Zero productivity gains in the euro zone: A positive or negative development?

While productivity gains have picked up in the United States since 2017, those in the euro zone have become zero in the recent period. Is this trend in the euro zone, which is very different from that in the United States, positive or negative? The positive effect is continued rapid employment growth in the euro zone; The negative effect is that since wages are accelerating because of the return to the vicinity of full employment, the low productivity gains in the euro zone are leading to a quite rapid rise in unit labour costs and therefore, since companies’ pricing power is weak, a fall in profit margins that is not appearing in the United States; This fall in profit margins in the euro zone makes it possible to maintain real wage growth at a rate close to that seen in the United States in the short term, despite the lack of productivity gains; All in all, the euro zone’s problem is therefore primarily the lack of corporate pricing power. If euro-zone companies could pass their costs through to their prices, inflation would be 2% (which would satisfy the ECB), corporate profitability would not decline, but real wages would obviously not increase, as wage income growth would then come only from employment growth