Italy of contradictions: growth is there but you can’t see it

“The Italy that is growing? It is the one with low productivity and low wages. Since it is the most backward Italy, if we limit ourselves to getting excited about its results, which are also positive, we continue to postpone the modernization of our country indefinitely”. This is how economist Giorgio Arfaras sees it, debunking easy clichés. For months, the increase in jobs has been celebrated by citing data. In the first quarter of 2024 – as certified by Istat – employment “in trend terms” grew by 1.7 percent compared to the previous year (+394 thousand units) with an increase in favor of permanent work (+3.1 percent) and a decrease in unemployment (-5.9 percent). As for the “cyclical” trend, compared to the last quarter of 2023, the increase in employed people is 0.3 percent, which is equivalent to an increase of 75 thousand units, confirming the growth of permanent employment (+0.6%, +92 thousand). In three months, unemployment fell by 2.9 percent (-55 thousand).

«Let’s not fool ourselves – explains Arfaras, a scholar historically linked to the Einaudi Center in Turin – jobs increase mainly in low-productivity sectors that pay their employees little. These are companies that have high employment rates for the simple reason that they do not invest in machinery.”

It is the first contradiction of economic Italy in recent years. Not the only one. Because the small or modest growth coexists with the historical record of poverty and the awakening of the South, documented by Svimez, must deal – all political – with the differentiated autonomy, which risks deeply damaging the Regions of the South. Let’s start again from employment. It is growing, but not in those productive sectors that should really drive a lasting growth of the country. The situation remains fragile, if we also look at the data of the Cgil: 180 thousand workers are at risk, starting from the 58 thousand employees of companies for which the Ministry of Enterprise and Made in Italy has already opened 59 crisis tables, since the beginning of the year.

Confirming that growth remains weak, making the Italian economic situation precarious, is the GDP itself. Is there an increase and is it even going beyond forecasts, as many have pointed out? Right. “But it is a very modest variation,” warns Arfaras again. For Istat, +1 percent in 2024, thanks to the increase in both domestic and foreign demand. The Brussels Commission has raised its estimates, but stopped at +0.9 percent (compared to +0.7% in the previous survey). As for 2025, there is instead a filing, albeit slight: the spring economic forecasts assign Italy a +1.1 percent instead of +1.2 percent.

It’s true. We are ahead of Germany and France (which this year, respectively, do not go beyond +0.1% and +0.7%), but we are surpassed by the other countries of Mediterranean Europe: Spain (+2.1%), Portugal (+1.7%), Greece (+2.2%).

“The Italian data excites those who started from apocalyptic visions, which predicted the worst because of the ongoing wars, in Ukraine and the Middle East, and for an even deeper pessimism that even pushed to glimpse the crisis of the West with almost Putinian accents – continues the scholar – there is added a propagandistic interest in saying that since the new prime minister, Giorgia Meloni, has taken over, just as with Mario Draghi it was argued that everything was going well because the prime minister who came from Europe transmitted confidence. Even before, everything was fine with Giuseppe Conte, first and second, because the Five Star premier allowed the citizen’s income. It is always propaganda. But in the latest version, the Melonian one, it presents itself in a patriotic guise announcing the reforms in the absence of the possibility of using public spending”.

There is still a lability that Brussels, precisely when opening the infringement procedure for excessive deficit, has thus photographed: «Vulnerabilities remain linked to the high public debt and weak productivity growth in a context of fragility of the labor market and some residual weaknesses in the financial sector».

Employment is improving, GDP is growing albeit weakly. But there is the drama of povertydemonstrating a social crisis that has not stopped in recent years, advancing without barriers. It is Caritas that documents that we are now at an all-time high: almost 270 thousand people have turned to the pastoral body of the CEI and received assistance. “The comparison of the number of people assisted 2019-2023 is merciless: +40 percent”, underlines the report, reaching, in fact, the conclusion that poverty now “is to be understood as a structural phenomenon of the country”.

