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The Italy of inequalities

2016

July - December

Description

The double number 3-4/2016 of Rps has given over the whole of its monographic section to the economic inequalities to be found in Italy today. It is a topic that has now become part of public discussion, though it is often dealt with superficially. This issue hopes to provide some detailed thinking on the trends and mechanisms that determine these inequalities, distinguishing between inequality and poverty, which, as often happens, tend to be wrongly subsumed in each other in public debate, where there is also a strange imbalance between denunciation of inequalities and the policies with which it is hoped to combat them. Given these limitations in public discussion, the section focuses in the first part on the reasons for studying them, as well as what we know about the main facts and underlying trends. The second section focuses on the effects, positive and negative, that some policies may have on inequalities, policies that are not necessarily redistributive in nature. The second part of the number concentrates on the pension reform contained in the Budget for 2017, while the relation between economic integration and social Europe is at the centre of the Debate section.

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THEME - Economic inequalities in Italy: trends causes effects and policies to combat them

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Not Only Opportunity and Combating Poverty. The many Reasons for Concern over Income Inequality
In these last decades, equality of opportunity and poverty alleviation have become the two most advocated values in public discussion of distributive justice, while attacking income inequality directly has occupied a marginal role. Often, it is even seen as a matter of envy and/or the entrance door to a general levelling down, in violation of freedom and merit. The article questions these positions, arguing for putting back income inequality at the forefront of distributive justice. On one side, income inequality could jeopardize equality of opportunity and poverty alleviation. On another, it could imperil both the satisfaction of basic needs, to the detriment of the non-poor too, and the sharing of a common moral equality. Finally, neglecting income inequality could entail legitimizing unfair processes of income formation.
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The Impact of the Crisis on Economic Inequality in Italy and Its Worrying After-effects
This article aims to provide fresh empirical evidence on trends of economic inequality in Italy and in major developed countries, considering the main factors that could have determined the increase in inequality experienced nearly everywhere since the 1980s. In particular, we show that the labour market greatly contributes to widening this inequality. Furthermore, when we take into account the risk of dropping into unemployment, we find that the role of the labour market as a cause of inequality has grown stronger in Italy since the emergence of the crisis.
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The Various Dimensions of Poverty: An Overall View
Since the early years of Italian unification, the population’s living conditions have been the subject of inquiry by governments. Initially the aim of public intervention was to maintain the established order: poverty and misery were considered dangerous hotbeds of political instability rather than recognized as a social injustice to be fought. The approach of the inquiry was basically qualitative and multidimensional. Only in the recent past has income poverty come to the fore, mainly driven by the need to make use of quantitative measurements. Although the literature seems to follow a multidimensional approach, poverty can still be detected following a one-dimensional approach based on economic criteria. Nevertheless, the one-dimensional income approach is not free of conceptual complications, mainly due to the multi-dimensional nature of poverty. These difficulties basically hinder the achievement of a single criterion of measurement. Poverty, usually understood as income poverty, is rather a multi-dimensional phenomenon.
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Income Mobility and Vulnerability of Family Units in Europe and Italy
This article explores intra-generational disposable and market income mobility in four European countries (Italy, France, Germany and Denmark) in the four years preceding and succeeding the onset of the economic crisis. The aim is to create a bridge between results from the static measures of inequality (which do not register any widening of the income gap in Europe after the crisis) and the findings from individual perception of living conditions (which clearly detect a decrease in the ability to make ends meet). To this end, we propose exploring income mobility as an instrument to detect income volatility and individual vulnerability, aimed at complementing the standard static measures of inequality. The cross-sectional comparison of data from 2008 to 2011 shows that the crisis did not significantly alter the mobility structure in European countries, while the separate study of Italian regions suggests increased vulnerability in the conditions of low-income families in the South, attesting the ability of mobility indicators to detect vulnerability among the lower paid.
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The Wealth of Italian Families: Distribution and Trends
The aim of this article is to analyse the trend in the distribution of wealth in Italy from 1991 to 2014 by means of the Bank of Italy’s Survey on Household Income and Wealth (Shiw). In particular, we will evaluate the association between the distribution of wealth and the level of household income and between the distribution of wealth and inheritance.
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Universal or Sectorial? The New Anti-Poverty Policies and the Problem of the Target
The article provides a critical analysis of the recent anti-poverty policies in Italy and their possible developments. After summarizing the trends of absolute poverty during the recession that began in 2008, it focuses on the evolution of the policies, in particular those adopted by the Renzi Government, with particular reference to the presentation of a draft legislative decree concerning poverty. Then we examine the range of beneficiaries of the Support for Active Inclusion (Sia), a transitional income maintenance scheme pending the introduction of Inclusion Income (Rei) required by the decree. At the time of writing, we do not know – and it is difficult to imagine – what the target of the Rei will be. Lastly, we discuss the possible beneficiaries of the new measure, so as to check, how distant the various alternatives are from the objective of a universal measure against absolute poverty.
