The deterioration in manufacturing efficiency by comparison with the leading industrial countries, under way since the mid-1990s, has been aggravated in recent years. Between 2000 and 2003, total factor productivity in industry fell by about 1 per cent a year.
The competitiveness of Italian goods, as measured by unit labour costs, declined by nearly 15 per cent between the start of 2002 and the end of 2003, or 9 points more than the deterioration in Germany and France. In the first nine months of 2004, with nominal exchange rates essentially stable, Italian competitiveness continued to suffer from a faster rise in unit labour costs.