fiscal and external deficits. the removal of labour market rigidities would further support the adjustment process of these economies. increasing product market competition, particularly in the services sectors, would also facilitate the restructuring of the economy and encourage innovation and the adoption of new technologies. such measures are crucial for enhancing productivity growth, one of the main drivers of long - term growth. all these structural reforms should be supported by an appropriate restructuring of the banking sector. sound balance sheets, effective risk management and transparent, robust business models remain key to strengthening banks ’ resilience to shocks and to ensuring adequate access to finance, thereby laying the foundations for sustainable growth and financial stability. finally, let me recall that the governing council welcomes the economic and financial adjustment programme which was agreed by the irish government following the successful conclusion of the negotiations with the european commission, in liaison with the ecb, and the international monetary fund. the programme contains the necessary elements to bring about a sustainable stabilisation of the irish economy. it addresses in a decisive manner the economic and financial causes underlying current market concerns and will thereby contribute to restoring confidence and safeguarding financial stability in the euro area. the governing council welcomes the commitment of the irish public authorities to take any further measures that may become appropriate to achieve the objectives of the programme.

profits obtained through wage cuts to build up internal funds rather than for investment, aggregate demand in the economy will shrink. and since a decline in aggregate demand will lower corporate profits, firms will be forced to cut wages further. this is a typical example of the fallacy of composition. the vicious cycle of declining wages and declining aggregate demand was initially set in motion by the balance sheet adjustments following the burst of the asset bubble, but it became entrenched due to the spread of deflationary sentiment. ii. quantitative and qualitative monetary easing and the labor market let me now turn to how japan is in the process of escaping from this state of contractionary equilibrium. if uncertainty and concern over the future were the cause of the decline in wages, then for wages to rise, it is necessary that both employers and employees see brighter prospects for the future. therefore, the first step is to change japan ’ s economy from one suffering from stagnation under deflation to one that grows sustainably under moderate inflation. in this regard, the bank of japan ’ s quantitative and qualitative monetary easing ( qqe ), which i explained in detail at this symposium last year, has been producing its intended effects. and as a result of these effects, japan ’ s labor market situation has shown improvement, as mentioned earlier. however, closer inspection shows that the japanese labor market still suffers from some of the problems that arose during the period of deflation. for example, there has been no reversal in the growing reliance on part - time workers. in fact, the recent increase in the number of workers is due mainly to an increase in the number of part - time workers ( chart 7 ). in general, in the early stages of economic recovery, it is demand for marginal workers such as part - time workers that increases first. in addition, the current economic recovery is led by the nonmanufacturing sector, where the share of part - time workers is higher than in the manufacturing sector. furthermore, the continuing shift to a service economy means that demand for part - time workers has increased over time. that being said, most recently, there has been an acceleration in the increase in the number of full - time workers, which is a welcome sign. this shift from growing demand for marginal labor such as part - time workers to growing demand for permanent workers suggests that firms ’ growth prospects have started to improve. if economic growth is sustained and thus underpins firms ’ growth prospects, japan is