Labour productivity needs to rise
Labour unit costs in the euro area are increasing, while they are shrinking in the US, Japan and Mexico. Productivity is increasing in Eastern European countries and in Spain, but this is insufficient to close the gap with the US in GDP per hour.
All European countries must increase their productivity if European manufacturing is to remain competitive. This requires investment in skills and capital, as well as the design of efficient labour markets and policy frameworks that are supportive of growth.