Internal Market, Industry, Entrepreneurship and SMEs

The effects of reforms of regulatory requirements to access professions: country-based case studies

The effects of reforms of regulatory requirements to access professions: country-based case studies
Published on: 16/01/2017
The European Commission contracted 6 independent studies at country level to assess the economic effect of reforms of regulatory requirements to access professions. This was done to support the mutual evaluation process. It underpins the follow-up actions on regulated professions presented in the Single Market Strategy with empirical evidence, and is also relevant in the context of the Services Package adopted on 10 January 2017.

2 case studies were completed in autumn 2016, covering Austria and Poland. The study on Austria highlights the complexity of isolating the effect of a specific amendment from other developments, while the study on Poland shows the positive effects of lifting restrictions in a number of professional services, including on the number of professionals and the prices of the services.

4 other case studies were published in October 2015. The results of 3 of the studies (Germany, Greece and Italy) showed that the liberalisation of professional requirements led to further opening of the market. The precise effects of liberalisation differ depending on the countries and the professions targeted by the reforms, but no or few indications of negative impact were found. The UK study looked into the effects of changing regulation in the opposite direction, i.e. restricting access to a couple of selected professions. 

All these studies are based on solid datasets and methodology and have been carried out by academic experts in the field. While they constitute an important element in better understanding the economic effects of reforms, they do not express any Commission position regarding liberalisation of regulatory requirements.

Overviews of the studies

Austria's case study analyses the effects of 8 regulatory amendments (e.g. liberalisation of entry barriers, new legal forms of organisation, restructuring of the way the respective professions are organised) which took place between 2002 and 2014 in the field of liberal professions such as architects, engineering consultants, accountants/tax advisers and lawyers. Overall, the authors arrive at mixed conclusions and hint at the difficulty of disentangling the effects of a rather specific reform on employment, entry rates, wages, etc. from other developments which also influence the behaviour of the professions under review. The results in this report can still be interpreted as a first indication of possible effects however, supporting the need for further research in this area in Austria and Europe.

Effects of Liberalisation in Austria using the Example of Liberal Professions, L.W. Chini, A. Minichberger, E. Reiner, M.H. Grafl, Wirtschafts Universität Wien and Forschungsinstitut fur freie Berufe, 2016 (PDF, 2MB)

In Poland the impact of the reforms on 22 regulated professions which took place between 2005 and 2014 was analysed. For instance, it was found that the clarification of the criteria for admission to the profession for lawyers and legal advisers was followed by a major increase in their number. This was accompanied by a less-than-average increase in the price of legal services and a reduction in the earnings of lawyers and notaries. After the lifting of the licensing obligation for taxi drivers there was an increase in the number of taxi drivers' licences in cities where access had been made easier and a drop in the price of taxi services for the first time. After deregulation of the professions of real estate agents and real estate managers, net creation of business in the sector was positive. The reform of the professions of city tourist guide, land tourist guide and tour leaders also coincided with an increase in the number employed in the sector.

The Effects of Reforms liberalising Professional Requirements in Poland, M. Rojek and M. Masior, Warsaw School of Economics, 2016 (PDF, 5MB)

In Germany, the requirements based on qualifications were made less stringent in 2004 for number of craft professions. As a result, the number of new entrants into these professions doubled between 2002 and 2008. Five years after the reform there were still more start-ups than companies going out of business. One of the direct consequences of reducing the qualification requirement for setting up a business is that fewer of the self-employed hold a degree.

Evidence presented shows that training activities have not been significantly reduced due to the reform. The number of people starting an apprenticeship had already declined in both groups of occupations (deregulated and not deregulated) before the reform. The author also argues that the reasons for the decline in the number of apprentices in craftsmanship may be linked in particular to an increasing number of people choosing to study at universities.

Importantly, the study does not call into question any particular education system (dual or unitary) or the required quality level of service provision.

Regulatory Effects of the Amendment to the HwO in 2004 in German Craftsmanship, Davud Rostam-Afschar, Free University Berlin and German Institute for Economic Research (DIW Berlin), 2015 (PDF, 848kB)

Greece enacted an extensive legislative reform in 2011 aiming to lift restrictive entry and conduct regulation in a large number of professional services. The analysis provides indications of positive effects for the regulated professions as a whole, as without the reform, the recession-induced reduction in their employment would have been larger, and the subsequent slight recovery in their employment would have started with a delay. More specifically, the reform lead to significantly lower prices for consumers of services of real estate agents, and, to a lesser extent, of legal professions, accountants, tax consultants and physiotherapists. The number of start-ups for notaries, auditors, tourist guides and chartered valuers more than doubled in 2014 compared with the yearly average before the liberalisation.

The effects of liberalisation of professional requirements in Greece, E. Athanassiou, N. Kanellopoulos, R. Karagiannis, A. Kotsi, Centre for Planning and Economic Research (KEPE), Athens, 2015 (PDF, 2MB)

In Italy, the Bersani reform of 2006 lifted the ban on commercial advertising and contingent fees (forbidden until then to members of most professional associations) and liberalised the market for over-the-counter drugs, allowing supermarkets to enter a highly-regulated market in direct competition with pharmacists. Results show that the reform brought new entrants into the market for over-the-counter drugs, increasing demand for pharmacists and leading to higher earnings of young pharmacists and their higher overall employment. Evidence shows that the reform had little or no impact on the market for legal professions, arguably due to the lack of sufficient implementation of the new provisions into the codes of ethics and deontology of each of the affected professions.

The effects of recent reforms liberalising regulated professions in Italy, Mario Pagliero, University of Turin & Carlo Alberto College, 2015 (PDF, 548kB)

In the UK, the study explores the impact of the introduction of licensing for nursery school workers and for security guards. For the former, it had a negative effect on employment and wages but a positive effect on skill levels. For security workers, wages went up but there was no effect on employment or skills. In both occupations a positive impact on quality was observed. For security guards increased quality was achieved through requiring a clean criminal record. The authors suggest than that depending on the profession, a high level of quality can be ensured by regulation of other aspects than qualifications.

The Effects of Occupational Licensing on Employment, Skills and Quality: A Case Study of Two Occupations in the UK, Maria Koumenta, Amy Humphris, Queen Mary University of London, 2015 (PDF, 1MB)