A strategy to restore competitiveness must encompass action on a number of fronts including pay and non-pay costs, infrastructure improvements which support productivity growth, the enhancement of competition in sheltered sectors, continuing to encourage innovation and R&D activity and enhancing the skill levels of the labour force. In particular, a flexible approach to wage developments is essential.
I will argue, however, that macro factors are important for explaining the emergence of the crisis, as they have created the preconditions for micro factors to unfold. Structural factors, global imbalances and risk premia Generally, the macro root causes of the financial crisis can be associated with two measurable developments: low risk premia and the accumulation of global imbalances.