BERLIN (Shanghai Daily) -- European Central Bank President Jean-Claude Trichet said labor productivity is the biggest problem facing the economy of the dozen euro nations.

"The main, main liability we have" in Europe is "progress in labor productivity, which is significantly inferior to the present level in the U.S.," said Trichet at a panel discussion on Saturday organized by the Bertelsmann Foundation in Berlin, according to Bloomberg News.

Annual growth in output per hour in the dozen euro nations is between 1 and 1.2 percent, compared with a U.S. rate of about 2.4 percent, Trichet said.

Growth in the euro region's $10 trillion economy has lagged the United States in every year since 2001 partly as companies moved labor to cheaper locations in eastern Europe and Asia and avoided hiring in Europe. The jobless rate in the euro nations was 7.8 percent in July compared with 4.8 percent in America.

Trichet said governments need to make job markets more flexible. While he praised countries including Germany, France and Italy for taking measures such as cutting jobless benefits and easing laws on dismissing employees, those steps won't create an economy "as flexible as we would like," he said.

"We have a level of rigidity in our own economy which is still very high and hampering the degree of flexibility in the labor market, goods and services market" and other areas of the economy, according to Trichet. He also cited "some weakness" in education and research and development.

"This creates an incapacity to take advantage of the opportunities in the current world," according to Trichet.

The average U.S. "baby boomer," a person born between 1946 and 1964, had 10 jobs between the ages of 18 and 38, according to Trichet, a figure which would be seen as "extraordinarily aberrant" in Europe. Prices for goods and services change twice as frequently in the United States as in the euro region, he said.

Europeans should also learn to be as optimistic as Americans, he suggested. "It's amazing when I cross the Atlantic, when I turn on the TV, I see someone who says 'It's a beautiful day, everything goes, the sun is shining," Trichet said. "I have nothing like that in Europe."

Trichet said he's confident that prospects for the euro region's economy are improving as executives revamp their businesses. Companies including Siemens AG and DaimlerChrysler AG have improved margins in the past three years by cutting jobs in Europe and forcing employees to work longer for less pay.

The ECB has raised its key interest rate four times since the start of December as the fastest economic growth in six years threatens to keep inflation above the central bank's 2 percent limit. Trichet has already prepared the ground for a further increase, pledging as recently as September 16 to show "strong vigilance" against inflation.

The euro region's economy will expand 2.4 percent this year and 2 percent next, the International Monetary Fund forecast on September 14. That compares with an IMF projection for the United States of 3.4 percent growth this year and 2.9 percent next year. The ECB's governing council has taken its key rate to 3 percent from a six-decade low of 2 percent in the past year.