of the recession is that this was driven by a desire to retain valuable skills and experience. many companies had learned from past experience how difficult it is to re - employ skilled workers once let go. but a consequence of this labour hoarding is that the amount of output produced per worker fell very sharply, in many cases partly because working hours were cut back. and although there has been some rebound since then, the level of labour productivity has still not recovered to its previous level. this greater retention of labour suggests that firms may be sitting on a substantial degree of spare capacity. underlying productivity – the level of productivity that would be possible if workers and capital were utilised at normal levels of intensity – may have continued to improve even though measured productivity has not. but this will only become apparent if and when demand recovers and the workforce is fully utilised. although i place some weight on this explanation, i worry that it is contradicted by what business leaders – just like you – typically say and, more importantly, by what they have been doing. despite all this apparent hoarding of labour, when responding to business surveys and questions from our network of agents, companies often say that they have relatively little spare capacity. now there are good reasons why a company ’ s notion of spare capacity may differ from that of an economist, and so there ’ s a danger that we over - interpret these responses. 4 but it is not just what the managers of those businesses say, it is also what they have been doing. over the past year, despite only sluggish output growth, private sector employment increased by almost half a million people – the strongest increase in as noted in the august 2011 inflation report, one possibility is that surveys capture companies ’ immediately available capacity rather than their long - run capacity. so companies may be reporting pressures relative to the capacity that can be used immediately and at little additional cost, and excluding, for example, production lines that were temporarily mothballed during the recession, but which could be reactivated as demand increases. bis central bankers ’ speeches employment since 1997. it is difficult to understand why firms should increase employment so significantly if their existing workforce is not fully utilised. some of this behaviour may be explicable if employment growth were concentrated in sectors of the economy which are expanding most quickly, especially those orientated towards the export sector. but it is striking that this pattern of rising employment and weak productivity is common across most sectors of the economy ( chart 2 ). 5

jean - claude trichet : the euro area and its role in the global economy remarks by mr jean - claude trichet, president of the european central bank, upon reception of the 2011 global economy prize, kiel, 19 june 2011. * * * it is a privilege to receive this global prize today. i would like to thank the jury for this distinction, which honours the ecb and its staff. kiel has a long tradition of openness. it has forged close ties with the rest of the world, ever since it joined the hanseatic league in 1283. seven centuries later, kiel is today part of the euro area, a vast economic continent, which is itself globally open and linked in many ways to the rest of the world. it is about the euro area and of its role in the global economy that i would like to share with you some thoughts in receiving this prize today. how can we characterize the salient features of the euro area and of its role in the global economy? and what are the challenges that need to be addressed in this context? three key aspects deserve attention in my view. first, the euro area is amongst the most open of large economies in the world. the euro area ’ s trade relations with the rest of the world have grown appreciably since 1999, which underscores that the euro area is not a closed shop. the euro area ’ s trade openness has increased by about 9 percentage points over the first years of the euro, from roughly one - quarter to one - third of output, notably as a result of rapidly growing trade with vibrant economies, such as the new eu member states or china. the euro area is the world ’ s largest trading partner, after the european union itself, accounting for about 14 % of global exports and imports in 2010. economic and monetary union has fostered trade. not only inside the euro area ( + 50 % increase in trade volumes over the first years of the euro ), but even more so with the european union as a whole and the rest of the world ( + 80 % over the same period ). the euro area is also very open financially, and increasingly so. its international assets and liabilities averaged each around 170 % of gdp in 2009, compared with roughly 140 % of gdp for the us and 90 % of gdp for japan. as financial globalisation unfolded in the last decade, the euro area ’ s external assets and liabilities have grown in tandem, by roughly 80