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A Reform of the Tax and Benefits System for Individuals and Families
Given the unsatisfactory Italian tax benefit system, with effective marginal tax rates that rise and fall, poverty traps and the inability of the benefits system to actually reach poor families or those with children, the authors suggest an articulated reform of social contributions, comprehensive income tax with its tax credits, and family allowance. The result would be a reduction of income concentration, poverty, and the tax wedge for lower income and present marginal tax rates, along with increased income support for families with children.
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Indexation of Pensions and Standard of Living Elderly Citizens
We focus on those Italian public pensions that are wholly adjusted to price variations. We gather evidence on how their purchasing power has changed over the last 20 years, and we compare this to the variations, over the same period, of the real value of the absolute poverty threshold for an older person living alone. We found a sensible divergence between them. In many years the real value of the threshold increased more than the purchasing power of pensions. Furthermore, even greater divergence was detected between poor pension-purchasing power and the real value of the average consumption basket of poor families. These outcomes are caused by how the indexation mechanism works, which does not take into account the composition of a poor family’s consumption basket. Furthermore, periodical revaluation draws on the Cpi index, which does not measure the actual price increases for families. A more adequate and feasible alternative is provided by the Harmonised Index of Consumer Prices.
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Job Security, Flexicurity or Insecurity? Dualism and Reform in the Italian Labour Market
In this article, we propose an overview of the labour market reforms that have been taking place in Italy since the late 1990s, showing that they produced an extension of temporary contracts in labour relations. While, after the introduction of the Jobs Act in 2015, we should expect to move towards a single type of labour contract – one offering greater protection – the concomitant further deregulation of fixed-term contracts has betrayed this expectation. Flow data provided by Inps clearly show that in 2016 contracts with increased protection do not play a significant role in discouraging the use of temporary contracts. In fact, while in 2015 the contribution relief obtained by firms hiring new workers with permanent contracts seems to have produced a marked effect, in the first eight months of 2016, when the relief was reduced to 40%, the flows seemed to return in line with the trend of previous years. Looking at the flow data by economic sector, we show that the increase in the use of temporary contracts has been stronger in those sectors where flexibility was already high. Moreover, with regard to the territorial distribution, we find that the Italian regions with the most crit
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Women and Jobs: Equal Opportunities Policies in Italy
In this article we examine the policies adopted in Italy to face a double problem: the low participation of women in the labour force and the unfair distribution of the burden of housework and care. An approach of «gender mainstreaming» can influence conventional wisdom, but a deeper change requires actions aimed to remove the material obstacles that hinder women’s empowerment. In Italy it is especially important to improve the systems of childcare and long-term care, so as to ensure good quality services in every region at affordable rates.
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Cuts to Local Bodies and Social Services. Condemned to Irrelevance?
The overall size of the Italian welfare system easily stands comparison with other European countries, but social services, programmed at the regional level and operated locally, show evident backwardness and strong territorial variations. Social services do not offer adequate responses to those in need, and in some areas of the country the probability of not receiving any help is high, which feeds inequality. In fact, social services play a marginal role in national policies, have become the target of spending cuts, and have not been able to gain full legitimacy as an instrument of social protection. At present, deteriorating economic conditions and increasing social demand have brought new awareness of the need to combat poverty and social exclusion; however, government policies are focusing mostly on monetary transfers, rather than on services.
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Municipal Budgets, Local Welfare and Social Negotiations. Connections and Divergences
In the light of recent studies by the Fondazione Di Vittorio on welfare issues, the article analyses the municipal budgets in relation to social spending, users’ contributions, local tax revenues, together with economic and financial problems and inflexibility, also trying to connect these constraints with opportunities for trade unions in social and territorial bargaining. This will bring out the link between the two pillars of social bargaining: taxation, on the one hand, and the welfare system on the other (both at local level). With regard to municipal budgets, the article explores spending dynamics since 2007, in particular for residential services for the elderly, childcare services and social care services.
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Industrial Relations and Economic Policies for Reducing Inequalities and Increasing Potential Growth
The increase in inequalities is a characteristic feature of the present model of development and is at the root of the global crisis. In Italy, the gradual increase in inequalities, particularly in the primary distribution of income, led to the decline that preceded the crisis and worsened the recession in all the main industrialized economies. This structural weakness of the national economy should be blamed on an economic policy based on deregulation and the competitive devaluation of labour – one of the important causes of the misfit between salaries and productivity. For better pre-distribution and redistribution of income we need new lines in economic policy, a modern system of industrial relations, and a new workers’ statute – creating, representing and protecting labour, to reduce inequalities and increase growth.
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TOPICAL QUESTION - The outlook for social security after the Joint Statement of Government and Unions

