Push for jobs in EU business services sector

Date: 01/10/1998

By Chris Johnstone

EU INDUSTRY ministers will be urged this weekend to support proposals designed to boost Europe's business service industry.

The European Commission will tell them that the sector has more potential to create jobs than any other, but warn that the Union's performance is already lagging behind that of the US.

A paper drawn up by the Commission ahead of an informal ministerial meeting in Austria which begins tomorrow (2 October) calls for more concerted action to help the sector, but stops short of demanding that a specific programme be drawn up to achieve this.

Ministers are expected to approve its recommendations without much discussion.

Business services embrace everything from management consultancy, computer services, marketing and personnel services to cleaning and security. This rather amorphous mix currently employs around 11.5 million people in the EU, with more than 2.5 million small companies involved.

The Commission paper on a common policy framework for the sector points out that the wealth created by business services exceeds that of the banking, insurance, transport and communications industries combined, and amounts to 72&percent; of that from manufacturing.

Jobs in the sector have mushroomed as more and more companies have opted to spin off work to outside contractors, although around 20&percent; more people still work for 'in-house' business services than for independent companies contracted to provide them.

The Commission's paper presents an upbeat analysis of the sector's future prospects, with the industry becoming more competitive and cutting prices as the use of business services becomes even more widespread.

“Estimates of the potential growth in this sector could be based on the fact that over the past 14 years employment has grown by 5.5&percent; per year on average, higher than in any other sector of the economy. There are no reasons to believe that this pattern will change,” it states.

It adds that if Europe follows the example of the US, more than 3 million new jobs could be created in the business services sector.

Commission proposals to unlock this potential include boosting the use of business services in the less developed and peripheral parts of the Union; encouraging competition between companies; and pushing for international barriers to be brought down.

Its paper points out that most business services are concentrated in cities, with the result that regions and small and medium-sized business are often unaware of how they can be helped.

It suggests that EU funding for struggling industries and regions should be better focused on raising awareness of how they could benefit from such services and of what they can offer, partly through the use of the 'electronic highway'.

The report says existing Union initiatives which indirectly promote business services as part of the fight against unemployment, such as the Small and Medium Enterprise Guarantee Facility, the European Technology Facility, and the Joint European Venture Facility, have so far failed to increase their appeal.

The Commission argues that a single market review should be launched to identify all the barriers which prevent such companies from competing across borders.

It points out that newcomers trying to break into the market tend to be shunned because companies which use outside contractors fear the unfamiliar and prefer to stick with their established service providers.

The Commission suggests that the vetting of existing rules should include all national and administrative obstacles as well as self-regulatory professional codes. It adds that all such rules should be judged according to whether they are really necessary.

It also argues that EU rules governing how tenders are made for large public contracts should be reshaped to provide more opportunity for discussion between purchasers and suppliers. The existing regulations, which are currently being reviewed by the Commission, demand an arms-length relationship between the two and only allow for increased contact in exceptional circumstances.

At an international level, the Commission says that the EU should press for world-wide trade in business services to be boosted as part of the forthcoming round of General Agreement on Trade in Services (GATS) 2000 negotiations.