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

The European Commission contracted four 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 and to underpin the follow-up actions on regulated professions presented in the Single Market Strategy with empirical evidence.

The results of three studies (Germany, Greece, Italy) show 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 have been found.

The UK study looks at the effects of changing regulation in the opposite direction, i.e. restricting access to a couple of selected professions.

The studies are based on solid datasets and methodology and have been carried out by top 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.

Overview

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 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 put 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

Greece enacted an extensive legislative reform in 2011 aiming to lift restrictive entry and conduct regulations 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

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 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

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