, and since 2007, we have fallen from bis central bankers ’ speeches 26th place to 40th place in terms of the business environment. the decline in the ranking does not necessarily reflect an absolute worsening, but it certainly does reflect the fact that other countries have focused on improving their business environments, while we have remained behind. in a competitive world, the determining factor is obviously our relative position. it is also clear that wages which, in a competitive environment are consistent over the long term with labor productivity, can rise over time only if we do what is required to accelerate increased productivity and to expand it to all industries. the policy required to cope with the long - term challenges in view of the weaknesses that i have mentioned, which stand behind the fact that labor productivity in israel is increasing slowly and that its level is still significantly far from the forefront of the advanced economies, the directions that must be taken in order to accelerate and expand the increase in productivity are clear : it is worthwhile incentivizing and supporting the adoption of advanced technologies and technological improvements, particularly in industries that are typified by low technological intensity, whether in the manufacturing industry or in the services industries. due to the continuing decline in the chief scientist ’ s budget as a share of the state budget and of gdp, and in view of the high return on such support to the economy, it is worthwhile diverting budgets to such activity, while also involving medium and low technology manufacturing. professional training programs must be expanded, improved, and streamlined, with an emphasis on post - secondary frameworks. it is worthwhile expanding technological - scientific studies in the secondary schools, and supporting post - secondary technological studies, including those in technological colleges. achieving the required improvements in the business environment, while focusing on the main points of weakness, concerning bureaucracy in the fields of construction and real estate, in the legal environment, and so forth, should not be abandoned. infrastructure reforms, including in the electricity field and in the ports, as well as connecting manufacturing to the natural gas infrastructure, should be advanced. the implementation of a policy to improve manufacturing productivity in israel is the key for manufacturing to remain strong and to provide quality employment for all parts of the population in all parts of the country. bis central bankers ’ speeches

that the eu enlargement will contribute positively to economic growth and welfare in the eu as a whole. it will provide new opportunities to trade and investment flows. the enlargement of the internal market will strengthen the degree of competition as the accession of the new member states has increased the number of suppliers within the internal market. in addition, enlargement has enhanced the scope for economies of scale, as the extension of the internal market increased the size of the market available to suppliers. this should translate in lower prices and increased productivity, thereby contributing to a higher potential growth. however, these benefits will not be realised automatically. again, in this respect too, there are substantial benefits associated with the implementation of structural reforms. in particular, a forceful and prompt completion of the enlarged internal market in both the old and the new member states is essential to fully exploit the benefits of the present enlargement. let me say a few words on the erm ii membership which has already been decided for six currencies out of the ten currencies of the new member states. having proceeded with the necessary structural adjustments, participation in erm ii can be an important means of anchoring exchange rate and inflation expectations, and of promoting discipline. it can help orient macroeconomic policies to stability, while at the same time allowing for a degree of flexibility, if needed, through the wide standard fluctuation band and the possibility of adjusting the central parity. in any case, there is not a uniform path to the adoption of the euro and each country will be judged on its own merits before adopting the euro. and, as required by the treaty, the sustainable convergence of the economies concerned will be carefully checked both in the interest of the country concerned and in the interest of the euro area as a whole. fiscal discipline finally, i would like to discuss another major challenge that europe is going to have to face over the next 50 years : an ageing population. a few figures may help to illustrate the magnitude of this challenge : according to the forecasts of eurostat, the european statistics institute, the population of working age ( people aged between 15 and 64 ) is going to drop from 67. 2 % of the overall population in 2004 to 56. 7 % in 2050. at the same time, the proportion of retired people ( in other words, people aged 65 or over ) is going to rise from 16. 4 % of the overall population in 2004 to 29. 9 % in 2050.