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Joint Statement Pensions 2016: Responding to Emergencies but Re-defining Prospects
The joint statement of 28 September 2016 by the government and Cgil-Cisl-Uil marks a first step in interventions on the questions of social security. It starts from some emergencies, such as those whose working life began early and those with physically demanding jobs, support measures for existing pensions, and action to define a series of subjects that will be discussed early in 2017. In our view, not all the solutions chosen are adequate to the problems facing us, starting from the government’s decision not to intervene on insurance contributions to cover the cost of old age pensions, but to make additional funds available when necessary. There are, however, new and positive things in the measures and in the prospects, such as the recognition of the differences in retirement age for different jobs, and adapting the requirements to life expectancy. We are just at the beginning, and an assessment can only be made at the end of the discussions, which, in «phase 2», will concentrate on the need for corrective measures to the system of contributions.
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Pensions: An Endless Story?
In the last twenty years, the Italian pension system has undergone continuous reforms that have modified the calculation methods with the transition to a notional defined contribution system, raised the age requirements for retirement, and slowed the indexation of pensions. The main purpose of the reforms was to contain current pension expenditure and make it financially sustainable in the medium-long term. The article is a summary of economic and financial trends in the social security system, retrospectively and in the long-term projections. What emerges confirms that the reforms have achieved important results in terms of financial sustainability. However, the loss of some key points of the original design of the 1995 reform, whose gradual implementation collided with stringent budgetary constraints, made security issues more acute for young people, women and disadvantaged workers. The measures in the last Budget, while taking steps to restore a little «flexibility» in the age of retirement, do not address the fundamental problem of redistributive mechanisms to reduce income risks and protect the low-paid.
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Italian Pensions and the Issue of Equity: From the Poletti-Renzi Reform to «Phase 2»
The pensions reform included in the 2017 financial measures contains several features that substantially differ from the crisis measures adopted in the period 2009-11. Not only does it increase expenditure in order to tackle the most severe social consequences of previous austerity-driven reforms, but it also acknowledges that different pensions rules may be applied to different worker categories and occupational profiles, provided that these differences can be justified as fair. To what extent, however, can these measures be considered adequate and effective in addressing the main weaknesses of the Italian pensions system, as the latter has emerged from two decades of retrenchment reforms that have also deeply re-structured its overall architecture? This article aims to answer this question by assessing the measures included in the Poletti-Renzi reform with regard to four main aspects: economic-financial sustainability, inclusiveness and transitions towards a multi-pillar architecture, adequacy of pensions, and a fair system.
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DEBATE - Europe: reconcile economics and welfare

Economic Integration and Social Europe: Which Synthesis?
The article discusses the topic that is at the heart of Maurizio Ferrara’s latest book (Rotta di collisione. Euro contro welfare?, 2016) on the relation between the process of economic integration in the Eu and the national welfare systems – a relation that involves four kinds of conflict, which can be overcome by various possible manoeuvres and corrective tools so as to reconcile Europe and welfare. These lines of tension and ways out are surveyed in the article, which then brings out how, in the face of the extent and seriousness of the crisis, we need to undertake a radical change of direction, a profound revolution. This will require great courage, and, without it, resentment, rancour, and the rejection of the sacrifices imposed by the recession will lead to reactions of despair and intolerance from ever greater sections of the population.
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The Nature of the Process of Monetary Integration and the Future of the European Social State
This essay analyses the ongoing Eurozone (Ez) crisis, highlighting the links between it and the Ez’s structure and institutions. We identify a set of elements that have made the Ez prone to divergence, instability and crisis from the start. We also offer an interpretation of austerity policies that shows them emerging as a direct outcome of the Ez’s institutional set-up. Dissenting from the thesis proposed by Ferrera (2016), we identify an incompatibility between the Ez set-up and the conservation of the quality and range of the European welfare state. Finally, we delineate four fault lines identified as the origin of the present «disgregation» process: capital-labour conflict, centre-periphery conflict, conflict between national sovereignty and supranational power management, and hegemonic crisis.
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