Luxembourg, 07/06/2006 (Agence Europe) - After the Eurogroup meeting (of finance ministers of the eurozone) on 6 June, Jean-Claude Juncker said the ministers had a real problem with the high inflation rate in the service sector. Juncker, who chaired the Eurogroup meeting, told reporters that the ministers had discussed the situation based on a report from the European Commission, and had decided to take a more detailed look at the situation country by country and sector by sector in order for each Member State to see what measures needed to be taken. Echoing Juncker, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said that inflation in the service industry tended to be higher than in the economy in general, and much higher than the inflation levels for non-energy industrial goods. In the eurozone, for example, inflation in services in the eurozone has been 2.3% on average each year since 1999, compared with average inflation for non-energy industrial goods of only 0.7%. The gap is widest in Spain, Greece, Ireland, Portugal and, to a lesser extent, in Italy, Luxembourg and the Netherlands.
What lies behind this high inflation rate in the service sector? Almunia said the problem was lower labour productivity, leading to a stronger rise in the cost of labour, and lower rates of competition because of the absence of a single services market. The Commissioner therefore recommended greater use of information and communication technology and hoped for rapid implementation of the services directive, once it comes into force. (The draft services directive had its first reading in Council in May 2006, see EUROPE 9201).