Restrictive professional practices

Professional restrictiveness

Nature

Restrictive professional practices refer to rules, policies, or behaviors within professions that limit entry, mobility, or competition, often to the detriment of consumers and aspiring professionals. These practices may include unnecessary licensing requirements, exclusive certification processes, or limitations on advertising and service provision. As a problem, they can reduce innovation, inflate costs, and restrict access to services, while protecting established practitioners’ interests. Critics argue that such restrictions often exceed what is necessary for public safety or quality assurance, resulting in reduced economic opportunity and social mobility. Addressing restrictive professional practices is essential for promoting fairness and efficiency.

Background

The global significance of restrictive professional practices emerged in the early 20th century as international trade and labor mobility increased, revealing barriers imposed by professional bodies to entry and practice. Notably, post-World War II economic integration highlighted how such practices hindered competition and workforce flexibility. Subsequent studies by organizations like the OECD and ILO in the 1970s and 1980s deepened understanding of their impact on innovation, service quality, and equitable access to professions worldwide.

Incidence

Restrictive professional practices are reported across a wide range of sectors globally, affecting both developed and developing economies. These practices, which include barriers to entry, exclusive licensing, and anti-competitive agreements, limit workforce mobility and access to services. The World Bank and OECD have documented their prevalence in fields such as law, medicine, and engineering, where they can stifle innovation and inflate costs for consumers and businesses alike.
In 2022, the European Commission fined several major banks for colluding to restrict competition in the foreign exchange spot trading market. This case highlighted how restrictive professional practices can persist even in highly regulated financial sectors.

Claim

Restrictive professional practices are a serious and urgent problem that stifle innovation, limit opportunities, and perpetuate inequality. By imposing unnecessary barriers to entry and advancement, these practices protect entrenched interests at the expense of talent and progress. They harm consumers, suppress competition, and undermine economic growth. Addressing restrictive professional practices is essential for creating a fair, dynamic, and inclusive society where merit and ability—not artificial restrictions—determine success.

Counter-claim

Restrictive professional practices are vastly overstated as a problem. In reality, they ensure quality, protect consumers, and maintain high standards within professions. Claims that they stifle innovation or limit opportunity are exaggerated; most regulations exist for good reason. The focus on this issue distracts from far more pressing societal concerns. Frankly, calling restrictive professional practices a major problem is misguided and ignores the essential role they play in safeguarding public trust and safety.