Italy Is Held Back by 2.6 Million People Who Have Given Up on Work

[Hydrogen]

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In a litany of woes Bank of Italy Governor Ignazio Visco listed this week, the sheer number of his fellow citizens who don’t bother seeking work was especially bleak.

The proportion of people active in the labor market is among the lowest in Europe, he complained to the country’s economic elite gathered in the gold-painted Shareholders’ Hall of Palazzo Koch, his institution’s home in Rome. Worst affected is the poorer south of Italy, where the governor hails from.

The labor market was only one of many weaknesses Visco highlighted in his annual speech on Tuesday. It may prove among the trickiest for the European Union to fix as it deploys skills-focused programs in its bid to reinvigorate Italy with 200 billion euros ($214 billion) of Recovery Fund cash.

Unlocking the jobs potential trapped in the inertia of the euro zone’s third-biggest economy is one of the few options available to fight the consequences of a demographic decline so stark that the world’s richest man, Elon Musk, has warned the country risks having no people left.

“Overcoming the factors that hinder productivity growth has become even more necessary” given the population outlook, Visco said. It “can only partly be countered by an improvement in the migration balance and by an increase in the labor-market participation.”

The numbers are stark: 2.62 million people are available for employment but not seeking it, more than the actual tally of jobseekers. On top of that are 872,000 part-time workers who would like more hours, and 90,000 people who want a job but aren’t immediately available, according to Bloomberg calculations based on Eurostat data.

“It makes me really sad to see these numbers,” said Andrea Prencipe, professor of innovation management and rector of Luiss University in Rome. “This points to a problem that goes beyond the usual issues of matching supply and demand, and skills. It’s a problem of mindset.”

As with many of Italy’s economic problems, the south suffers the most. Last year, when a measure of national unemployment averaged 9.5%, it was almost 24% in the area of Naples, where the 72-year-old Visco was born. The country’s third-biggest city, it is often seen as a proxy for the malaise and organized crime associated with that half of the peninsula.

Further east in Isernia, a landlocked province where the governor’s family comes from in the mountainous region of Molise, joblessness exceeded 12%.

Visco also highlighted how the country stands out for the low proportion of women in the workforce, exacerbated by the difficulty of regaining employment after having children.

But at the root of the problem is schooling. Low labor participation is “closely connected with educational attainment,” the governor said. It’s a commonly shared view. 

“We have a low-skilled labor force,” Italy Finance Ministry Deputy Secretary Maria Cecilia Guerra lamented on Rainews24 on Wednesday. “This has a big impact on our growth prospects.”

That isn’t easy to fix. Prencipe, the Luiss professor, says that simply throwing money at the problem won’t address it, even though the EU Recovery Fund does have initiatives devoted to skills and education. 

He says young people find it hard to enter the workforce after studying in Italy and need better-honed training that makes them nimbler at a time of faster-evolving employment requirements and lengthening lifespans.

Adapting to the shifting labor market is a challenge for Beatrice Tarantino. She has struggled to find a job since losing hers at an insurance company in Rome during redundancies in 2018. Currently helping a friend with childcare, she plans to return to the fray of seeking work later this year.

“After the pandemic struck, it got harder to look for a job,” the 49-year-old said. “Now I’m starting to feel too old to find one.”

Encouraging people to enter or return to the labor market is fundamental. The alternative, as Visco suggested, is that the country’s best and brightest emigrate, as almost 1 million already have done, while others do nothing. Such a challenge puts the onus on Italy to ensure that its vast injection of EU money isn’t only spent, but spent well. 

“It’s not a matter of how much funding -- which is considerable overall -- but of how we’re going to use it,” said Prencipe. “We need it to really tackle the problems related to labor and to learning.”



https://www.bnnbloomberg.ca/italy-is-held-back-by-2-6-million-people-who-have-given-up-on-work-1.1773994

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When I see negative circumstances like these abroad, I always question whether these troubles could find their way to native shores. Does italy's 2.6 million not seeking unemployment resemble the future of the united states. This is a habit I developed for many years from zimbabwe to venezuelan hyperinflation. As history does fortell that these forms of crisis typically have a trickle up effect. They begin in smaller nations of the world. And trickle upwards until eventually they affect larger and wealthier nations. Looking at these negative stats, I would expect future american job markets to resemble italy's current predicament.