It is, moreover, the confirmation of the trend already outlined by Istat a few months ago: almost 6 million people in absolute poverty in 2023. Absolute, in the sense that these are families with a monthly expenditure that does not exceed the purchase of a basket of goods and services sufficient to guarantee a minimally acceptable standard of living.

From the Democratic Party senator, Walter Verinian explanation arrives. «Poverty coexists with a growth that exists, but which is driven by exports, without widespread wealth in the country. Well-being concerns only some productive strata and some social sectors. Thus inequalities increase within social peripheries, which ultimately coincide with urban ones. Behind the official data on poverty we see the poorest people and they are those who cannot make it to the end of the month with their income and who do not seek treatment when they fall ill», warns the parliamentarian: «Hence a great alarm that, if it does not receive an answer, risks not stopping the spread of real social powder kegs in certain areas of the country. Among these, the gangmasters and the barbarity that we saw in Latina, confirming inhuman conditions that also characterize some sectors of the world of work and which, in the Lazio municipality, have at least received a response from the trade unions after what has dramatically happened».

For Verini, we need “a great pact between social forces, unions and entrepreneurs, which holds together good growth, the one that comes through innovation and the fight against poor work, against exploitation”. The Democratic Party senator invites us to “not only think about growth, without also looking at safe working conditions”. As for tools such as the inclusion allowance, which has taken the place of the citizen’s income, it is something that does not work because “it does not have the necessary financial coverage”. But this does not change the fact that the old income of the Five Star Movement was insufficient, as it was “weak on the side of active policies for work”.

At least there is good news for the Southif it is announced by an authority on the subject such as Svimez. In 2023, in the South, GDP grew above the national average (+1.3%), due to public investments; unlike the North which slowed down growth (+1% in the North-West, +0.9 in the North-East). Central Italy is definitely struggling (+0.4%).

It is a pity that the differentiated autonomy, just passed by Parliament after being imposed by Matteo Salvini on his government allies, risks seriously compromising the development of the South. The abrogative referendum promoted by the opposition together with Cgil, Uil and the Third Sector associations, to cancel the law, is about to start. The Southern Regions are already making their voices heard, in an attempt, after the green light to the measure, to avoid the worst.

A specific request comes from Roberto Occhiutogovernor of Calabria and vice-national secretary of Forza Italia. “No agreement between the government and the individual Regions, if there is not first certainty of funding to guarantee rights and services. And even in matters not subject to the Essential Levels of Performance (Lep) caution is needed to avoid that autonomy produces negative effects. If resources are lacking, the approved measure risks remaining an empty box not only for the South, but also for the North, including matters that do not require the Lep to be transferred to the Regions. But above all for the Lep there is not even a single euro at the moment and, given that we still have two years to define the Levels, I do not understand why the reform was voted on in the last parliamentary passage, at night and in a hurry”.

A law that “splits Italy”? “I have never considered it that way,” replies Occhiuto, “rather it is a train with two carriages. In the first, there is the implementation of Article 116 of the Constitution, with the recognition of autonomy. In the second, the implementation of Article 117 with the rights and benefits to be enforced in all Regions in the same way, on the basis of the Lep, after having finally overcome the criterion of historical spending. A criterion that is harmful to Regions and Municipalities. The first carriage is on its way, the second is stuck at the station.” For the majority, the political risk is high. “Let’s not forget,” warns the Forza Italia governor, “that differentiated autonomy, not considered a priority by the center-right electorate, is now met with strong opposition among citizens in the South and much more limited consensus in the North than a few years ago.”

With the public debt we have – it is expected to reach 143.7 percent in four years, exceeding that of Greece – it will not be easy to find the necessary resources. The new Stability Pact already prevents deficit maneuvers like those of recent years. Imagine all the rest… The scholar Damiano Bruno Silipo tried to calculate, on Regional Economy, “The effects of differentiated autonomy on the sustainability of Italian public debt” (title of the research) and the result is certainly not encouraging. So the question, which also sounds like a political challenge between the majority and the opposition, is only one: will the funds for the Lep arrive first, with the necessary financing, or will the abrogative referendum cut the ribbon, once and for all? The entire game, in any case, will be played by 2025.