Hence, we must look at all sectors when assessing competitiveness. 2. Second, wage developments in the public sector are much more important than is generally realised. Therefore, the public sector must set its compensation levels with the implications for the whole economy in mind; it must be aware of its role model. 3.
Third, less than 2% but close to 2% over the medium term – namely the level of medium-term inflation that is ensured as an average in the euro area by the ECB – is the right benchmark to use for all countries to calculate competitiveness indicators in real terms. Hence, one must not be misled into price-wage spirals by temporary inflation differentials. 4.