When looking at unit labour costs, it is also noticeable that a number of euro area countries which experienced significant increases in unit labour costs since their entry into the euro area, also show relatively high current account deficits. National authorities have an important responsibility to contribute to moderate price and unit labour costs developments.
It should in particular be avoided that public wage-setting contributes to strong overall unit labour costs growth. As high unit labour costs growth may also reflect an overheating of the economy, the avoidance of a pro-cyclical fiscal stance is particularly important. Furthermore, a key issue is the capacity of goods and labour markets to adjust.