the potential for the euro area. following studies by the world bank, in 2006, the average cost of starting a business with up to 50 employees in the euro area amounted to roughly 2226 usd, compared to 285 usd in the us. in 2006, it took on average 22 days to set up a business in the euro area, compared to 5 days in the us. 12 as regards administrative costs, studies gauge these costs in the eu25 to amount to 3. 5 % of real gdp. fourth, to fully exploit countries ’ changing comparative advantages in producing goods and services it is essential that labour markets can adjust to the variation in their production structures. this requires the right incentives for a sufficient mobility of workers, inter alia, between jobs and regions, but also from unemployment to employment. suitable adjustment mechanisms in the euro area also require sufficient labour mobility across borders. the new euro area member slovenia therefore needs to be granted full access to all euro area countries ’ labour markets, which is currently not the case. furthermore, sufficient wage differentiation is needed, especially to improve employment opportunities for less skilled persons and in regions with high unemployment. generally, wage developments need to adequately reflect developments in productivity by skill level, region and industry. furthermore, adjustments to the level of employment protection are required, in particular where they impede the hiring of younger and older workers. in this regard, over the last decade, the euro area countries have made progress particularly in rendering the use of temporary employment contracts more flexible. as a result, for example, the share of young people working on temporary contracts has risen to 50. 3 % in 2006, compared to 41 % in 1996. at the same time, the level of employment protection legislation for permanent contracts has only fallen slightly since 1990. it is therefore important to reform regulation on regular contracts where it has adverse effects on hiring incentives. 13 generally, with the ageing of the european populations, employment gains in combination with ambitious and effective structural reforms in the pension and health care sectors are the only way to render social systems sustainable in an increasingly global economy. implementing this necessarily non - exhaustive list of structural policy priorities should increase the euro area ’ s overall flexibility in an increasingly globalised world. for firms in the euro area countries, these reforms should generally lead to a greater choice of suitable investment options and open up possibilities for improved productivity, thus helping them to raise cost competitiveness. as the present see oecd ( 2006 ) education at a glance, paris.

. second, euro area countries have to raise their innovative activity by investing more in research and development, thereby boosting productivity. in this regard, an increased level of product market data rely on the groningen growth and developments centre. annual average. see denis snower ( 2006 ) ‘ globalisation challenges for the euro area ’ ; oenb, wien. competition would raise incentives to win new market shares by offering new and more innovative products, thus creating a higher demand for r & d. against this background, the lisbon agenda envisages that by 2010 eu countries spend on average 3 % of their real gdp on r & d, including both public and private spending. with roughly 3. 5 % of real gdp being spent on r & d in 2005, finland is the only country in the euro area that meets this target already. in contrast, the euro average of real gdp being spent on r & d in 2005 amounted to just 1. 9 %. to increase investment in r & d it is essential to foster private spending and to not rely on public spending only. generally, economic policy has to ensure the right framework conditions for private spending on r & d as this would be best channelled towards successful investments. in this respect, necessary structural reforms include market liberalisation and deregulation, but also an adequately trained and educated workforce. there has been a remarkable catch - up in education of the younger generation compared to older generations in the euro area. in 2004, 74 % of the euro area population aged 25 - 34 had attained at least upper secondary education, compared to 59 % of those aged 45 - 54. with ageing populations in an increasingly competitive international economic environment, education and training policies have to ensure a high quality education for the young – containing a high degree of basic knowledge but also knowledge demanded by the productive sector. and they have to ensure sufficient incentives for the life - long learning of persons that need to stay for longer in the labour force than in the past. third, we need to create an entrepreneurial - friendly environment with low administrative and bureaucratic costs for firms and business - starts ups. this would support the exploitation of new production possibilities, increase entrepreneurial efforts and innovative activity of firms. together, this would raise employment and the potential growth rate of an economy. the immense importance of this issue is increasingly appreciated by the eu and european governments, with the netherlands being one of the forerunners in the area of ‘ better regulation ’. a brief look at numbers shows