of a century. speaking of structural reforms, and the successful reforms carried out by the netherlands, it seems fitting that professor boeri, who is known as a forceful exponent of economic liberalisation and structural reform in europe, and in particular in his own country, will be conducting his fellowship at the netherlands institute for advanced study located in wassenaar, where, 25 years ago, the decisive wassenaar agreement was signed, steering the course towards change and initiating the remarkable and substantial recovery of the dutch economy. the main outcome of the wassenaar agreement was the establishment of wage moderation, which, in turn, helped firms to restore profitability and stimulate both investment and employment. 3 prior to this agreement, the netherlands had been gripped in a wage - price spiral. however, through this agreement, which considerably diminished wage indexation, a platform for the remarkable turnaround of labour - market performance was created. in addition, a continuum of supportive policy frameworks aimed at reforming labour market institutions was adopted, thereby ensuring the underpinning of wage moderation. 4 the expansion of the part - time and temporary agency work sector in the netherlands, combined with the implementation of effective policies, has resulted in both greater flexibility in the labour market, and job certainty for part - time and temporary agency workers. moreover, it has assisted in alleviating the “ insider - outsider ” characterisation of the european labour market. furthermore, the steady reduction in tax wedges and reforms of the benefit system, in particular, the shortening of the maximum duration of unemployment benefits and the reforms governing the disability scheme which were implemented over several years, have also helped increase the labour market ’ s performance. what the netherlands and all successful reformers have in common is that they have, in parallel, successfully reduced product market regulation. this has led to more effective employment growth following an increase in labour supply, as wage moderation has fed through to jobs as opposed to rents. 5 on this score, the proposed policies to further enhance the innovative environment of the netherlands should be commended. in summary, a successful reform programme is more than just the sum of the individual reform policies due to the synergies that are created. additionally, and as professor boeri has recently pointed out, 6 there can be no steps backward in undertaking and implementing reforms, particularly with the need for greater flexibility in this era of rapidly changing economic environments. being here in amsterdam today, on this given occasion, i should also like to take

distortions arising from high and volatile inflation, the development of growth and employment are ultimately determined by the structural features of an economy. well - designed structural policies promoting flexibility in product and labour markets, enhancing education and training and fostering research and development are, therefore, crucial for the long - run performance and smooth functioning of an economy. this holds particularly true in a monetary union like the euro area, where national monetary and exchange rate policies are no longer available as adjustment mechanisms. recognising the need for sound structural policies, the member states have established a comprehensive reform agenda in the context of the lisbon strategy aiming at enhancing the growth and employment potential of the euro area countries. yet, while there have been some remarkable improvements, reflected, in particular, in the creation of 15 million new jobs in the euro area since the start of economic and monetary union ( emu ) compared to only around three million new jobs in the nine preceding years, in many countries, structural reform efforts have not sufficiently enhanced the flexibility and efficiency of product and labour markets. this is evidenced by the still unacceptably high unemployment rate in some regions or segments of the labour market, and the very low level of labour productivity growth in the euro area. 1 implementing and carrying out structural reforms is undoubtedly a challenging and arduous task. however, it is particularly important to resolutely pursue such reforms in the current environment, where the euro area economy is facing a number of important challenges, including rapid technological change, accelerating globalisation forces and ageing populations. the experience of those european countries, which have undertaken courageous and successful reforms in the past, shows that they pay off. 2 the netherlands is one such country, and is now characterised by a flexible labour market with the lowest unemployment rate in the euro area at 3. 2 % in 2007. in addition, with a total participation rate of 78. 5 % in 2007, the highest in the eu, and a female participation of 72. 2 %, two of the lisbon objectives have already been met. the annual growth rate of real gdp per hour worked in the euro area averaged only 1. 3 % over the period 1999 - 2006. see a. annett ( 2006 ) “ lessons from successful labour market reformers in europe ”, imf euro area policies : selected issues, august 2006. i would like to turn now to some of the reform policies pursued in the netherlands that led to the remarkable performance of the dutch labour market over the last quarter