Oct 29

Italy’s world records #5

Last available data from national and international bodies confirm the decline of Italy. GDP dropped at ninth place in the world and an array of negative records are declared by major authorities in these days. Actual jobless people, including those  “discouraged” who are not actively looking for jobs, is around 6 million which is double than official statistics, bringing unemployment rate over 20% ISTAT announces -official figures show over 50% unemployment rate among young people in South of Italy. The business and consumer confidence climate indexes calculated by the same Institute keep on decreasing, while over 17% of Italian household is absolutely poor.

Gains from greater flexibility obtained from the nineties have not been invested in innovation and new technologies, and the GDP share invested in education, research and employment services has dropped during this crisis, Ignazio Visco, Bankitalia’s Governor, said at the Book Forum in Bari. However, private investments in R&D had dropped by 4% in the eight years before. Chances to get a job after graduation in Italy are equal to those after a diploma (73% in the age range 25-39), much lower than other European graduates (83% in the same age range).

In the ICT sector, things do not go much better according to the Annual progress rankings of the Digital Agenda Scoreboard. Private investment in company software, databases, R&D is around 4% of GDP, while the same industry expense is 11% in the US and 2% in Greece. Only 2% of Italian telephones are connected to new (high-speed) generation networks, against the average 20% of high speed connection lines in Europe. Data loss of Italian connections is triple than the European average and six times higher than losses in Germany. E-commerce penetration is very low too, making Italian ranking the worst in Europe: less than 5% enterprises manage online sales and only 15% of Italians buy goods online. Such share rises to 50% of European citizens on average. 43% of Italian households do not have Internet connections, and 22% only uses e-Government rankings.

Respect for media freedom is well below the European and OECD standards, as measured by  Italy’s 57th position in the Press Freedom Index 2013, out of 179 Countries investigated by Reporters sans Frontieres. Italy also tops the list for tax evasion, the President of Italian Audit Court Giampaolino told to a Senate Committee on October, 3 2012. He noted if Italian tax evasion had been at US levels since 1970 (less than 3%) public debt would be much lower, 76% instead of 130% of GDP, and the changes necessary to adjust the public finances “much less demanding”. “Stamping out tax evasion would also contain runaway inequality in wealth distribution”, Giampaolino added. Actually, Italy is at 72th position in the Corruption Perception Index 2012.

The 2013 budget law is not expected to improve the critical situation of the Italian economy, although the many governmental announcements. The one-shot privatisation of the last State jewels (see also Italy for sale and Italy for sale -#2), and the ridiculous reduction of the fiscal drag (nearly €100 per year on average) not only are useless for growth, but add inequality to the system too, the Audit Court and Bank of Italy criticised on October, 29.

Although a deep need for financing public and private investments in times of recession and heavy budget cuts, Italy will spend 40% only of European funds 2007-2013 by the end of this year, and it is positioned at the bottom of the ranking together with Romania and Bulgaria. However, Italy is at top of the black-list of Countries sentenced by the Court of Justice for (over 100) infringements of EU law.

Such figures indicates some of the weakest points of the Italian economy. The policy makers should target them with the highest priority in order to give Italy the last chances to stop its decline. But the government, industry and Unions still do not share the same view and the political agenda is concentrating on very far issues like the political consequences of Berlusconi’s trials, the length of the Letta’s government and the reform of the election law. We would never say it is too late to act, but time is getting very short.