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ECB Says Market Reforms Must Help All  10/18 06:08

   FRANKFURT, Germany (AP) -- European Central Bank head Mario Draghi says 
governments must ensure that pro-business reforms create economic benefits for 
everyone if the changes in worker protections are to find acceptance.

   Draghi said in a speech Wednesday that a perception that growth isn't 
benefiting everyone has "fuelled the belief that some have been 'left behind' 
by the spread of market forces."

   He said countries that loosen worker protections and make hiring more 
flexible for companies also need to take steps to make jobs more secure and to 
retrain workers.

   Draghi has called repeatedly for countries to step up so-called structural 
reforms: to reduce bureaucracy, red tape and excessive rules governing business 
and hiring. He has said the central bank's support for the economy through its 
stimulus programs gave them a "window of opportunity" to act.

   He conceded that the costs of reforms - often short-term - had led some to 
regard structural reforms as "a bad word." He said that countries that did 
engage in such reforms during the eurozone debt crisis - such as Spain, 
Portugal and Italy - had seen unemployment fall. He warned, however, that 
sometimes making job relationships more flexible led to poorer labor deals for 
young people, and that labor reforms should also address workers' needs for 
security.

   Draghi spoke at an economic conference convened by the ECB, which conducts 
monetary policy for the 19 countries that use the euro, to explore how to 
promote economic reforms in the bloc. While the central bank has pushed for 
reforms in its public statements, Draghi is careful about mentioning specific 
countries because of the ECB's status as a politically independent institution 
whose leaders are appointed, not elected.

   Pro-business reforms are getting attention in Europe because France's new 
president, Emmanuel Macron, is taking steps to loosen France's labor 
protections. But the topic cuts across the entire eurozone economy. Italy's 
clogged courts, for instance, make it hard to resolve bankruptcy claims and 
contract disputes. Even Germany, which has low unemployment and strong growth, 
has come in for criticism about restrictions on competition among some service 
providers.

   Draghi did not address the future of the bank's stimulus programs, such as 
its 60 billion euros ($71 billion) per month in bond purchases and zero 
benchmark interest rate. Decisions on a phase-out of the bond purchases are 
expected at the next ECB rate meeting Oct. 26.


(KA)

 
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