The European Union
Eurostat

Market and non-market services¹ together account for about two thirds of total EU employment and value added in 1997. Market services are more than twice as important as non-market services in employment and more than three times in value added terms. Distributive trades and business services¹ dominate market services on both counts, in almost all EU Member states.

"Services in Europe", a report²  by Eurostat, Statistical Office of the European Communities in Luxembourg, highlights the main features and trends of the tertiary sector within the European Union.

Services is the only sector that has generated jobs over the last two decades, as industry and agriculture have seen a reduction in the number of persons they employ.

Communication services, other market services, financial services and services of Hotels, restaurants and cafes recorded the fastest growth in value added, the first three sectors registering the highest productivity in market services.

Significant differences in the Triad EU, USA, Japan

The main driving force behind increased wealth in Europe was labour productivity, combined with an increase in the hiring of labour in some service sectors (e.g. in business services). In the USA, increased wealth in services seems to result from a rise in the total number of hours worked.

The USA outperformed Japan and the EU in average annual employment growth in services. During the period 1988–1997 the USA registered a growth rate of 2.2% in market services compared to 1.7% for EU15 and 1.6% for Japan; in non market services growth rates reached 1.6% in the USA, 0.1% in the EU15 and –3.1% in Japan. Main employers

Across EU15, about 67 million people were employed in market services against around 31 million in non-market, representing a respective 46.1% and 21.3% share of total EU employment in 1997.

Although distributive trades and other market services were the main employers in every single Member state, there were nonetheless marked differences.

• Finland was the only country to report negative growth in market services over the last decade, while there was a decrease in non-market services in Sweden (-0.6%), Belgium
• (-0.5%) and the United Kingdom (-3.0%).
• Only 20% of all service workers in the United Kingdom and Luxembourg were employed in non-market activities, while in Nordic countries and Ireland the corresponding rate stood the average EU rate of 32%, the public sector playing an important role as supplier of services.

Main components in market services

Between 1970 and 1997, market services' share of total value added rose from 39.1% to 53.4% in the EU, while non-market services rose from 11.8 % to 15.0%. In absolute terms, market services dominated the tertiary sector with 3,485 billion ECU against 1,002 billion ECU for non-market services, in 1997. Within market services and in 1997, business, health and education services (‘other market services’) ranked first, at 46.5% of total value added, followed by distributive trades (24.7%) and, further down, financial services (10.6%).

For 1996, labour productivity, measured as value added per person, delivers a contrasting picture:

• Distributive trades and Horeca displayed low levels across the majority of Member states for which data are available.
• At the other end of the scale, services rendered to businesses as well as financial and communication services recorded high labour productivity.
• Belgium, France and Austria led the productivity league in distributive trades, with respectively 53 200, 46 300 and 45 700 ECU.
• Germany, Luxembourg and Austria recorded the highest productivity in other market services, with respectively 110 100, 94 500 and 91 100 ECU.

More women working in market services, with lower pay

Turning to the structure of the labour force, the report finds that women outweighed men with some 2.8 million more women working in market services. There were significant differences across the EU when it came to employment status (full-time/part-time) and revenue. In 1997,

• for every 100 full-time working males there are only 52% full-time working females,
• average monthly earnings for male full-timers stood above female earnings in all EU Member states, with the largest differences recorded in the UK (645 ECU), the Netherlands (780 ECU) and Belgium (719 ECU). However, six Member states had female part-timers reporting higher earnings than their male colleagues in 1995, with the largest difference recorded in Finland
• (73 ECU), Denmark (86 ECU) and Belgium (99 ECU).

Competitiveness increased

Looking at a number of competitiveness indicators, "Services in Europe" underlines that

• in most Member States for which data is available, the value added per person employed is above average in air transport, telecommunications, rental or real estate services,
• industrial cleaning services are very labour intensive with a low turnover per capita,
• personnel costs per employee were higher in air transport than in any other transport service, averaging almost 50 000 ECU among those countries for which data was available.

** 1996

1) Market services cover communication services, distributive trades, financial services, Horeca, other market services and transport services. The following activities are – in general – covered by the sectors:

- Communication services: Telecommunication, postal and courier services

- Distributive trades: Wholesale and retail trade, sale, maintenance and repair of motor vehicles
- Financial services: Banking, insurance, pension funds, financial auxiliary services
- Horeca: Hotels, restaurants and cafes
- Other market services: Business services (e.g. computing services, legal services, accounting services, marketing services, etc.), health, education services, other market services
- Transport services: Land, water and air transport services, auxiliary transport services.

Non-market services: health, education services, other non-market services.

2) Eurostat, "Services in Europe", Data 1995-1997 – 1999 edition, 223 p., 27.50 EUR, Catalogue number: CA-24-99-99-736-**-C.

"Services in Europe" provides in-depth information on additional features of the structure and profile of the labour force as well as a sectoral analysis for market services, a section on the cyber-economy and a country by country analysis. "Services in Europe" is also available on CD-Rom (100 EUR, Catalogue number: CA-24-99-744-3A-Z) which contains economic analysis, methodological information, a glossary of terms and a data base with annual structural business statistics concerning service activities within the EU.