Opinion of the European Economic and Social Committee on Developments in the construction sector in Europe
Date: 2008-07-10
Institutions: European Economic and Social Committee
Subjects: ESC opinion, building industry, data transmission, disclosure of information, know-how, sustainable development

C 27/22

EN

Official Journal of the European Union

3.2.2009

Opinion of the European Economic and Social Committee on ‘Developments in the construction
sector in Europe’

(2009/C 27/05)

On 6 December 2007, Ms Margot Wallström, Vice-President of the European Commission and Commis-
sioner for Institutional Relations and Communication Strategy, and Mr Günter Verheugen, Vice-President of
the European Commission and Commissioner for Enterprise and Industry, requested the European Economic
and Social Committee to draw up an exploratory opinion on

Developments in the construction sector in Europe.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 13 June 2008. The rapporteur was Mr Huvelin.

At its 446th plenary session, held on 9-10 July 2008 (meeting of 10 July), the European Economic and
Social Committee adopted the following opinion by 57 votes to none, with two abstentions.

1. Conclusions

These are the only ways of preparing for the likely

1.3
arrival in the near future of competitors from outside Europe.

1.1
Contrary to what some might believe, the future of the
construction industry will depend less on the public spending it
receives (although greater continuity in programming would
definitely not go amiss) than on the ability of
the relevant
authorities to work out a regulatory framework, applicable to
all, that ensures maximum transparency in competition and the
best use of the potential and know-how of businesses of every
size.

In view of the above, the main recommendations of this

1.2
opinion are as follows:

— putting in place unified tender procedures by means of regu-
lations as soon as possible; especially in the public sector,
such procedures should give clients as broad and clear-cut a
choice as possible, so that they can choose contractual tools
to suit their needs;

— giving

regulatory

construction professionals

to
substantially contribute to the challenges of sustainable
development: through the use of the overall costs approach,
public-private partnerships of all sizes, and financing based
on expected performance, both small and large business are
ready to meet these challenges;

scope

— improving the construction sector's image to make it more
attractive to young people in education so that more of
them enter the profession;

— making major efforts

trades
accounting for a substantial percentage of European jobs
which are not at risk of relocation;

to promote training for

— promoting sustainable construction activity in the EU;

— maintaining a healthy economic environment and employ-
ment conditions in line with people's needs in the countries
where they work;

— boosting European competitiveness.

2. Introduction (background)

In a letter dated 6 December 2007, European Commis-
2.1
sioners Margot Wallström and Günter Verheugen requested the
EESC to help advance the Lisbon Strategy by undertaking an
exploratory opinion in order to examine whether legislation
regulating the construction and the business services sector
they are geared towards
‘form a coherent whole; whether
change, both ongoing and forthcoming; and, finally, the extent
to which it may be necessary to launch a process of simplifica-
tion, streamlining and modernisation of the legislation in these
areas. It should be clarified that the exercise could extend to any
other legislation that has a bearing on the development of the
sector (health and safety at work, environmental protection,
etc.), and the legitimate interests at the heart of
the sector
should be integrated into the analysis’.

2.2
Consequently, all the points raised in the request for an
opinion must be examined meticulously and systematically,
since this is a vast topic and one which had earlier been the
subject of several studies carried out by external consultants at
the Commission's behest.

2.3
The present opinion, however, will confine itself to those
aspects signalled by the requestor, namely changes or simplifica-
tions in legislation and rules governing the sector which should
be made as part of an impartial and strategic inventory of the
construction industry and serve to improve the conditions
within which it operates and moves forward.

2.4
To this end, the opinion recaps a few useful facts about
the sector to put the construction trades and constraints upon
them into context.

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3. The position of

the construction industry in the

European economy

Some figures

3.1
comprises 2.7 million businesses, in the EU-27 in 2006:

the construction industry, which

for

GVA share of GDP

Share of wages in the sector's GVA

Share of the sector's GFCF in total GFCF

2006

10.5 %

54.5 %

50.5 %

Sector's share in total employment of all sectors (1)

7.2 %

(1) The construction sector accounts for 30.4 % of jobs in industry. Sources:

Eurostat and FIEC.

3.2 A few facts

3.2.1
Since the construction sector cannot be relocated, it is
an integral part of Europe's future growth and its industrial
fabric.

The very nature of what it produces and its need to
3.2.2
have fixed bases — deeply rooted in local
life — in every
country means that it performs a social and civic role which
should be kept in mind and fostered.

The notion that this sector is all about big companies that only
deal with large projects must be put into context: operations
with a unit value over EUR 20 million account for no more
than 2 % to 5 % of the total European construction market.

