many of those who have left the labour force are self - supporting, such as unemployed who are not members of an unemployment fund and who do not receive cash benefits. others have left the country, for instance some of the migrant workers who came to denmark from eastern europe during the boom. in addition, the number of commuters, especially from germany and sweden, has fallen. on the positive side, there is a well - founded hope of spare capacity in the labour market to use when economic growth gains real momentum. moreover, it is encouraging to see that the number of people on permanent benefits has not shown any significant increase. there are indications that the supply of labour is now reacting more strongly than previously to economic developments. this is a positive feature in so far as it reflects greater flexibility in the labour market. it is important that the current cyclical reduction in the labour force does not lead to a rise in the number of people on benefit schemes. this could produce a knockon effect in the form of a more permanent increase in the number of people on transfer payments, and denmark is already at the upper end of that scale. this development could mean that it may take longer before registered unemployment is reduced to any significant degree. companies have not yet adapted fully to the drop in output. this means that they can increase production without hiring more people. and there are more to be hired outside the registered unemployment category. it is interesting to observe how much these unemployed people outside the registered unemployment category will contribute to dampening wage inflation. if the contribution is substantial, our previous estimate of registered structural unemployment may be on the high side, but it is still too early to draw any conclusions. * * * normally, consumer issues are outside the scope of danmarks nationalbank ’ s tasks, important and interesting as they may be. today, however, i would like to comment on the latest development in the market for financing of cooperative housing. some cooperative housing associations seem to have resorted to very risky sources of finance in recent years. i ’ m thinking of uncallable fixed - rate loans subject to rising interest rates during the term of the loan. technically, these loans are structured as adjustable - rate loans combined with an interest - rate swap. these loans do not accord with danmarks nationalbank ’ s opinion on the par rule that provides for redemption of a loan at a price close to 100. in addition, the loans seem to be a far cry from the mortgage sector ’ s declared objective of

but the output gap is unlikely to narrow significantly as the pace of recovery in final demand is expected to be moderate. in these circumstances, prices are expected to be stable for some time. 5. in sum, the positive cycle among production, income and expenditure continues steadily and is reflected in the improvement in corporate profits and the rise in employees ’ income. thus, despite the restraining pressures from fiscal policies, including the consumption tax hike and the decline in public - sector investment, japan ’ s economy is expected to continue its recovery, supported by the yen ’ s depreciation until early spring and the expansion of information - related demand. however, the economic recovery is unlikely to gather significant momentum, as a result of fragility in some sectors, as well as the continued balancesheet adjustment pressure. in these circumstances, building an economic environment which increases the confidence of the private sector is vital to strengthening the economic recovery. in this process, effective structural reforms to draw out the dynamism inherent in the economy continue to be essential in addition to appropriate macroeconomic policies.