. it will worsen the opportunities for low - skilled workers and the long - term unemployed to find work and will make it more difficult for those who do not yet have strongly - developed professional skills to obtain access to the labour market. in order to improve the opportunities of low - skilled workers and the long - term employed, there is another, more promising path. the goal must be to reduce the gap between wellprotected regular jobs subject to social security contributions and other types of employment and to channel the demand for labour more towards jobs subject to social security contributions than before. in principle, the role played by special forms of employment such as temporary employment in a functioning labour market which “ breathes ” over the business cycle should not be underestimated. these forms enable rapid adjustments to be made on both the supply and the demand sides : job - seekers are given the chance to re - enter the ranks of the employed quickly, and enterprises can cope with peaks in orders in a flexible and low - cost manner. yet it is particularly the favourable treatment, particularly with regard to taxes and levies or to job protection, which can make the transition to regular employment considerably more difficult. there is a similar problem in the rules for additional earnings alongside see also meer, j and west, j ( 2013 ), effects of the minimum wage on employment dynamics, nber working paper no 19262. bis central bankers ’ speeches unemployment benefit ii which make it very unattractive for “ income boosters ” to segue from low - paid part - time work to regular jobs subject to social security contributions. it would therefore be a good idea to eliminate these distortions, for instance, along the lines of the proposal already put forward in 2006 by the german council of economic experts. 2 the previous flexibility - increasing measures taken both by policymakers and the social bargainers have made enterprises, in particular, more resilient to temporary slumps in demand, such as during the economic crisis – when it makes sense to retain experienced workers and their expertise. that was surely a major contribution to enabling germany to overcome the economic consequences of the financial crisis comparatively quickly. but the challenges that lie before us are about more then that : they are about the ability of the german economy to deal with structural shifts. they are about enabling workers from shrinking industries to migrate as smoothly as possible to new growth industries. however, this is possible only if the labour market is flexible in the mainstream and not just at the margins.

the efforts to stabilise the euro area would have no credibility. germany is campaigning for stabilityoriented fiscal and economic policy. the strength of its voice also rests on the strength of its economy. it is in the interest of stability - oriented monetary policy for euro - area fiscal policymakers to be in a position to fulfil their responsibility to the euro. we must also not permit the build - up of any new macroeconomic imbalances which could sow the seeds of the next crisis. to achieve this, the ability to adjust and innovate has to be improved ; sustainable government finances and social security systems have to be secured on a long - term basis ; and, in order to reverse the age - related growth slowdown, additional growth forces have to be mobilised – both regarding the labour potential and also regarding public and private capital stock and productivity growth. there are ultimately numerous starting points in order to achieve those objectives. i wish to proceed by picking out four areas where i see a particular need for action : labour markets and immigration, education and infrastructure, reforms to federal financial relationships, and corporate taxation : more specifically, differences in the tax treatment of investment depending on the method of financing and the legal form. i am well aware that i am only scratching the surface of these topics and omitting other important areas entirely – such as the energy u - turn or financial market regulation. 1. 1. labour markets and immigration i have just outlined how demographic trends will place a burden on future growth. there are two ways to combat this – by increasing the labour force or by increasing productivity. let me begin by going into detail on how labour market policy measures or a targeted immigration policy could be used to halt the decline in the labour force. demographic trends will tend to lead increasingly to shortages of skilled labour. however, this development was halted briefly because labour force participation has grown strongly and more and more people have immigrated to germany in the past few years to work here. this is the path for the future. there are labour force reserves, particularly among women and the elderly. a further expansion of childcare and care for the elderly could improve options for women to take up or increase their paid employment. the system of taxes and transfers can also get in the way of higher labour force participation. on the other hand, the increase in labour force participation among older workers following the elimination of early retirement shows the potential impact of targeted reforms. the discussion that is still ongoing in some quarters –