3.2.6
The large European groups that often feature promi-
nently on the world stage are for the most part ‘federations’ of
very locally based small and medium-sized organisations that
operate in the same competitive environment as local indepen-
dent SMEs.

3.2.7
Generally speaking, the large European players in this
sector have not evolved on what might be termed the
‘American’ model, but have managed to sustain and develop
their know-how by relying on their own acumen and partici-
pating in the conception of projects.

3.2.8
It is thanks to this approach that European businesses
have carved out a place for themselves on the world markets.
Nor is this model, based on integrating conception and execu-
tion, necessarily the prerogative of large groups: it can and must
also be applied to companies of all sizes.

4. Some basic principles

4.1
The challenge for this exploratory opinion requested by
the European Commission must be to propose not only a
streamlining of legislation, but also a course of action which:

3.2.3
all initiatives bearing on sustainable development:

The construction sector must play an important role in

— ensures true transparency and equality of opportunity in

tenders;

— since it is a necessary conduit of investment (housing, build-
ings in general, transport, energy production, etc.) made on
this front;

— by adapting its working methods,

including those of the
materials sector, to the needs and demands of sustainable
development.

3.2.4
No broad view of the sector as a whole would be
complete without mentioning the sector's image, which is still
to some extent poor despite the best efforts of the profession
over more than thirty years. This is something the opinion
should address, because it is reflected in:

— the spirit of the provisions in some countries governing
illegal

procurement

treatment

and

the

of

public
employment;

— a clear difficulty in recruiting young people (direct attractive-
ness) and their training (mistrust of building and public
works training by the training system as a whole).

3.2.5
The very nature of these trades, in terms of both the
needs of clients and the diversity of skills involved, means that
the market is extremely fragmented and will remain so for years
to come. As a result, there will always be cohabitation between
craftsmen, small, medium-sized and large companies.

— brings about a shift from an outdated culture of mistrust to

one of confidence and partnership;

— includes

the most economically advantageous bid and

overall cost for the lifetime of works;

— guarantees intellectual property rights;

— ensures that minimum conditions of employment are speci-
fied in procurement procedures and that checks and penal-
ties are in place for infringements;

— cuts red tape by keeping regulation and procedures to a
minimum while maintaining the security aspects and the
essential rights and obligations of the contracting parties.

Except

in the case of

fluctuations in the volume of
4.2
markets (which is beyond the scope of
this opinion), these
various elements that should be incorporated into regulation
should enable construction sector players to develop in an
orthodox manner and so ensure that a coherent social policy
(jobs — security — salaries) is followed and the sector is made
more attractive for
the various parties concerned (young
parents, teachers, etc.).

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5. Main proposals

The key areas where we think the relevant authorities

5.1
should focus their efforts are these:

— unification and simplification of public procurement proce-
dures to ensure both transparency and the best use of
resources and powers;

— encouraging innovation with rules to cover, for example, the

intellectual property rights of ideas and variants;

— both initial and career-long training of workers;

— contribution to changing the image of this sector, which

provides jobs for young people;

— rules in the social sphere to govern both employment condi-

tions and good health and safety practices;

private, public and quasi-public entities and make it quite clear
that any funding is conditional on a tender and a formal
contract.

5.3 Innovation and intellectual property rights

5.3.1 What sets the construction sector apart is that every-
thing it produces is a ‘one-off’. This is why we should have
European legislation that protects intellectual property and
the ideas to be protected,
recognises the special nature of
namely that they are conceived for a particular tender and will
not necessarily be systematically reproduced. Specific legislation
should be put in place at European level to protect technical
ideas in the competition process and establish rights to protect
tenderers.

— sustainable development in the widest sense of the term —
an area in which construction businesses have a large part
to play and fresh responsibilities to assume.

5.4 Training

5.2 Unification and simplification of procurement procedures

5.2.1

Action could be taken in the following areas:

— transforming legislation on tenders into regulations to
the procedures at
replace the current directives so that
European level are truly unified, with a level playing field for
competition;

— more systematically preferring the best bid over the lowest

bid;

— giving competitive dialogue a more rigorous framework for
the contracting entities so that it really is a procedure for
getting the best and not a systematic plundering of ideas
and intellectual property;

— encouraging a ‘from concept to execution’ approach that
combines company know-how and creative talent from the
conception stage;

— making greater use of overall contracts (for construction and
maintenance, or PPPs) to meet the challenge of sustainable
development and prepare and mount an adequate response
to the attempts of some countries to dump on the European
market;

— putting in place genuine harmonisation of standards and
technical aspects in order to dismantle technical barriers at
national level and unify the European market;

— taking into account the needs of SMEs in order to enable
them to survive, maintain their staffing levels and so avoid
excessive bipolarisation within the sector.

