Eurozone's top banker: governments must act to help economy

AP News
|
Posted: Jun 09, 2016 6:27 AM

BRUSSELS (AP) — European Central Bank President Mario Draghi is calling on governments to do more to make their economies more competitive and create jobs as the region's aging population weighs on labor markets.

The economy of the 19-country eurozone has struggled to gain traction despite the ECB's efforts to stimulate it with a raft of measures, which have ranged from cutting interest rates to injecting hundreds of billions of euros into the financial system.

Draghi told finance and banking experts at the Brussels Economic Forum on Thursday that the eurozone could not rely solely on the central bank's efforts and needs more action from governments.

"The cost of delay is simply too high," he said in a speech.

He said that while structural reforms — such as cutting red tape and making labor markets more flexible — can be politically difficult, they are essential to boost growth and lower unemployment.

Draghi called for a particular focus on the long-term jobless. Unemployment in the eurozone was at 10.2 percent at last count. The percentage of people who have been looking for a job for more than 12 months was at 5.5 percent in 2015, well above the 2.9 percent in 2008, according to statistics agency Eurostat.

Draghi pointed to reforms in Portugal that reduced unemployment by about 3 percentage points from 2011 to 2014.

He underlined that it is important not just to get people into jobs but to increase the size of the workforce, amid forecasts that Europe's working age population will start to decline in the next decade.