There is another strange slant in the news where european media sources pride themselves on primarily reporting on negatives in america. And the USA by contrast prides itself on reporting primarily on the troubles of asia and europe. Everyone reads negative news about foreigners and seldom about their own country of residence. This reinforces notions of "bad things only happen to silly foreign people and never to us". Which hampers the native capacity to respond to crisis due to residents choosing to believe such things could never come to home shores and they should be exempt from having to deal with such issues.

It could be fair to say these types of economic issues could become commonplace eventually. What will the affects be. How do we address and resolve them. There must be something that can be done.

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[jackg]

A lot of these issues could probably be fixed by making jobs actually seem more attractive to workers they want them to be filled by.

The data used here is also likely based off a lot of estimation work too.

Southern European wages seem very low compared to North Western Europe (I only just rerealised this a few weeks back). It's something else that should be worked on by those countries to ensure they can educate up well enough their current cohort of students and maybe find ways to connect qualified individuals and pair them up with businesses to train them further and bring them up to the same level of skills as should've been taught in school (if it wasn't).

[Darker45]

A lot of these issues could probably be fixed by making jobs actually seem more attractive to workers they want them to be filled by.

Do you mean to say these idle labor force could be enticed to work and be productive by presenting available jobs that they are really interested of having?

I'm a little envious at this kind of people. They have the luxury to be picky when it comes to job. They could choose not to work if they don't like the job. Where I am, even college graduates end up working as store cashiers for lack of better opportunities.

Anyway, as per the article, this might be more than the "usual issues of matching supply and demand." It is actually intriguing that this is being branded as "a problem of mindset.” I'm interested to know what this specifically means.

[Sithara007]

I am 100% sure that the situation is not as bad as the case here in India. Here just around 1.5% of the population pays income tax. Almost everything is subsidized (food, fuel, electricity, housing, healthcare, education.etc) by the government (either federal or state), and it is very much possible for entire families to survive despite doing any work. For non-Indians it may be difficult to believe that 1.5% of the population (derogatively called as the "salaried class") is subsidizing the remaining 98.5%, but this system has survived for many decades now.

[Don Pedro Dinero]

I am surprised by the difference between Spain and Italy, I thought it would be more similar although it seems to be based on estimates. There is a similar issue in southern Spain, which is a fish chasing its own tail. There is little work, more public aid is given and in the end there are certain people who do not look for work because with the aid they get a little less than if they had to go to work, and they do not have to move from home. Or they combine public subsidies with undeclared work.

[Kakmakr]

I think the problem is worsened when a country provides for a huge social grant to assist unemployed people. I have talked to some people in the UK and they said the financial support in the UK for unemployed people are too much. A lot of people stopped looking for work, because the government support is enough to sustain them. 

https://www.gov.uk/benefit-cap/benefit-cap-amounts

The benefit cap outside Greater London is:

    £384.62 per week (£20,000 a year) if you’re in a couple
    £384.62 per week (£20,000 a year) if you’re a single parent and your children live with you
    £257.69 per week (£13,400 a year) if you’re a single adult

The benefit cap inside Greater London is:

    £442.31 per week (£23,000 a year) if you’re in a couple
    £442.31 per week (£23,000 a year) if you’re a single parent and your children live with you
    £296.35 per week (£15,410 a year) if you’re a single adult

This is just one of the benefits... a lot of people also get other benefits ...like FREE Water & Electricity etc... and they eat at Soup kitchens.... etc. 

[Don Pedro Dinero]

<...>

It is a problem of good intentions. There are people with few resources, training and employability who, if you don't help them from public institutions, are condemned to marginalisation and in many cases forced to commit crime in order to survive. The aid is a way of buying social peace.

When aid is generalised, there are also people who are employable, who could work, but who dedicate themselves to living off the aid because all in all, working is only going to bring in a little more money.

[so98nn]

I’m wondering why such situation could arise in Italy? May be geographic location and less flourished businesses? In any case the population does not seem to be big enough where it’s impossible to manage the countries employment. I think government can easily attract new businesses and also let their people understand they can do start ups considering job situation in the country. Definitely for individual to start a business they will need some schemes from the Government which can easily boost their current situation and bring employment. Small country, lesser population is surely easy to manage I believe.

