3.2.2009   

EN

Official Journal of the European Union

C 27/26

1.1

Ms Margot Wallström, Vice President of the European Commission for Institutional Relations and Communication Strategy and Günter Verheugen, Vice President for Enterprise and Industry, asked the EESC to draw up an exploratory opinion on business services by undertaking a follow-up and further analysis on a previous opinion (1) that considered business services and industry.

1.1.1

This study should keep in mind the great importance attached by the European Commission to the Lisbon Agenda to preserve and increase European industry's competitiveness by managing the process of change in line with the European strategy for sustainable development and on the social level by encouraging the emergence of representative social partners to negotiate at the appropriate level.

1.1.2

The achievement of such objectives must move in parallel with the simplification of the regulatory framework for industry, a political priority constituting one of the key planks of the Commission's industrial policy.

1.1.3

Moreover, this industrial policy is characterised by an integrated approach that takes into account the needs of the different sectors.

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Action on Business Services Policies and a High Level Group. It is recommended that a High Level Group on Business Services be set up to undertake deeper analysis of the sector, to screen existing policies in order to identify and assess the more effective and successful of these in regard to business services, and to design concrete policy actions to address major gaps and needs. Particular attention should be paid to the very diverse nature of the different business services subsectors in order to identify which ones deserve major policy attention and at which level (regional, national, EU) policy action is justified.

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Labour Market Policies in Business Services. From a social perspective an in-depth examination is required at sectoral level of the challenges being created by the new types of employment generated by interactions between business services and manufacturing industry. This analysis needs to encompass education, training and life-long learning, as well as the employment conditions of workers, including those involved in outsourcing processes. To achieve this objective social dialogue at a sectoral level should be encouraged. In this context, an agenda should be drawn up to discuss specific changes in labour conditions and job opportunities resulting from structural changes affecting the business services sector.

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Business Services in Innovation Policies. R&D and innovation programmes and actions for service innovation should be strongly promoted. Areas such as organisational innovation, Knowledge Intensive Business Services (KIBS) and innovation management deserve more attention.

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Business Services Standards Development. Enterprises should be encouraged to help establish standards through self-regulation after thorough consultation with users of business services. The support of CEN and its Associates (open platform) is important to disseminate the fruits of successful innovation, especially through rapid informal consensus-building

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Promoting Service Science as a new discipline in education and training.

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The Internal Market and Regulation affecting Business Services. The EESC has identified a list of areas that need to be tackled in order to bring about simplification, clarification and a reduction of regulatory burdens, obviously without weakening existing health and safety at work requirements and worker representation obligations. Amongst other things, attention is drawn to the fact that no impact assessment has been carried out of the Services Directive on business services and that this deserves a major effort, especially once the directive has been transposed into national legislation. This should include the identification of possible further actions concerning more open trade and competition in the enlarged EU Internal Market.

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Further Improvements in Business Services Statistics. Member States are recommended to collaborate more in order to improve statistics on business services and, in particular, to have better information on their performance and their effects on the economy of Member States — a necessary tool for governments if they are to help the sector develop its potential. Recent amendments to Chapter 74 of NACE will still not be enough to provide the necessary details required to capture meaningful data on business services.

3.1

Background. The EESC own-initiative opinion adopted in September 2006 — CCMI/035 — proposed that more serious attention be paid to business services because of the contribution they make to the performance of European manufacturing industries. That opinion explained the interactions between services and manufacturing and the impact on social and economic performance in terms of employment, productivity and competitiveness. That was taken as the starting point for this follow-up and further analysis of business services. It would be well to start the present opinion by defining business services as a set of service activities that — through their use as intermediary inputs — affect the quality and efficiency of production activities, by complementing or substituting in-house service functions (Rubalcaba and Kox, 2007). This definition has some equivalence with NACE rev. 1 (codes 72-74) and with the new version of NACE (codes 69-74, 77-78, 80-82) and the aggregation of different categories of services. There are two major categories within business services:

The aim of this opinion is to help this sector earn more recognition, to enable it to develop without hindrance and to help European economies in their efforts to become more competitive in the global market.

