14  Figure 5  Real wage mass (*)  Daily index of economic uncertainty (DEPUC)  (percent, contributions to monthly change, seasonally-adjusted) Employment Wages Wage mass  500  1,5 1.5  400  2,0 2.0  1.0 1,0  (index)  300  0.5 0,5 200  0.0 0,0  100  -0,5 -0.5 -1,0 -1.0 21  22  23  0 12  14  16  18  20  22  (*) Estimated using seasonally-adjusted series of real labor costs, hours usually worked and employment. Sources: Central Bank of Chile, Becerra and Sagner (2020), and National Statistics Institute. Figure 6  Gross fixed capital formation (1)  (index, 2018=100, original real series)  120  Current  Previous  IMCE (2)  (diffusion index)  100  115 75  110  Wholesale and retail trade Construction Manufacturing IMCE w/o mining  105 50  100 95  25  90 85 13 14 15 16 17 18 19 20 21 22  0 18  19  20  21  22  23  (1) For the fourth quarter of the previous series, the annual change of the current series is used. (2) Value above (below) 50 indicates optimism (pessimism). Sources: Central Bank of Chile and UAI/ICARE.
To increase labour utilisation and get people into work, necessary labour supply side measures include the reform of tax and benefit systems to address these problems and increase incentives to work. Measures aimed at reconciling motherhood with professional life, such as the provision of child care, may raise participation rates. Furthermore, the use of flexible forms of work such as part-time 8 and temporary work may also provide further working incentives. High unemployment rates in the euro area and in particular high youth unemployment rates, amounting to 17.8% in 2005, clearly suggest the need to spur labour demand. In this context, there is a need to promote wage flexibility and to address labour market rigidities. Furthermore, adjustments to the level of employment protection legislation are needed where they impede the hiring of younger and older workers in particular. Regarding the second priority area for reforms that I would like to mention, increasing competition and establishing efficient and well-functioning product markets is another prerequisite for higher medium to long-term growth. 9 The economic literature generally leads to the conclusion that competition is an important factor explaining both productivity and price developments 10 . A lack of competition harms productivity trends by limiting production efficiency and by reducing the incentive to innovate. Moreover, increased competition is generally associated with a lower price level brought about by a reduction in the mark-ups of firms, for given marginal costs.