On 29 December, the Services Directive adopted in November 2006 was transposed into law in Germany. In 2005 and 2006, German and European trade unions, along with Attac, numerous employers' liability insurance associations and left-wing parties had protested massively against the Service Directive and the "country of origin principle".

According to the country of origin principle, EU companies providing services – in which the EU includes skilled trades people or goods producing industries – are only subject to the laws of their country of origin. This principle was moderated slightly due to the protests triggered, yet it remains in place, as recently confirmed by the labour-law expert Dr Lorenz in a report prepared for the Hans Böckler Foundation.  Service providers are allowed to pay the wages which are usual in their countries of origin and such firms can only be monitored from there. The rules of the host country may only be applied for cross-border services from non-EU countries "if justified for reasons of 1) public order and/or 2) public safety and/or 3) public health and/or 4) protection of the environment"[1].  

 

The country of origin principle even applies to criminal offences. Although in principle German criminal law does apply to foreign business owners, exemptions apply to precisely all those laws specifically connected with a service. Thus, as pointed out by IG-Bau (Building, Agricultural and Environmental Workers’ Union), it has become virtually impossible to prosecute those exercising a profession in a criminal  fashion. IG Bau has observed that most service providers from Central and Eastern European member states of the European Union tend not to adhere to legal rules; instead they systematically circumvent the minimum standards in place here in Germany. The union has stressed that the combination of these factors means that we can expect ruinous price competition which cannot be effectively prevented by means of minimum wages in the construction and cleaning sectors. It fears considerable job losses at domestic level in the sectors which it represents.  

Lack of monitoring

The prohibition of discrimination means that target countries are not entitled to demand any original documents, certified copies of documents or certified translations of references or other documents attesting the service provider's qualifications. The same ban applies to proof of nationality and place of residence of service providers, their employees, their shareholders, directors or supervisory bodies. This clause allows service providers to smuggle the cheapest workers into the EU – it paves the way for human trafficking. Documents such as employment contracts or accounts also do not have to be available at the place of work. This makes effective monitoring of service providers and their employees, along with an effective supervisory system in the service sector impossible in real terms.  

The EU Member States are merely required to make easily accessible information on certain quality labels and other quality marks, along with codes of conduct. Together with the European Commission, the Member States have to carry out "accompanying measures" in order to ensure that service providers engage in voluntary quality assurance, and to promote the development of voluntary European standards. The Directive makes no mention of any obligations in this context. The trade union Ver.di in particular had in 2006 criticised the fact that, in future, 27 different legal systems would apply in parallel in 22 different languages; this would, the union pointed out, be the expense of legal certainty. The German Trade Union Confederation (DGB) described the exemptions regarding prosecution under criminal law as unconstitutional. 

Minimum wage and privatisation
The race to offer the lowest taxes and social insurance contributions has being given new impetus, regardless of the effects of the crisis. The increased wage dumping which now looms can only be prevented by a universal statutory minimum wage. This kind of minimum wage already exists in 20 EU states, and has not increased unemployment in any of those countries.

The Directive covers large sections of the services of general interest, such as energy, water and sanitation management, education and social services. Between 2010 and 2012, many electricity contracts across Germany will expire. The calls for tender for these services will then have to be Europe wide.  

For local governments which have decided to engage in public-private partnerships (PPPs), it is significant that mixed models do not comply with the Services Directive; they will have to open up their services to the free market. In addition, numerous EU fee scales stipulate that fees should in the future only be sufficient to cover costs. Opportunities to have a sliding scale of fees depending on income, and to finance this from public budgets, are significantly restricted.

However, national education systems are not subject to the rules contained in the regulation, provided they are "still essentially financed by public funds". This does not apply, though, to those educational institutes in the university sector, or in the vocational training and continuing training sectors, which are mainly privately financed. The introduction of tuition fees could lead the European Court of Justice to classify universities as "private"; they would thus be covered by the Directive. The same also applies to social services provided by private companies, social initiatives or PPPs. They may also be covered by the Directive.

Government

The idea of the "single points of contact" plays a central role in the Services Directive; they are to be available from 29 December 2009 onwards and are intended to act as points of contact between service providers in an EU state and the national institutions. Since all procedures are in future to take place electronically, the Directive in reality promotes an extension of eGovernment. Private service providers like Arvato (Bertelsmann) sense the opportunity to make money and are offering local governments support in implementing the Directive.

Arvato AG and Arvato Government are working for the Bertelsmann concern to open up new fields of business in the field of public administration. Sovereign tasks are increasingly being entrusted to private firms, meaning that citizens' personal data is being collected, analysed and possibly sold to third parties in the framework of eGovernment. The organisations for which Arvato manages data include Deutsche Telekom, Deutsche Bahn and  the SCHUFA credit reference agency. And this in the aftermath of the data scandals at Deutsche Telekom and Deutsche Bahn!

The Bolkestein Directive promotes the erosion of democratic standards and increases the pressure of competition on public service providers. The Directive aims to liberalise the service sector almost in its entirety. 

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