Construction services are key to the EU economy. Construction works undertaken by builders and developers account for 6.1% of EU GDP and 7.3% of EU employment. Based on its high economic importance and low single market integration, the European Commission has identified construction as a priority services sector for internal market policy action.
The construction sector was particularly impacted by the economic crisis and its recovery is proving slow in the face of relatively low average productivity and persistent legal barriers. Restrictive national regulation results in little cross-border activity. There is significant untapped growth potential for construction services in the EU today if construction service providers are allowed to make full use of a true single market.
The 2006 Services Directive introduced rules and principles to allow services providers across many sectors, including construction service providers, to more easily establish in another EU country or to provide temporary services across borders.
In 2011, the Construction Product Regulation laid down harmonised rules for the marketing of construction products in the EU, and also helped providers use construction products cross-border by introducing common rules for assessing their performance.
For public works, construction service provider activities are also the object of specific EU Procurement Law.
Beyond internal market legislation applicable to professional services in the field of construction (architects, engineers and craftsmen), the performance of construction services is directly impacted by specific fields of law, including environmental, energy efficiency, urban and spatial planning, labour and social security law, with some of this legislation introduced at EU level.
Performance check of the internal market in construction services
The Commission carried out 'performance checks' as part of the work plan announced in its 2011 Communication, 'Towards a better functioning single market for services'. This assessed how different pieces of EU legislation applying to services, such as construction services, work together in practice. The fact-finding exercise concluded that there was a significant disparity of implementation of the EU Law in question across EU countries, resulting in barriers to cross-border service provision.
Strategy for the sustainable competitiveness of the construction sector and its enterprises
In 2012, as part of the Europe 2020 initiative, the Commission published a Communication, ‘Strategy for the sustainable competitiveness of the construction sector and its enterprises’. One of the areas addressed was the regulatory framework faced by construction economic operators, including construction service providers. The objective is to reduce the administrative burden for construction enterprises. To achieve this, a coherence exercise is underway that examines EU legislation impacting the construction sector is underway.
Studies on obstacles to construction service provision in the internal market
National rules for construction services often exist but are very disparate across EU countries. This is partly because there is no harmonisation at EU level (member countries set out most of the applicable requirements). The very disparate regulatory approaches of EU countries are sometimes even beyond what EU law allows.
The Commission has endeavored to inventory and assess, in the framework of EU law applicable to services in the Internal Market, the different kinds of rules that exist at national level for construction service providers active across Internal Market borders. These studies help us to identify breaches of EU law and potentially find solutions for further Internal Market integration.
The first study ‘Simplification and mutual recognition in the construction sector under the Services Directive’ (2016), assessed the impact that the Services Directive had on authorisation schemes imposed on construction service providers. This assessment covered market access for the provision of construction services in general as well as other authorisation schemes imposed in the context of performing construction work at a certain site (commonly referred to as 'building permits'). The study found a wide range of persistent obstacles to both establishment and temporary cross-border provision at both regulatory and administrative levels.
The second study ‘Study on costs involved in accessing markets cross-border for provision of construction services’ (2018) inventoried the other type of authorisation schemes imposed on construction service providers i.e. those imposed in the context of market access for the provision of specific segments of the construction services market (commonly referred to as 'installation services'). The services covered in this study were installation of F-gas equipment, energy-efficiency related installations and heating equipment in general, electrical, gas, telecom, water and sewage installations, installation of elevators, fire protection and alarm systems, pressure and hoisting installations, as well as asbestos removal services. This study also consolidated the information gathered under the 2016 study and assessed the costs cross-border construction service providers face in complying with the administrative formalities of obtaining all the required authorisations.
A third study, due to be released in early 2020, will focus on inventorying the rules for using construction products while providing construction services. EU law, notably the Construction Product Regulation and the Services Directive, requires EU countries to govern the use of most construction products that use performance-based rules. The rules allow for the use of any variety of construction products that meet certain performance requirements. They set the performance requirements in a non-discriminatory and justified manner, as per overriding reasons of general interest, using necessary and proportionate rules. This study will seek to determine whether this is indeed the case in the regulatory practice of EU countries.