linked to prices are the wages, unit labour costs in particular. “ although labour costs only account for some 20 % of the cost structure of manufacturing firms, and for 40 % in the case of firms in the services sector, these figures rise to almost 90 % excluding inputs. accordingly, when value added deflators, which exclude the cost of inputs, are analysed at aggregate level, changes in unit labour costs ( that is, employee compensation corrected for productivity gains ) are understood to be a fundamental determinant of future changes in prices ” ( bank of spain, economic bulletin, 2 / 2019 ). after the drop in the midstream of the crisis, unit labour costs in the region started to rise moderately until 2017 - 2018 when sharp rise was noticed, supported by the cyclical upturn, as well as the rise of wages in public sector and minimum wages in some of the countries. during 2011 - 2016, the overall growth of ulcs in the region averaged around 2 %, while in 2017 and 2018 the y / y growth picked up to 5 % - very close to the pre - crisis average growth. the sharp rise of the productivity adjusted wages should translate into higher core inflation. yet, it only supported the disposable income and the rise in private consumption, while price pressures remained subdued. this disconnect between unit labour cost and inflation might indicate probable time lag between the two. or “ there might have been structural changes to the way firms incorporate costs into their pricing decisions that has affected the relationship between wage growth and inflation. if firms and workers expect low inflation going forward, for example due to the improved credibility of the central bank, firms may be reluctant to raise their prices even when faced with higher wage costs as they expect increases in costs to be only temporary. in such a situation, the pass - through of higher wages to prices would be muted due to lower expected persistence of cost and price changes. alternatively, the rise in competition, either domestically or from abroad, may have limited the ability of firms to pass cost increases to consumers for fear of losing market share. another important consideration of a more cyclical nature is firms ’ profitability, which determines how much and how fast wage growth feeds into prices. to the extent that firms have buffers - comfortable profit margins - they may be able to absorb higher wage costs without increasing prices ” ( imf, reo - europe, november 2019 ). 7. 0 - 3. 0 - 6

trust and contribution of the citizens, no central bank can fully achieve its goals. that is why we are committed to transparency, both to them and to all economic agents, which is why transparency is one of our strategic goals. the national bank is the second central bank in the world for which the imf made an assessment according to the latest transparency code and we are glad that it found that our bank is implementing advanced transparency practices. dear guests, each historically significant anniversary puts us at a crossroads, and depending on what has already been achieved, requires from us to figure out which direction to take. therefore, i must emphasize that regardless of how the country's european integration process will proceed, the european standards will continue to be our guide to the european family of central banks. and then, when the european chapter of our story is completed and the denar remains our historical symbol of stability, i believe that it will be confirmed once again that as a central bank we have walked down the right path. since the 2008 / 2009 global financial crisis and the experiences of the covid crisis, in a time of accelerated changes on the world stage as a result of globalization, digitalization and financial innovation, the mandate of central banks has been constantly changing and expanding with new functions. all current and new functions and activities 3 / 4 bis - central bankers'speeches of modern central banks that protect the public interest are already part of our vision, but not as an activity that we forecast for the time future and distant, but as something we are already working on. among other things, we are particularly dedicated to financial education and inclusion given the importance of increasing knowledge about financial services, especially at a time of rapid fintech development, which would eventually provide easier access to finance for citizens and companies. in support of the fintech development, we drafted the first version of the national strategy, with a view of making our story a regional leader in this area as well. following the example of the european central bank, this year, when we celebrate thirty years of the introduction of the denar as our currency, we initiated activities to consider the introduction of a digital denar. if the analyses show that there is a need for introduction of a digital denar, hopefully, during some of the next celebrations of the day of monetary independence we will talk about the digital denar as an official means of payment in the country. dear guests, the great goran stefanovski, whose words inspired me to open my address tonight,