However, as is so often the case, the devil is in the details. Not all southern eurozone countries have seen growth outperforming that of northern countries. The narrative differs by country. The chart below shows a scatterplot with developments of productivity and unemployment.
Countries in the top left quadrant, like Spain and Greece, have seen strong job growth accompanied by productivity gains. This is the healthiest situation from an economic perspective as it boosts domestic demand in the short run and helps long-run efficiency gains in the economy. The top right quadrant has seen job losses which come with productivity gains, especially for countries with tight labour markets. This suggests that businesses are improving efficiency as labour markets remain tight and wages have increased significantly, and comes on the back of a period of labour hoarding and productivity slacking in the aftermath of the pandemic.
The bottom half of the graph shows countries that experienced weak productivity performance. In Italy, this has come with strong declines in unemployment. Businesses are relying more on labour for output. For the short run this is positive as it boosts Italian household incomes, but given its weak demographic profile, the question remains as to whether this is sustainable. The bottom right quadrant, including Austria and with Germany close by, sees unemployment increase and productivity weaken. This is essentially a sign of weak cyclical performance.