To this end, nominal wage developments consistent with the objective of price stability – as quantitatively defined by the ECB – and the trend productivity growth provide an appropriate general guideline for wage-setting, which, however, must be carefully and suitably applied in a differentiated manner in order to take into account labour market conditions and productivity developments in specific sectors or regions as well as the need to improve competitiveness if this is warranted.
Labour market reforms also can help eliminate bottlenecks resulting from matching inefficiencies in the labour market that are often a source of excessive unit labour cost increases. A higher matching efficiency of euro area labour markets accompanied by greater wage flexibility would facilitate the non-inflationary adjustment of wages and support sustained employment growth.