The first chapter presented recent economic developments, highlighting the ongoing dualisation of the economy, the relatively slow pace of productivity advance and the continued high employment rate. If the current trends continue, the OECD medium-term baseline (scenario I) described in the same chapter implies a modest improvement in living standards over the next five years. There are significant risks associated with this scenario that could easily generate an alternative outcome characterised by a more rapid productivity growth but also high and persistent structural unemployment (scenario II). A resolute pursuit of structural reforms advocated in this chapter would probably result in less spectacular productivity growth but higher and more sustainable employment and living standards (scenario III).