3.2

Importance of Services and Business Services. Services have an increasing place in the mindset of citizens, professionals, companies, regions and countries. Services to a large extent dominate the new demands and supplies of economic and social systems. Although they are present in most aspects of economic and social life, much of their activity is not captured by statistics. The traditional breakdown among productive sectors, even if it is incomplete and hides the strong interrelations among economic sectors, allows us to estimate the importance of major economic activities (see chart 1). Services as an economic sector are of increasing importance in Europe, with a share in total employment smaller (at 70 %) than in the United States (80 %) and larger than in Japan (67 %). In all these three areas, the particular subsector of business services has grown at a very dynamic pace, leading to similar increases in the share of total employment. Enterprises that provide business services as their main activity account for 10-12 % of total employment and value added. If one considers the business services produced as a secondary activity, the percentage employment would be much larger. In Europe in 2004 (see chart 3), the countries leading the business services economy were the Benelux area, the United Kingdom, France and Germany. In the period 1995-2004, some countries — Hungary, Poland, Austria, Latvia and Malta, among others — increased their business service sector quite substantially. This suggests a certain convergence process between some EU countries. These country positions only represent employment in companies that have business services as their main activity. Most of them are SMEs.

3.3

Assessment of Developments. The EESC has now re-assessed the situation in the light of developments since its previous opinion of September 2006 (CCMI/035) and noted with satisfaction how the importance of business services in manufacturing has acquired greater weight in decisions taken by the Commission:

3.4

Supportive Actions to benefit Business Services. On top of the major on-going EU actions promoting business services in industrial and innovation policies, and the potential spillovers generated by the internal market directive, there are other Commission actions that indirectly support the role of business services in manufacturing:

3.5

Major Needs of the Business Services Sector. Despite the current progress in actions related to services, major gaps and needs have to be considered. The current European policy framework is heavily biased towards the manufacturing industry, although services constitute by far the largest segment of the economy and contribute to growth in any aspect of business and social life.

3.5.1

Most of the horizontal and sectoral initiatives under the EU Industrial Policy, both at national and EU levels, focus on manufacturing industry regardless of the intrinsic supportive role that business services play in it. There is therefore an urgent need to establish a balanced EU policy that does not underestimate the importance of business services to the global competitiveness of European manufacturing itself and to the economy as a whole. Horizontal policies targeted at any economic sector must be truly horizontal and match the needs of firms and workers in the new service economy, where industrial and service sectors are inextricably linked, by create new opportunities for the European economy in the global market place as a direct result of synergies between them. Many of the EU policy initiatives that make up industrial policy must be adapted and applied to services. This involves matters such as: a fully effective internal market for services, international trade, state aid rules, labour market, social measures, training and regional policy, R&D, innovation, standardisation, entrepreneurship, and better statistics and information, taking into consideration, where appropriate, the specific needs of services. This should not be taken to mean that all policies should be vertical-specific to services. It should rather mean that the implications of all these policies in services should be screened and, when appropriate, specific actions should be taken.

3.5.2

Some major needs can be identified in the following areas:

3.6

Interactions between business services activities and targeted policies. Chart 4 attached to this report shows how tentative comprehensive actions could interact and enable business services to develop forcefully to face the challenges ahead. Synergies and interactions between different types of policies should be taken into account.

3.7

Economic rationale is needed when designing specific EU policies to boost the operations of business services, as Kox and Rubalcaba have recently demonstrated (Business services in European Economic Growth, 2007). In support of their arguments they mostly highlighted market and systemic failures such as information asymmetry and externalities.

3.8

Lisbon Agenda 2008-2010. Policies related to business services could be helpful in the context of the proposals for the Community Lisbon Programme 2008-2010 (COM(2007) 804 final). Most of the ten key objectives to be accomplished by 2010 affect services either directly or indirectly.

3.8.1

The Commission will propose a renewed Social Agenda by mid-2008 and will help to address the skills gap. Important deficits and needs may be identified in most business services, which are very labour intensive. In its opinion on ‘Employment of priority categories (Lisbon Strategy)’ (9), the EESC noted that the ambitious Lisbon employment objectives had only been achieved to a limited extent and that many of the new jobs created in recent years, particularly in the case of women, were part-time. Older workers were still faced with a manifest shortage of suitable vacancies, and young people in particular were mostly finding atypical (non-standard) forms of employment, in some cases without proper legal and social safeguards. The EESC opinion stressed that in the context of flexicurity there should be a high degree of social security, active labour-market policies, and education, further education and training.

3.8.2

Earlier this year, the Commission put forward proposals for a common policy on immigration. This may affect the immigration of highly qualified workers in areas such as knowledge-intensive business services and less qualified workers in activities such as cleaning or security services.

3.8.3

The Community will adopt a Small Business Act to unlock the growth potential of SMEs throughout their life cycle. Business services is the sector with the highest start-up and wind-up rates, so particular attention to new SMEs is deemed to be appropriate. In its opinion on ‘Business potential, especially of SMEs’ (10), the EESC advocated better targeted and streamlined integrated guidelines on SMEs for growth and jobs for the years 2008-10. SMEs will also benefit from the reduction of EU administrative burdens by 25 % by 2012.