[davis196]

It's not just Italy. All southern European countries have big numbers of unemployed people, who aren't actively seeking a job. Spain and Greece also have this problem. I'm not sure about Portugal or the Balkan countries, though.
This is what you get, when you combine a generous "welfare state" and not-so-attractive minimum wages. Many people don't find a valid reason to get a job and waste their lives working hard for a minimum wage(while staying poor).
Southern European culture adds something to the situation. Being hardworking and discipline isn't cherished in the South. The people prefer having a good time, rather than wasting too much energy on dumb activities like working in a 9/5 job.

[Sithara007]

~~~
Southern European culture adds something to the situation. Being hardworking and discipline isn't cherished in the South. The people prefer having a good time, rather than wasting too much energy on dumb activities like working in a 9/5 job.

Well... this maybe partially true. Mediterranean states are famous for this culture. In countries such as Italy, there is a large population of illegal immigrants from Sub-Saharan Africa and South Asia, who are ready to work for extremely low wages. This drives down the salaries, as well as the social status of those who do menial work. Successive governments have worsened the problem, by offering generous handouts and welfare payments. And as a result, most of these countries are neck-deep in debt. Some of them (Greece, Cyprus.etc) already had their financial meltdowns.

[LoyceMobile]

I'm a little envious at this kind of people. They have the luxury to be picky when it comes to job. They could choose not to work if they don't like the job.

Exactly. It may not be the best for the country's economy, but as an individual, I'd love to have the (financial) freedom to only do what I really want.

Here just around 1.5% of the population pays income tax.

I checked the rates: only 5 to 30% income tax? That's less than even the lowest tax bracket we have!

[tadamichi]

It's not just Italy. All southern European countries have big numbers of unemployed people, who aren't actively seeking a job. Spain and Greece also have this problem. I'm not sure about Portugal or the Balkan countries, though.
This is what you get, when you combine a generous "welfare state" and not-so-attractive minimum wages. Many people don't find a valid reason to get a job and waste their lives working hard for a minimum wage(while staying poor).
Southern European culture adds something to the situation. Being hardworking and discipline isn't cherished in the South. The people prefer having a good time, rather than wasting too much energy on dumb activities like working in a 9/5 job.

I think it’s also about, that in Southern European countries the state established a framework that just works against the working individual and favors the corrupt and well connected.

You have a combination of broken economic incentives, weak property rights(which makes it hard to build companies etc., the state can just take your belongings without real justice systems), low mobility of the population(good luck moving around Italy when you’re poor, the highway tolls are huge), educated population moving to other places like Germany, and the list goes on.

While in Northern European countries the state tries to enable the individual to do better. Free university, high mobility of the population, strong property rights, strong minimum wages, better economic incentives, the state protects their industries instead of working against them. Northern Europe is for sure no paradise, but much better in this regard.

And the result of that is that the people in the south stop trying or move to other places like Germany and thrive there.

In the statistic i would also take into account that Italy made vaccination mandatory for workers over 50 years old, otherwise they can’t show up to their workplace. It’s a nice example of a state working against the individual, and destroying their own economy in the process. Even tho i think they took it back now, but depending on how much covid tests cost, it could also be that people can’t afford to go to work.

Idk which of these laws are still into effect, because they change every 5 minutes, but they definitely influenced the statistic.

[jackg]

A lot of these issues could probably be fixed by making jobs actually seem more attractive to workers they want them to be filled by.

Do you mean to say these idle labor force could be enticed to work and be productive by presenting available jobs that they are really interested of having?

I'm a little envious at this kind of people. They have the luxury to be picky when it comes to job. They could choose not to work if they don't like the job. Where I am, even college graduates end up working as store cashiers for lack of better opportunities.

Yep this is exactly my point. If companies want workers, they need to be more proactive in hiring and participating in areas of society where they'll find those workers..

I know of places like hobby shops (eg book stores) and pubs that have often asked their more regular customers if they'd like an interview/job with them. I think there are equally a lot of people that work in shops in the UK who work there because they actually enjoy what they do (eg seeing new people every day and having interactions with them) - I use cashiers as an example because they're probably one of the lowest paid jobs everywhere.

While in Northern European countries the state tries to enable the individual to do better. Free university, high mobility of the population, strong property rights, strong minimum wages, better economic incentives, the state protects their industries instead of working against them. Northern Europe is for sure no paradise, but much better in this regard.

And the result of that is that the people in the south stop trying or move to other places like Germany and thrive there.

