Yes, because persistent ULC growth in excess of the euro area average can be expected to give rise to sustained inflationary pressures and losses in competitiveness, with adverse effects on the real economy. What does the evidence tell us?
First, the cumulative change in ULC over a period of time is highly correlated with the HICP inflation over the same period across euro area countries. The close relationship between the cumulative ULC growth and inflation rates is impressive (see slide 13).