This is a sign that a genuine structural correction is taking place and resources are being moved from the non-tradable sector to the production of traded goods. We have also seen some improvement in cost competitiveness, which has contributed to the external adjustment.
Between 2008 and 2012, in the three programme countries the cumulated unit labour cost growth was about 10pp below the euro area average. The adjustment has been mainly driven by an increase in average productivity, largely reflecting labour shedding, rather than by a reduction in nominal wages. The latter adjustment has been much more limited so far.