End of closed shops is good for jobs

The abolition of «closed-shop» professions, where new entries are hampered by a host of irrational licensing restrictions and minimum tariffs, would benefit both consumers and employment, according to an EU-wide survey. The study, prepared on behalf of the European Commission, says that the deregulation of professions and services in Greece, as in the gaming sector – where OPAP has exclusive rights to organize betting and numerical games until 2020 – would have no negative effect on unemployment or the functioning of the single market. In fact, it is projected to boost growth and reduce joblessness by 0.35 percent. Abolition of minimum tariffs in services and the entry of new competitors would lower costs in many services. The findings of the survey come to confirm those of older studies, such as that of Greece’s reputed Center for Economic Planning and Research (KEPE), which in 2001 estimated that the full liberalization of 15 professions would boost annual economic growth by 1.6 percent. It would be true to say that closed-shop professions, with artificial barriers to entry such as special licenses, examinations and Greek nationality, protect existing jobs in the particular fields of activity. However, Greece is automatically protected to a large degree from foreign competition by its language: Considered one of the most difficult in the EU, it poses serious obstacles to the entry of foreign professionals anyway, and almost insuperable ones in some fields, as the legal profession and notaries public. Moreover, the Greek market is small, which means it is not easy for a foreign advertising or legal firm, for instance, to open a branch in Greece without having previously secured a minimum clientele. Reactions were strong against proposals for deregulation in the past, as in early 2000 by the then-economy minister Nikos Christodoulakis, forcing their withdrawal. The issue has resurfaced with a recent initiative by the European Commission, which is planning legal changes. Sources say these are aimed at the «abolition of antiquated regulations restricting competition among professionals and burdening the consumer without due reason.» The changes will be focused on six professions: attorneys, notaries public, engineers, architects, pharmacists, accountants and tax specialists. As an example of outdated legislation, the Commission cites the banning of advertising which restricts consumer information and the setting of prices for specific services. «Closed» professional shops, of course, are not only a Greek phenomenon. When the European Commission unveiled its draft Bolkerstein Directive on a single services market in the EU, there were very strong reactions from politicians and professional organizations, especially in large countries like Germany. Certain professional groups, such as taxi drivers, believe they are threatened by the potential entry of competitors from the enlargement countries. The debate on the directive froze after the European Parliament’s recent proposal for an amendment of the so-called «country-of-origin» principle, under which a firm setting up shop in another country is subject to the laws of the country of origin.

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