They should address product markets, network industries, labour markets, and the modernisation of public administration. To support employment, wage-setting should become flexible and aligned with productivity. These reforms will help to regain competitiveness, increase employment, set the foundations for sustainable growth and support the return of confidence.
It is worth noting that several stressed countries already did significant reforms which are reflected in the competitiveness gains since 2008 in terms of relative unit labour costs (UCLs). In fact, since then and in relation to other Euro Area members, Ireland reduced its unit labour costs by 19.4%, Spain by 9.5%, Greece by 8.9% Portugal by 6.6%and Italy by just 0.1%.