PHS policies - Implementation and monitoring guide

Employment related objectives


  • Objective 1: Employment creation

PHS measures have an important effect on employment, owing to the creation of direct employment with jobs for performing PHS activities and indirect employment with jobs for guiding PHS workers, but it is also because PHS users return to the job market or increase their working hours. This results in a strong decrease in long-term unemployment and an increase in employment of specific targets groups such as low-qualified people and women. Those effects are particularly in line with the Europe 2020 strategy. Evidence and Eurostat figures show that in 2014, 7.3 million workers were providing personal and households services (based on NACE codes 88 and 97) in the EU28 (European Commission, 2015). These data need to be considered with caution, as personal and households services may encompass activities that are classified in different NACE sectors. Regarding employment creation, it appears that, according to the 2014 Eurofound European Jobs Monitor Edition, between 2011 and 2013, PHS sectors have employed a further 81 192 personal care workers and 74 518 personal service workers. As a consequence, the PHS sector is the second-fastest growing employment sector behind ICT, and its rise is not expected to decrease. Indeed, the Commission (2012) indicates that PHS sector job creation potential is estimated at 5.5 million new jobs in the coming years.

In Belgium, one of the most important goals of the service vouchers system launched in 2004 was to create jobs. Thus, in 2013, there were 160 793 workers in the system, which represents 4.2 % of all jobs in Belgium (IDEA Consult, 2013). The same applies for the RUT tax deduction implemented in Sweden which – according to some estimates – has led to the creation of approximately 15 000 jobs between 2007 and 2011 (Konjunkturinstitutet, 2011).

  • Objective 2: Reducing undeclared work

One of the main characteristics of the PHS sector is that a large part of its services are provided informally by undeclared workers. This is mostly the result of the sector’s high employment content (i.e. the price paid for the services is made up almost entirely of workers’ wages), which means that the formal provision of PHS is relatively much more costly (when taking into account taxes, and so on) than undeclared provision. For public authorities, undeclared work represents a loss in social contributions and tax payments, which for undeclared workers often means disadvantageous working conditions and a lack of social security.

Evidence shows that, in comparison to other sectors, the PHS are particularly exposed to undeclared work. The results of the special Eurobarometer (n° 402, published 2014) on “Undeclared work in the European Union” indicate that 11 % of the EU27 population admitted that they had bought goods or services connected with undeclared work. Among them, 15 % of buyers said they had bought household services (such as gardening, house cleaning, child and elderly care) and 7 % had bought personal services (such as hairdressing or private teaching). Based on the figures from the previous Eurobarometer on undeclared work (2007) and taking into account that undeclared workers do not work typically full-time, it was estimated that the potential number of undeclared workers in household services amounted to around 1 million[1]. As indicated by the Commission (2012), this appears to be a rather conservative estimate, given the likelihood of under-reporting in surveys on undeclared work. The DGCIS result (2011) show that, in countries where no PHS supporting policies are implemented, undeclared services represent around 70 % of all transactions, in comparison to 30 % in countries where supporting measures are implemented.

In France, undeclared labour in the domestic sector has gone down from 40 % in 2005 to 30 % in 2011 thanks to various fiscal and administrative incentives (Wyman O., 2013). In Finland, the share of undeclared work decreased from 60 % to around 25 % in household services as a result of the introduction of the tax credit for domestic help.

  • Objective 3: Fostering and developing PHS activities

The increase in employment in the formal PHS provisions may indicate an increase in the number of companies and/or number of PHS transactions. Some PHS providers might already exist before PHS measures have been adopted, but the measures will enable them to extend their activities and will also foster the entrance of new companies on the market. The creation of new companies has direct implications on the creation of indirect employment (administrative workers, and so on) and on tax revenues for the state. The development of a formal sector might also ease the professionalisation of the services (training courses, and so on) and help to improve the working and employment conditions of workers (that were previously offering undeclared PHS), as discussed below.

For example, in France, stimulation of the sector (increase in the number of companies and/or in the size of companies, professionalisation of the companies, and so on) was a key objective of the “Borloo Plan”, for which one of the specific objectives was to foster the services supply by facilitating the agreement procedure, and so on. Thus, in 2012, 28 600 organisations were active in PHS sectors, which represents a 12 % increase in comparison to 2011. It was also designed to professionalise the sector by, among other ideas, developing national intermediary platforms that would ease the relation between demand and supply and guarantee the quality of the service providers that received their agreement.

[1]See European Commission (2012), Commission staff working document on exploiting the employment potential of the personal and household services, SWD (2012) 95 final.