicitor who does not after‐ wards send excessive invoices. The same is true for architects, who are bound by minimum and maximum fee levels. The Federal Constitutional Court holds that those regulated standardisa‐ tions are also an assurance of quality and most of all of an assurance of independence in exercising the profession. Any legislation is only justified when it is necessary and required. Therefore the legislator must test again at every juncture to what extent times have changed, leading to the need for a change of legislation. Now, we have seen the European Union’s initiative for transparency and are verifying it also within the framework of our regulations. Follow‐ ing those verification activities, we have submitted our action plan to the Commission at the beginning of the year and presented in it some consid‐ erations for amending particular professional rules. And in any case we have plans for relaxing the rules on exercising a range of professions and have, indeed, already implemented some of those. They affect primarily II.1 Brigitte Zypries 27 the professions that are closely linked with the economy, exercised by so‐ licitors, patent attorneys, fiscal consultants and auditors. The market for auditing annual accounts is being opened up further for audit firms, regis‐ tered in the EU. The legal form requirements have been relaxed. By now, it is no longer forbidden in Germany to run a veterinary practice, incorp‐ orated as a legal person. Other reforms concern the mandatory ongoing education of physicians and medical specialists and right now legislative proceedings are under way in the German Second Chamber for unifying and newly organising the occupational training of health workers and nurses. The legislative proceedings are under way, albeit against the strong opposition from paediatricians. So you can see, the Federal Government is already taking the legal oc‐ cupational arrangements seriously and is also making the case for mod‐ ernisation and adjustment of the regulations where necessary. But we also believe that such justified and proportionate regulations must be kept in place in order to ensure the quality of apprenticeship places. The same goes if it serves the assurance of appropriate consumer protection. As you probably all know, there is a particular problem with the fee regulation for architects and engineers, because currently an infringement proceeding is under way. The Commission is criticising us for having min‐ imum and maximum wages for architects and engineers, as laid down in the HOAI. The Federal Ministry of Economic Affairs will defend the HOAI in this proceeding, because we cannot see any infringement of the services directive or of the freedom of establishment. From the point of view of consumer protection it makes sense to pre‐ serve the fees arrangement, since it gives the principal the certainty that he is not being cheated because verifiable, fixed maximum and minimum prices exist. Therefore, a principal with low income is not forced to make use of the services of a cheap but bad architect. Regarding fiscal consul‐ tants we have agreed to a conversion to non-binding prices. This means that, in principle, the fees table is maintained but it will only be applied if no other arrangements have been agreed upon. Furthermore, it means that it is possible to deviate from the laid down fees table, which meanwhile is also the case in the area of legal counselling fees. I see this as quite a clever solution: Consumers have a guideline for what they have to pay, but can deviate from it if they can agree on something else. Professor Holtemöller, you have started with quoting a study of how regulations affect the development of productivity. In our experience, the available data make comparison of regulations with those in other coun‐ II The Practical View 28 tries relatively difficult. The causes, statements on cause and effect, are usually fairly vague and it is not so clear what is actually being measured. One could also ask whether that opening up would really lead to an in‐ crease in productivity. We know that in the United Kingdom, the limita‐ tions on capital participations in legal counselling services have been lift‐ ed. It has led to much bigger chanceries. But whether it has also led to lower prices did not become clear to us. Empirical data ought to be col‐ lected. Indeed, the mere fact that bigger units are being formed does not necessarily mean that prices will fall. I believe it should be questioned whether we want such oligopolies in the field of architecture. Well, you will notice straightaway that I am distinctly sceptical about it. Nevertheless, I do not wish to deny either that even in our ministry there are people who certainly have different opinions in this regard, as indeed have also some members of the Federal Government. It is important here to conduct empirical research into what might actually be the result of deregulating. Would it lead to larger units? What would be the effect on prices or the effect on choice of occupation? Of particular importance to us in Germany is, what would happen to the dual education system and what would happen to the Meister degree and to qualified training? I be‐ lieve that your conference today will make an important contribution to us focussing on these questions. I wish you further fruitful exchange of ideas. II.1 Brigitte Zypries 29

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Abstract

‘How Can We Boost Competition in the Services Sector?’ is a key question in the process of creating a more effi-cient economic environment in Germany. This book contains a collection of conference contributions on service sector reforms from members of academic institutions, ministries, the EU Commission and other organisations. The conference consisted of a keynote on the importance and implementation of structural reforms in Europe and two panels that dealt with the evaluation of past reforms in the services sector and the potential scope and effects of further reforms.

Since the 1990s, productivity growth in Germany and other Member States of the European Union has been significantly lower than in the US. The development of productivity growth in the services sector is estimated to account for two thirds of this widening gap. The European Commission advocated reforms in the services sector in its country-specific recommendations for Germany. At a conference in Berlin in July 2016, experts from various fields presented and discussed studies on service sector reforms.

With contributions by

Oliver Holtemöller, Brigitte Zypries, Joaquim Nunes de Almeida, Dirk Palige, Henrik Enderlein, Stefan Profit, Davud Rostam-Afschar, Paolo Mengano, Oliver Arentz, Erik Canton, Jochen Andritzky

Zusammenfassung

„Wie können wir den Wettbewerb im Dienstleistungssektor stärken?“ Dies ist eine Schlüsselfrage für eine größere Leistungsfähigkeit des ökonomischen Umfelds in Deutschland. Dieses Buch versammelt Konferenzbeiträge von Mitgliedern wissenschaftlicher Einrichtungen, von Ministerien, der EU-Kommission und anderen Organisationen zu Reformen im Dienstleistungssektor. Die Konferenz umfasste einen Eröffnungsvortrag zur Bedeutung und Durchführung von Strukturreformen in Europa und zwei Gesprächsforen zur Bewertung vergangener Reformen im Dienstleistungssektor und zur möglichen Reichweite sowie zu den möglichen Auswirkungen weiterer Reformen.

Die Zunahme der Produktivität ist seit den 1990er Jahren sowohl in Deutschland als auch in anderen Ländern der Europäischen Union deutlich geringer als in den USA. Es wird geschätzt, dass die Entwicklung des Produktivitätszuwachses im Dienstleistungssektor für zwei Drittel dieses zunehmenden Abstandes verantwortlich ist. Die Europäische Kommission spricht sich in ihren länderspezifischen Empfehlungen zu Deutschland für Reformen in diesem Sektor aus. Auf einer Konferenz im Juli 2016 in Berlin stellten Experten aus unterschiedlichen Bereichen Studien zu solchen Reformen vor und diskutierten deren Ergebnisse.

Mit Beiträgen von

Oliver Holtemöller, Brigitte Zypries, Joaquim Nunes de Almeida, Dirk Palige, Henrik Enderlein, Stefan Profit, Davud Rostam-Afschar, Paolo Mengano, Oliver Arentz, Erik Canton, Jochen Andritzky