The European Central Bank praised labour market reforms enacted in Portugal and other highly indebted eurozone countries, describing them as “important to increase flexibility in labour negotiations and reduce excessive job protection.”

The ECB study ‘Labour markets in the eurozone and the crisis’, released on Monday, notes that countries are reacting differently to the crisis, in line with its differing impact. But it sees the reforms implemented in Portugal, Greece, Ireland, Spain and Italy as the first steps to improving competitiveness of these countries and the eurozone.

However, it states that the “relatively limited” adjustment to salaries in eurozone countries, despite the seriousness of the crisis, points to “rigidity”.

The ECB study stresses that less-qualified workers, temps and youngsters have been the worst affected by the recession.