The over-generous Italian welfare state means that for all the belt-tightening, most people in the country still enjoy la dolce vita
Italy’s new Welfare Minister, Elsa Fornero, broke down in tears when announcing a squeeze on state pensions this month, but she was weeping too soon. For while the latest package of austerity measures will undoubtedly hit Italians hard in due course, there is scant sign yet that they are suffering unduly. Foreigners note with surprise how prosperous and well-dressed most Italians still look, and Silvio Berlusconi was not wrong when he pointed out that the restaurants were still full (“Italia in crisi? I ristoranti sono pieni!“). London is full of free-spending Italian tourists. After a decade of recurrent recessions and with the heaviest burden of government debt of any European Union country apart from Greece, how do the Italians manage to appear so unconcerned?
Italians, of course, like to present a bella figura to the world, and this may lead them to cover up whatever financial problems they face. But they also enjoy job protection and welfare benefits without equal in Europe, far greater than were ever enjoyed by the citizens of the Soviet Union. Their pensions in the public sector are astonishingly generous. Mario Draghi, now president of the European Central Bank, draws a pension from the Italian Treasury, of which he was director-general for ten years till 2001, of about €15,000 a month (about £155,000 a year) although he was still in his fifties when he retired. This on a smaller scale is the happy situation in which most public sector workers find themselves, often retiring very young and taking up other work in Italy’s vast black economy to supplement their pension income.
In the private sector as well, pensions are good, benefits generous, and it is incredibly difficult to fire anyone. This may help to explain Italy’s dismal rate of growth, but it also means that people with jobs have been able to hang on to them despite the county’s economic problems. Among young Italians, who have yet to start work, there is widespread unemployment, but this is to some extent their fault. Those who have been through higher education refuse to take the kind of blue-collar and service jobs that are available: these are left to be done by Italy’s five million immigrant workers. The middle-class young, meanwhile, prefer to rely on the support of their parents, who are either still in employment or moonlighting and drawing final salary pensions.
The truth is that things are not so different in Italy from in Britain. There is belt-tightening in Italy, too. People buy fewer cars, fewer houses and fewer luxury goods of all kinds. The sales have started in shops before Christmas. The traffic in Rome seems to have eased. But times are not hard enough yet for people to change their way of life, even if they conduct it on a slightly more modest scale. Rome wasn’t built in a day, and nor can the Italian welfare state be dismantled in one.