I heard of a stereotype from Eastern Europeans that Germany is where you go if you want a lot of money but want to continuously work and the UK/nordics are where you go if you want a good amount of money but a stronger work life balance. I wonder if this would actually be undone by improving the living and working conditions in Eastern and Southern Europe.

I think the problem is worsened when a country provides for a huge social grant to assist unemployed people. I have talked to some people in the UK and they said the financial support in the UK for unemployed people are too much. A lot of people stopped looking for work, because the government support is enough to sustain them. 

The cap was brought in by the current government after a few controversies after there wasn't a cap.

I think the cap pushes everything else higher and you might want to decide whether you think that's worthwhile or not... House prices, rent and groceries are kept high as a result and there might be a big impact in stopping some of these from happening. £13-20k is enough to live off, it's not enough to save off though imo and you won't claim anywhere near that if you already have a good amount of savings too so most of that money is being put straight back into the economy in some way.

[Zlantann]

The numbers are stark: 2.62 million people are available for employment but not seeking it, more than the actual tally of jobseekers.

This might be because the types of jobs the people want are not available. After the Covid-19 people discovered that they can actually work from home. One of such avenue is provided by Bitcoin and other online jobs. But when government makes policies that affect these avenues negatively it discourages the people from working. People not seeking employment might also be caused by over-reliance on government for subsidies and unemployment grants or benefits. This can actually lead to laziness among the citizen.

“This points to a problem that goes beyond the usual issues of matching supply and demand, and skills. It’s a problem of mindset.”

Yes a change of mindset not just for the citizens but the government. They must understand that most of their policies are obsolete and cannot produce the needed result. Favorable Bitcoin policies might not be the total solution to their problems but it can be a part of it.

He says young people find it hard to enter the workforce after studying in Italy and need better-honed training that makes them nimbler at a time of faster-evolving employment requirements and lengthening lifespans.

The conventional or normal school learning programmes have become obsolete and outdated. These lessons were tailored to produce job seekers that rely on government. The world has moved passed that stage. People want to control their live and career. This is the era of idea and innovation. Hence the Italian educational system must be overhauled and a new educational policy should be enacted. The educational curriculum should be tailored to suit the ever dynamic world economic system.
 

Encouraging people to enter or return to the labor market is fundamental. The alternative, as Visco suggested, is that the country’s best and brightest emigrate, as almost 1 million already have done, while others do nothing.

The labor market is ever dynamic. the work force must also change. People can be encouraged to work only when the right kind of job is provided. When government fail to provide highly needed and make policies that scare away investors in such areas people would not be motivated to work in available areas. The best and brightest emigrants out of Italy might not be doctors because there are still hospitals. They might not also be lawyers, nurses or construction workers because their jobs are still available. The people leaving are Bitcoiners and other innovators because of government harsh policies.

Visco also highlighted how the country stands out for the low proportion of women in the workforce, exacerbated by the difficulty of regaining employment after having children.

Women tend to be chocked-up with family responsibilities and childraising tasks immediately they get married. But that’s not a good excuse for making them unemployed. The problem is that the kind of job available doesn’t suit their current conditions. Online employment opportunities should be the target of the government and Bitcoin can also help.

[tadamichi]

Yep this is exactly my point. If companies want workers, they need to be more proactive in hiring and participating in areas of society where they'll find those workers..

I know of places like hobby shops (eg book stores) and pubs that have often asked their more regular customers if they'd like an interview/job with them. I think there are equally a lot of people that work in shops in the UK who work there because they actually enjoy what they do (eg seeing new people every day and having interactions with them) - I use cashiers as an example because they're probably one of the lowest paid jobs everywhere.

That’s actually an amazing idea, also former customers could be the suited for this, since they used services/ products themselves.

I heard of a stereotype from Eastern Europeans that Germany is where you go if you want a lot of money but want to continuously work and the UK/nordics are where you go if you want a good amount of money but a stronger work life balance.

 
Idk if wages in Germany are really higher than in Uk/ nordics. Work/life balance in Germany is really good(but also depends on the sector, low paying jobs can be terrible and non natives often get exploited, because they don’t know that the law protects them), but i see many Eastern Europeans take illegal contracts with no protection, where they then work for 12 hours a day and not enough pay. 

I wonder if this would actually be undone by improving the living and working conditions in Eastern and Southern Europe.