With regard to this list,
the
response to calls for regulatory change should not be to impose
ready-made solutions but to provide contracting entities with a
complete toolbox which they can use in line with their needs.

it should be made clear that

5.4.1
A point commonly made by construction professionals
in most Member States is that in general the needs of the sector
are only very poorly met by most national educational systems,
at all levels of training. In view of this, while relations need to
be improved between the trades and education systems at
national
level, there should also be an impetus at European
level, for instance by:

— supporting legislation on training to promote building and
public works in Europe (recognition and equivalence of
certification of training at all levels);

— helping to improve skills

career

structure.

levels by promoting lifelong
learning. As the sector is known to be under pressure, it has
a poor image among young people and a hierarchical gap in
since
its
construction jobs have come to require qualifications, even
high qualifications, and a solid knowledge base. This should
subsequently be enhanced by businesses giving their staff
access to further training and thus opening up careers to
them;

It badly needs know-how,

— extending an Erasmus system for various levels of training
in building and public works throughout Europe by taking
the pool of accumulated experience, small
advantage of
though it
in the following three
sectors: painting, stone cutting, and the renovation of old
buildings);

is (with ESF support,

— promoting European universities for building and public
works trades and recognising a European title of craftsman;

— promoting training facilities for project managers in Europe
so that the public and private clients of companies have a
better knowledge of contracts and what companies actually
do;

— developing facilities to provide European inter-company

further training;

5.2.2
Taken as a whole, these modifications or adaptations
should encourage transparency and a level playing field between

— promoting European qualifications (e.g. languages).

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5.5 Health and safety regulations

5.5.1
Current regulations have had a very beneficial and very
profound influence on working methods in the construction
sector. Nevertheless, it would be good to:

— encourage the pooling of best health and safety practices;

— combat illegal work by action throughout Europe (such as
consultation and networking of data bases, ID passes and
systems to identify workers), and by introducing penalties
and appropriate fiscal measures such as reduced-rate VAT;

— facilitate the implementation of the REACH regulation;

— facilitate the flow of workers without

social dumping
(accepting the formalities already in place in the Member
States in relation to secondments) and enable European
workers to return to their country of origin;

— ensure that fines can be enforced throughout all EU Member

States;

— accept the conditions of the country where the work is done

as the basis for any form of employee mobility.

5.6 Sustainable development

5.6.1
As suggested above, those in the construction sector
have a very considerable role to play in meeting the challenges
that face the world today, including climate change. They are
ready, within an appropriate framework of regulations and
incentives, to assume this responsibility and bring their added
value to the European market. They are also prepared to pass
on their know-how in the field to other corners of the world
where, as we know, the efforts that need to be made are both
enormous and crucial
if all their benefits are to be felt by
everyone.

5.6.2

To achieve this, it would be good to:

— introduce an overall costs approach (for the duration of the
investment) in the rules for European public tenders, and
define a concept of best bid, perhaps involving a sustainable
development criterion. This could enable contracting entities
to take comprehensive account of the sustainable develop-
ment dimension in their choice;

Brussels, 10 July 2008.

— encourage PPP procedures, which by their very nature inte-
grate conception, execution and maintenance and could
therefore be the best way of making the most of the overall
cost concept;

— redeploy some forms of financial support by concentrating
them, in all Member States, on the huge task of energy infra-
structure renovation;

— encourage large-scale renewal projects embracing public

works and buildings;

— promote development and recognition of environmental
incentives,

districts (creating a Community label, financial
etc.).

5.6.3
In both the construction and the transport sectors, if
construction businesses are given a chance to participate
throughout the ‘concept-implementation-maintenance’ process,
they can make a decisive contribution, particularly in terms
of ensuring financing for the requisite activities, in their capacity
to manage overall costs and finance investments for future
energy-saving measures.

5.7 SMEs in the construction sector

5.7.1
The problem of SMEs in the construction sector —
unlike in others (see point 3.2.5 above) — is not really one of
access to this or that kind of market.

This is why those in the sector quite rightly see no
5.7.2
justification in the quota approach thought up by some and
rejected by the European authorities. Moreover,
the figures
mentioned by the various parties are in reality far exceeded in
all European countries.

5.7.3
Small Business Act, should, rather, be regulated with:

The issue of SMEs, other than matters covered by the

— smart solutions for the transfer of enterprises;

— models for funding or for sharing services or financing
which create a level playing field without distorting competi-
tion, particularly in terms of SME access to complex opera-
tions (PPPs and sustainable development);

— solutions geared to facilitating SME access to standardisation

and norms.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS