The Governing Council supports the actions taken by the European Commission in the context of the Stability and Growth Pact and the subsequent outcome of the ECOFIN Council meeting last month. It is now necessary to remain vigilant in order to ensure strict adherence to the medium-term plans and rigorous implementation of the procedures of the Stability and Growth Pact. In order to further improve the fundamentals of the euro area and to put the expected recovery on a broad and sustainable basis, euro area countries must strengthen their efforts to implement comprehensive structural reforms. Over the past few years progress has been made with regard to enhancing the flexibility of euro area product and capital markets. Euro area countries have also made some headway in terms of improving the way their labour markets operate. These reforms, together with moderate wage developments, have contributed to the strong employment growth and the considerable reduction in unemployment witnessed in many euro area countries in the last cyclical upswing. However, it is worth noting that despite the continued high unemployment in the euro area, firms continue to report difficulties in terms of recruiting suitably qualified workers. This suggests that further improvements in the functioning of euro area labour markets and their ability to match labour supply and demand are needed. Evidence gathered in a recent Eurosystem analysis, which will be published shortly, supports this view. In this context I would also like to stress that structural reforms in different markets should not be seen in isolation.
7  In a recent contribution, Nicholas Bloom and co-authors showed that US multinationals obtained higher productivity from IT than non-US multinationals and that establishments taken over by US multinationals (but not by non-US multinationals) increased the productivity of their IT. They attributed a bulk of productivity differences to differing people management practices across US and non-US firms. See Nicholas Bloom, Raffaella Sadun and John Van Reenen, 2012, “Americans do I.T. better: US multinationals and the productivity miracle”. American Economic Review 102(1), pp. 167–201. 8  For more information about the Network visit http://www.ecb.europa.eu/home/html/researcher_compnet.en.html. BIS central bankers’ speeches  3