Inflationary monetary policy exacerbates growth and employment problems instead of solving them, at least over the medium term. The unbearably high unemployment rate in large parts of Europe presents the key economic policy problem from the German perspective, too. A full employment equilibrium in the participating countries is characterised by varying national labour costs corresponding to national labour productivity.
Thus, a rapid equalisation of the nominal wages in the participating countries is not realistic, as the unemployment rate threatens to continue rising in countries which raise the wage level above the level of labour productivity. Increases in negotiated wages and settlements should therefore conform to the national employment situation and the growth rate of labour productivity.