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.