in other economies, including the us, the case for a decisive implementation of structural reforms is even more pressing. this is not to say that there has been no progress in structural reform across europe in past years. indeed, a number of governments have made important and significant steps to address structural rigidities in their countries. progress has been uneven however and we still have a distance to cover before reaching the goals that have been set. the impetus from determined structural reforms in capital, labour and product markets would set in motion a virtuous circle of increasing confidence : the more credible the reforms are, the more confidence they will create, and the more confidence is created, the sooner positive results will be visible. so, i would like to give you some examples of where i think further progress with structural reform is needed in europe, to enhance job creation, growth and economic resilience. one of the most difficult and persistent challenges facing europe is to reduce structural unemployment and elevate the level of activity rate. in 2003, 9 % of the labour force in the european union was unemployed, a level of three percentage points higher than in the us. the rate of youth unemployment was more than double that of adult unemployment. the overall rate of activity is around 62 % in the euro area where it is as around 75 % in the united states. some countries have started to reform their social security systems and unemployment schemes and early retirement incentives have been reduced. but more progress of this type is necessary to attract more people into the labour market, particularly as europe ’ s populations become older, and to reach the goal which has been set up in the lisbon agenda, namely a rate of activity of 70 % by 2010. in a number of cases, together with high marginal tax rates, the legal and regulatory environment in europe continues to provide a disincentive to take up work and to continue working later on in life. and, there are still, in certain sectors of activity, a large mismatch between skills and vacancies, implying the need for improved education and training. finally, wages should more strongly reflect regional and sectoral productivity differences. eu countries also made progress in product market reforms during the 1990s, having positive effects on the integration and level of competition in goods markets, but barriers to competition and innovation in europe remain. attention should be paid in particular to the share of eu internal market legislation not yet transposed into national laws, the incomplete integration of the service sector, where most new jobs

paper by bordon, ebeke and shirono ( 2016 ) concludes that “ existing studies have shown that the long - run effects of structural reforms on growth and employment are positive. 12 however, the evidence on the short - run effects of structural reforms is rather mixed and limited. ” the recently published april 2016 imf weo agrees and writes : “ product market reforms deliver gains in the short term, while the impact of labor market reforms varies across types of reforms and depends on overall economic conditions. reductions in labor tax wedges and increases in public spending on active labor market policies have larger effects during periods of slack, in part because they usually entail some degree of fiscal stimulus. in contrast, reforms to employment protection arrangements and unemployment benefit systems have positive see christiano, l., m. eichenbaum and s. rebelo ( 2011 ), “ when is the government spending multiplier large? ”, journal of political economy, 2011, 119 ( 1 ), 78 – 121. see eggertsson, g. b., a. ferrero, and a. raffo ( 2014 ), “ can structural reforms help europe? ”, journal of monetary economics, vol 61, 2 – 22, january 2014. see bordon a. r., c. ebeke and k. shirono ( 2016 ), “ when do structural reforms work? on the role of the business cycle and macroeconomic policies ”, imf working paper no 16 / 62. bis central bankers ’ speeches effects in good times, but can become contractionary in periods of slack. these results suggest the need for carefully prioritizing and sequencing reforms. ” to summarise, the effects of structural reforms are contingent on the state of the cycle and the degree of slack in the economy as well as on the accompanying stance of macroeconomic policies. that is why the imf weo pleads for the use of structural reforms accompanied by fiscal policy when there is fiscal space, a concept that has several different interpretations. in their recent shanghai meeting, the g20 pleaded for the same approach, although one can be sceptical about delivery. we can recall the embarrassing results of the g20 agreed plan in brisbane two years ago to generate an additional 2 % in world growth via a long list of concrete reforms put forward by the imf and the oecd. less than half was implemented and in fact, the world economy now risks not even attaining what