Structural Reforms to Sustain a Strong Performance

In recent years, strong growth of output and employment were underpinned by a wide-ranging structural reform programme and a sound macroeconomic policy framework, while real interest rates have come down to low levels. Privatisation of large public companies was almost complete by 2000, and was accompanied by several liberalisation "packages" that included an early introduction of competition in network industries, among other measures. Labour market reforms that lowered severance payments for most new permanent contracts, together with real wage moderation and the use of temporary contracts have boosted the employment ratio from 50.7 per cent in 1997 to 58.8 in 2002. At the same time, the unemployment rate fell by 5.5 percentage points, even though it is still – at over 11 per cent in late 2002 – one of the highest in the OECD.