Foreword
Following a deep recession, Portugal has been recovering steadily since 2014. The economy is back on a positive growth path, with past structural reforms and more favourable global economic conditions all contributing to the upswing. The recovery has largely been sustained by a strong export performance and now domestic demand is also picking up. After receding in the five years following the 2008 crisis, employment growth is now positive and wages are increasing.
Despite this encouraging outlook, the growth trajectory is projected to improve more modestly in the coming years with imbalances reappearing in the economy, especially supply bottlenecks and labour-market skills-mismatches. As such, pursuing the process of structural reform is needed to strengthen Portugal’s economic and social sustainability. Reducing still-high regulatory barriers to competition and market entry will foster innovation, efficiency and productivity. It will also lead to more firms and professionals entering the market, thus supporting more investments and ultimately job creation.
This is why, in 2016, the Portuguese Competition Authority asked the OECD to identify and assess the impact of regulatory barriers to competition in the land and maritime transport sectors and in self-regulated professions in Portugal. This report describes the outcome of the OECD’s review of self-regulated professions; it was conducted in close co-ordination with the Portuguese authorities, bearing in mind their priorities and sensitivities. The professions covered by the review include lawyers, notaries, solicitors and enforcement agents; architects, engineers and technical engineers; auditors, certified accountants, customs brokers, economists; nutritionists and pharmacists.
In Portugal, self-regulated professions employed around 144 000 people (roughly 3% of total employment), and generated a gross value added of almost EUR 4.1 billion, or 2.3% of GDP, in 2016. In terms of services rendered to enterprises, they accounted for around EUR 13.2 billion.
Self-regulated professions play a role in the economy which far exceeds their share of value added and employment. For example, professional services make key contributions to firms in the form of knowledge intensive services. Independent research by the European Commission has demonstrated that the multiplier effect of these professional services can have a positive impact on the output of firms and therefore on the economy as a whole. Conversely, when self-regulated professions are subject to overly restrictive entry restrictions or onerous rules for conducting their business, a lack of competitive pressure may induce them to charge above-market prices, provide sub-optimal services, and fail to adapt to market changes and innovation. The unnecessary costs, time wasted and overly complicated procedures can result in a negative impact on society as a whole.
The access to and exercise of self-regulated professions in Portugal remain restricted even though some improvements have been made. This report provides detailed policy options to either mitigate or eliminate regulatory barriers, including those that constrain the ability of professionals to compete (e.g. by imposing exercise conditions); treat competitors differently (e.g. by favouring specific categories of professionals); or, facilitate co-ordination among competitors (e.g. by imposing the same prices for certain acts).
The OECD Competition Assessment project, carried out in close collaboration with the Portuguese Competition Authority, examined around 700 pieces of legislation on the self-regulated professions. The project team identified 363 provisions as harming competition, and made 348 recommendations for change. If the recommendations in this report are implemented in full, the total positive impact on the Portuguese economy is estimated to be around EUR 130 million per year, equivalent to 0.1% of GDP. In addition to the directly quantifiable benefits, the multiplier and long-term effects on the Portuguese economy will produce positive long-term effects on employment, productivity and growth.
I congratulate the efforts undertaken by the Portuguese Government and the work of the Portuguese Competition Authority to reinforce competition law and simplify the business environment for the self-regulated professions reviewed. These are important and necessary steps towards designing, developing and delivering better policies for the benefit of all Portuguese citizens.
Angel Gurría
Secretary-General, OECD