Definitely, i would consider going back to southern europe, if the conditions were similar to the north, its just way worse to build something under these weak conditions. Imagine starting a company now and depending on what you’re selling, it would be hard to just rely on a souther european market, because the purchasing power is way lower there. Which makes it harder to build high quality products and sell them there. You will be always reliant on a foreign market with more purchasing power at the moment. So the company could just move to a foreign market directly instead of settling in southern europe, it would be way more efficient. I think something like this is more of a project for people like me, that wanna see their country thrive, instead of a smart business decision. It’s hard for the south to catch up, when at the same time you will have the state working against you, when trying to improve the situation.

[Lucius]

It's not just Italy. All southern European countries have big numbers of unemployed people, who aren't actively seeking a job. Spain and Greece also have this problem. I'm not sure about Portugal or the Balkan countries, though.

It all depends on how strong the gray economy is and how much are the social benefits and various benefits for those who are unemployed. Many formally unemployed people work without being registered because they earn more, and some are stimulated not to work with quite generous benefits, which can amount to 70-80% of the average salary. Now imagine someone working without being in the system and at the same time receiving unemployment benefits - taxes and pensions are not something these people care about.

As for the Balkans, countries like Croatia face a large labor shortage in general, especially during the tourist season as more than 300 000 people emigrate to the west EU in the last 10 years - while this gap is being filled by people from BiH and Serbia who come mainly as workers in construction and tourism.

From one example cited in the article, it can be said that people lost their jobs during a pandemic at the age of 50 have the biggest problems mostly because they can't find a similar job they did before, and the idea of retraining is not something they gladly accept.

Adapting to the shifting labor market is a challenge for Beatrice Tarantino. She has struggled to find a job since losing hers at an insurance company in Rome during redundancies in 2018. Currently helping a friend with childcare, she plans to return to the fray of seeking work later this year.

“After the pandemic struck, it got harder to look for a job,” the 49-year-old said. “Now I’m starting to feel too old to find one.”

[Darker45]

I'm a little envious at this kind of people. They have the luxury to be picky when it comes to job. They could choose not to work if they don't like the job.

Exactly. It may not be the best for the country's economy, but as an individual, I'd love to have the (financial) freedom to only do what I really want.

I'm actually a bit puzzled by the figures shown in the OP. It's a huge portion of the labor force right there that could actually make a lot of change to the economy. It must be alarming when the majority of the available labor force are not seeking jobs. That's a lot of productivity lost.

On other hand, however, does this mean that they don't need jobs? Does this signify prosperity? Does this really mean financial freedom? Or is this a kind of a rising pre-modern mindset which prefers unproductivity over tiring or boring or bland jobs? It's something like, "I'd rather be unemployed than be of service 40 hours a week to a profit-oriented company."

Personally, I've noticed that there is indeed this kind of mindset. I myself would rather be idle than be working aimlessly 10 hours a day on a minimum salary in a toxic workplace with an equally toxic boss and workmates.

But for somebody to be able to take this luxurious stand, it must mean that one can eat three times a day even if unemployed. Should the government, then, be happy that her people have reached this level or be worried that the economy might end up unsupported?

[fiulpro]

-There are a lot of problems happening in Italy to be honest, there are few things one have to understand, the laws for workers are not good and that's why most of them are choosing to stay at home, there is also a lot of problems for them happening, therefore at the end of the day what the government would do is to give these jobs to foreigners and they are definitely seeing influx from Ukraine so they are going to reform the laws to keep the economy going, I understand that this might be a 'maybe' but anything can happen.
-Some people might have luxury of picking but some might not, it's not a one way street. Lets see how it goes.

[Gianluca95]

In italy we've a serious problem with grants. Like UK, if people takes it, they aren't incentived to find a job. Also we've another problem, I'm Italian and I can explain to you better:

- Many people accepts grants and doesn't go to find a new job.

- Many entrepeneur offers work without any legal contract for a lower fee (between 500-800 €, and this are really poor income for a person at the end of the month)

- Government doesn't do nothing to incentive the open of new industry sector.

[el kaka22]

Something "about" similar is going on in my nation as well, and as far as I know minimum wage workers in USA as well. The minimum wage is so small that, there are people who know that they will not be paid the amount they deserve, and even the amount they can survive. If the poverty line is 600 dollars a month in a nation, and you offer them let's say 250 dollars, then do not expect those people to work.

Hence, there are a ton of people who are not even seeking jobs anymore, they are getting unemployment checks which forces them to go check a job, and that ended up with them not getting paid and they keep on collecting the welfare instead. Business' need to offer more in order for people to go back to work.