Why would productivity gains pick up in 2024 in the euro zone?
Governments and the ECB are counting on a clear upturn in productivity gains in the euro zone in 2024 to curb inflation: if productivity were to grow by 1% in 2024, even with wages rising by 4%, unit labour costs would only rise by 3%, compared with 6.50 % in the third quarter of 2023. But why would productivity gains pick up in 2024? The arguments put forward in favour of an upturn in productivity gains are as follows: Disappearance of less productive zombie firms; but the corporate default rate has already risen sharply in 2023 without any positive impact on productivity; Reduced recruitment difficulties, encouraging companies to adjust their employment downwards since they would no longer be afraid of not being able to recruit in the future. However, employment continues to rise in the absence of productivity gains, which will keep hiring difficulties high; Efforts to modernise companies, but investment in communication and information technologies remains very low in the euro zone.