3.8.4

The Community will strengthen the single market and increase competition in services. The same EESC opinion (INT/324, quoted above) complains of the incomplete single market, especially slow implementation of directives by Member States, administrative burdens and lack of labour mobility. These are huge barriers for SMEs to surmount.

3.8.5

The Community will turn the fifth freedom (the free movement of knowledge) into reality and create a genuine European Research Area. Knowledge-intensive business services may have a role to play in this Lisbon priority.

3.8.6

The Community will improve the framework conditions for innovation. The EESC has also produced an opinion on ‘Investment and Innovation’ (11). The main thrust was that Europe has to stay ahead in research, technological development and innovation and that more funding from the EU budget, improvement of education facilities and a general raising of standards were necessary. Also needed were: a social climate that is open to progress and innovation; the creation of the necessary conditions and the taking of decisions that give enough business confidence and optimism for investors to put their capital into new ventures in Europe; raising awareness of the fundamental significance of basic research and instilling an entrepreneurial spirit for those who are willing to innovate and take risks; and accepting a certain level of failure and losses that inevitably comes with risk. The EESC also looked at the legal and social environment for innovative entrepreneurship and an innovation-friendly market.

3.8.7

The Community will promote an industrial policy geared towards more sustainable production and consumption. The role of environmental business services in industrial policy may be placed under this priority.

3.8.8

The Community will negotiate bilaterally with key trading partners to open up new opportunities for international trade and investment and create a common space of regulatory provisions and standards.

4.1

Priority 1: A High Level Group on business services should be set up by the European Commission in the context of enterprise and industrial policy to ensure that policy actions take the broader view of services in their interactions with industry and economic activity as a whole. The following could be the main objectives of such a High Level Group:

4.2

Priority 2: A social dialogue dedicated specifically to the business services sector should be encouraged to discuss and formulate recommendations concerning:

In practice, the viability and effectiveness of such sector-based social dialogue (e.g. recognition of agreements, organisational support) will depend on the identification and recognition of representative European organisations of employers and employees.

4.3

Priority 3: R&D and innovation in services:

4.4

Priority 4: Development of Standards. Standards in services have been slow to develop. They are generally demand driven. On the side of business service providers there are structural problems. For the most part, these are small enterprises that do not belong to representative organisations in their country and this is also reflected at European level, where the category is not well represented in any European organisations. The only way to improve the situation, then, is for users to be mobilised to express their requirements. The market for business services stands to gain immensely from clear standards in this area. The development of standards can be useful to:

4.5

Priority 5: Further improvements in business services statistics. Policy actions depend on analysis of ongoing trends that can only be gauged from clear and meaningful statistics. The apparent lack of satisfactory productivity increases in relation to the USA could be partly due to unreliable statistics based on a methodology used to measure manufacturing performance. Further refinement of business services statistics demands not just a decision from Eurostat, but collaboration from national governments to change their methods of gathering statistics. Particular attention should be paid to measuring the role of business services within other industrial and service sectors.

4.6

Priority 6: Service Science

Service science (or Service Science, Management and Engineering, SSME) is a new emerging discipline covering the diverse and fragmented approaches towards services: service economics, service management, service marketing and service engineering, among others. The need for promotion and better integration of all these areas is being recognised by service researchers and businesses. Service engineering provides a good example within Service Science. It is a specific technical discipline concerned with the systematic development and design of service products using suitable models, methods and tools. Although service engineering also embraces aspects of service operations management, one of its key focuses is the development of new service products. At the same time, service engineering is also concerned with the design of development systems, in other words with service-related questions of general R&D and innovation management. Integrated approaches for co-engineering physical goods, software and services will become an established feature.

Fundamental research into new business models, methods and tools will give service science a valuable boost. Finally, the growing harmonisation of service standards will encourage the specification and efficient development of new services (12).

Service engineering is one of the few fields in the service sector that has been substantially shaped by European research. Closer integration in international networks and the systematic development of an independent service engineering community are essential in order to sustain a leadership role in this field in the future (13).

4.7

Priority 7: The Internal Market and regulation of Business Services

Reduction and simplification of the regulatory burden. There are several restrictive factors that work against enterprises in business services and neutralise their efforts to increase their productivity and to seek business in other Member States. These include problems of labour mobility and recognition of education qualifications. The volume and complexity of regulation has grown in recent years and this has increased the burden on small service providers. The most relevant points requiring attention are: