Reducing the temporary employment ratio One of the differential aspects of our labour market is its high temporary employment ratio. On average over the past decade it has stood at 25.2%, compared with 13.9% for the euro area. It is indeed employees on temporary contracts who have disproportionately borne the brunt of job destruction flows in the Spanish economy. That gives rise to very adverse effects on inequality, careers and productivity. And this without forgetting that excessive temporariness influences such important decisions as those on youths leaving the family home and starting a family. For all these reasons, reducing duality is unavoidable. In this connection, the employment protection mechanisms should be reviewed under the prism of squaring the necessary protection of employees with flexibility for firms. Accordingly, I believe we should explore modalities such as contracts with growing severance costs. There are also mixed models which combine the possibility of accumulating in advance in a fund a portion of these severance costs with a severance payment in the event of dismissal whose amount increases with years of service. Improving active labour market policies Another characteristic of our labour market is the high persistence of unemployment. For example, at end-2019, almost 43% of the unemployed had been seeking a job for more than one year. The situation will now worsen, given that the workers most affected by this crisis are, on average, lesser-skilled. Active labour market policies should therefore be strengthened.
In order to mitigate the inherent pro-cyclical nature of financial activities, to which I will return later, the Basel Committee’s proposals also contain capital buffers and forward-looking provisioning. Finally, the proposals include global minimum liquidity risk requirements enabling credit institutions to withstand a short-term liquidity stress and aiming to ensure longer-term stability in their funding requirements. The objective of this comprehensive package is to enable financial institutions to better withstand the adverse effects of economic shocks. In order to assess the cumulative impact of the proposals, quantitative impact assessments are underway. The outcome will be available in the coming weeks, and will assist decision-makers in properly calibrating the measures. At this stage, therefore, it is premature for me to say anything about the desirable  2  BIS Review 87/2010  calibration of the measures. Nevertheless, I am of the view that the measures are warranted from a conceptual point of view, though their cumulative impact needs to be carefully assessed. Indeed, it is important that the right balance is struck between enhancing banking stability and maintaining a stable provision of credit to the economy. IV. What has been done? The main strands of the reform agenda I come to paint are at various stages of development. It is therefore useful to briefly run through what has already been achieved, in particular in Europe. Starting with the prudential framework for banks, most FSB members, including the EU Member States, have fully implemented the more risk-sensitive Basel II framework.