THE IMPACT OF ANTI-CRISIS MEASURES, AND THE SOCIAL AND EMPLOYMENT SITUATION: ITALY Elisa Borghi, Università Carlo Cattaneo – LIUC KITES- Università Bocconi European Economic and Social Committee Group II Extraordinary Meeting Brussels, 28th February 2012

Contents Relevant measures Main effects The decree Save Italy: expected effects Conclusions

Introduction: the crisis Quarterly GDP (growth rate)

Relevant measures November 28 th, 2008 Anti-crisis decree (35 articles providing for an economic recovery package amounting to 6.4 billion) – Extraordinary bonus to families – Fund for Employment and Training – Tax relief on productivity bonuses (extension) – Social Card Urgent measures approved in 2009 – Decree 5/2009, 10th February 2009 – Decree 1st July 2009 n.78 – Law n.121/ 3rd August 2009 Budget Law 2010 (December 2009)

Relevant measures May 2010 – Urgent measures for financial stability and economic competitiveness Budget Law 2011, December 2010 Measures for financial stability: – July 2011, n. 98/2011 and 111/2011 – August 2011, n. 138/2011 – December 2011 Save Italy decree (201/2011)

MAIN EFFECTS: GDP, PRIVATE CONSUMPTION, EMPLOYEES Fonte: ISTAT GDP, Private consumption: real percentage changes

Household confidence index. Source: ISTAT Estimated effect of a reduction of 10% of this index reduces consumption of 0.5% with an effect on GDP of -0.3%

Consumption Poverty has increased Disposable income and saving propensity

Employment People seeking employment

Employment OrdinaryExtraordinary IN DEROGA Total Redundancy Fund – CIG (million of authorized hours) Source: INPS

Unemployment rate Total and people years old Source: ISTAT

Wages and inflation rate. Percentage changes on previous quarter

Effects of the Save Italy decree

Conclusion Italy has been severely hit by the crisis in terms of employment and social conditions Fiscal policy: mainly increases in taxation Spending cuts can worsen families economic conditions, particularly poorest ones. High indebtedness and contagion of the sovereign debt crisis makes the trade-off between stimulus and austerity more severe

Conclusions Urgent measures prevented the introduction of structural interventions fixing the weaknesses of the Italian economy. Increases in taxation contribute to the reduction of disposable income and consumption, leading to an increase in poverty. Spending cuts, in particular of health care expenditure and of transfers to regions, have a greater impact on poorest families. Worse labor market conditions during the crisis and structural weaknesses become more evident. To overcome the crisis, structural reforms are needed: the grow Italy decree