FLEXIBILIZACIÓN EN LA CONTRATACIÓN LABORAL

Relative strengths of Dutch BS industry include its high level of internalisation, its open market for foreign competition, its low entry thresholds, its relatively large average firm size, and favourable conglomeration effects.

Strong internationalisation of Dutch BS industry 6

The Netherlands is strongly presented in the world BS market. Its BS exports rank sixth and its imports rank in the fifth place. The Netherlands have a small export surplus in business services trade. During the period 1992-99, the BS share in Dutch foreign trade grew, both for exports and for imports (Figure A5.1 in Annex V). This is remarkable since the share of services in total Dutch trade stagnates. BS imports share increased faster than the share of BS industry in Dutch GDP.

The Dutch BS market is less sheltered from foreign competition than holds for most benchmark countries. Foreign trade intensity of Dutch BS industry is among the highest of all OECD countries. Dutch BS exports are relatively unaffected by the growth of domestic BS demand, less than in most benchmark countries. This indicates that exports do not form a residual market. Nonetheless, Dutch BS exports increased less than the BS industry’s share in Dutch GDP (Figure 2.10). This is partly due to a substitution process between exporting and direct investment by the BS firms. A similar process can be witnessed as to BS imports. Table A5.1 in Annex 5 shows that BS direct investment has grown considerably faster than BS trade. This process may also explain why the strong growth of domestic Dutch BS demand was associated with a falling share of imports in domestic BS supply. The importance of local production by foreign BS subsidiaries in the Netherlands is clearly growing. Its increase correlated positively with the change in total Dutch BS demand.

The openness of Dutch BS market is reflected in high inflows of direct investment by foreign BS providers. Direct investment inflows since the 1990s accounted for a sharply increasing share of the industry’s total fixed capital formation.

Habituation to foreign competition

National regulations in the BS industry can operate as effective trade barriers. The Netherlands is among the countries with the most liberal regulation regimes, particularly for foreign BS suppliers. This is confirmed by the results from an EU-commissioned survey among BS providers. The Dutch and Irish markets for business services appear to be the most open ones, as reported in Table 4.4. This contrasts with France, Germany and Italy where exporters face more trade barriers.

Strengths of Dutch BS industry

Having low trade barriers makes the Dutch BS market relatively open to foreign BS imports and foreign direct investment by BS multinationals. An important side-effect is that those segments of the Dutch BS industry were exposed, relatively early, to foreign competition through imports or through local production by foreign BS multinationals. Exposure to foreign competition goes along with a learning-curve advantage as to product quality and efficiency. Note that this advantage mainly holds for the large national firms and small specialist firms that effectively compete with foreign providers. The great mass of small, locally-oriented firms continue to be relatively unexposed to foreign competition.

Foreign-language capacities of Dutch workers an asset in international BS trade

Socio-cultural factors may have a strong impact on trade capacity. This is certainly so in an industry where supplier-customer relations often require face-to-face contact. In some BS branches, like IT-related services, English has become the international lingua franca, but in other branches this is far less the case. In a questionnaire survey of 307 European BS providers and 198 BS-purchasing companies, foreign-language problems ranked highest as socio-cultural barrier to further international trade in BS products (CSES 2001, p. 52-56). This problem was mentioned especially by suppliers and buyers in Germany, France, the UK, Sweden and Finland, but not in the Netherlands (ibidem, p.74). The reason may well be that the foreign- language education in the Netherlands has been fairly good. The multi-language capacities of Dutch BS-workers clearly form an asset in international BS markets.

Table 4.4 Opinion of BS providers on the severity of barrier to trade in individual EU countries

Country AA

Total number of BS firms stating that they export services to this country a

B

Number of BS firms stating they faced barriers to trade in this country a C B as a percentage of A Ireland 32 3 9.4 The Netherlands 64 7 10.9 Spain 61 10 16.4 Portugal 41 7 17.1 United Kingdom 89 16 18.0 Belgium/Luxemburg 68 14 20.6 Sweden 35 8 22.8 Finland 26 8 30.7 Denmark 34 12 35.3 Germany 98 35 35.7 France 92 33 35.8 Austria 26 10 38.5 Italy 50 20 40.0 Greece 25 16 64.0 a

The numbers refer to a group of 186 BS providers with present or past export activities. This group forms part of a total population of 307 BS providers in the survey. Source: CSES (2001, Annex, p. 185).

7

The Economist, 16 November 1999.

8

‘Most business services are concentrated in the central and urban regions in the EU, while access to business services in peripheral areas and for SME are scarce’ (European Commission 1998, p. 19).

Easiness of setting up a new firm

It is relatively easy in the Netherlands to set up a new BS firm. The World Economic Forum in its Global Competitiveness Report compared OECD countries with regard to the easiness of setting up a new firm. The Netherlands ranks seventh, behind the USA and the UK, but well before most other benchmark countries (Belgium, France, Germany, Italy, Denmark).7

The easiness of setting up a new BS firm is reflected in the very high startup rate in Dutch BS industry (cf. Table 2.2). The process ensures a constant flow of new entrepreneurial resources.

Firm-size advantages

The lack of scale economies can be a factor in the slow productivity development of BS industry. In this perspective, it could become important in the future that the average Dutch BS firm is larger than in other EU countries (Eurostat 2000).

Average firm size in BS industry is generally very small. More than 80 per cent of all firms count less than 10 employees. This is found throughout the EU and also in the USA. Firms in BS branches with standardised products tend to be larger than in BS branches producing client- specific and knowledge-intensive services (cf. Figure 2.9 and Appendix II). In the Netherlands the average firm in both types of BS products is larger than elsewhere in the EU. The average size structure of French and Austrian BS companies is most comparable to the Dutch one.

A closer consideration of the firm-size data shows that the relatively high Dutch BS firm size average is to a large extent caused by two BS branches that generally are considered as low-tech and not knowledge-intensive, namely temporary work agencies and industrial cleaning. The average Dutch BS firm size in knowledge-intensive BS branches (computer services, accountancy, legal, tax and management consultancy, market research, engineering and marketing) is also somewhat larger than in most other benchmark countries.

Favourable conglomeration effects

BS industry tends to conglomerate in urban areas.8

The Netherlands has a relatively strong degree of urbanisation, so that Dutch BS industry benefits from the relatively close proximity to many clients. Though much of the BS industry is concentrated in the Randstad area, the urbanised or semi-urbanised character of several other regions (e.g. Brabant, Utrecht) supports a relatively broad range of local BS firms. This is a development advantage relative to BS industry in some large and less densely populated benchmark countries. In the latter countries, BS is concentrated in some very large metropolitan areas, but much more scarcely available outside

Weaknesses of Dutch BS industry

9

Cf. Manshanden et al. (1997); Rubalcaba (1999, Ch.10); Gago (2000. p.15-6); Hansen (1990); Martinelli (1991); Daniels (1991); Illeris (1991); Sprangers (research by ETIN, reported in Fin. Dagblad July 31st 2000); Moyart (1997); Gehrke and Legler (1998).

10

Innovation expenditures include all outlays related to those scientific, technological, commercial, financial and organisational activities that are intended to lead to the appliance of technologically new or improves products and processes. Cf. Van der Wiel (2001); Suijker et al. (2002).

those regions, so that small business clients in peripheral areas may be relatively underprovided with BS inputs.9