The Italian Welfare State in a European Perspective: A Comparative Analysis 9781447316893

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THE ITALIAN WELFARE STATE IN A EUROPEAN PERSPECTIVE A COMPARATIVE ANALYSIS Edited by Ugo Ascoli and Emmanuele Pavolini

THE ITALIAN WELFARE STATE IN A EUROPEAN PERSPECTIVE A comparative analysis Edited by Ugo Ascoli and Emmanuele Pavolini

First published in Great Britain in 2015 by Policy Press North America office: University of Bristol Policy Press 1-9 Old Park Hill c/o The University of Chicago Press Bristol 1427 East 60th Street BS2 8BB Chicago, IL 60637, USA UK t: +1 773 702 7700 t: +44 (0)117 954 5940 f: +1 773 702 9756 [email protected] [email protected] www.policypress.co.uk www.press.uchicago.edu © Policy Press 2015 British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book has been requested ISBN 978 1 44731 688 6 hardcover The right of Ugo Ascoli and Emmanuele Pavolini to be identified as editors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved: no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior permission of Policy Press. The statements and opinions contained within this publication are solely those of the editors and contributors and not of the University of Bristol or Policy Press. The University of Bristol and Policy Press disclaim responsibility for any injury to persons or property resulting from any material published in this publication. Policy Press works to counter discrimination on grounds of gender, race, disability, age and sexuality. Cover design by Policy Press Front cover image: istock Printed and bound in Great Britain by CPI Group (UK) Ltd, Croydon, CR0 4YY Policy Press uses environmentally responsible print partners

Contents List of figures and tables Notes on contributors

vii xiii

Introduction 1 Ugo Ascoli and Emmanuele Pavolini The main traditional specific features of the Italian welfare state during the ‘golden age’ How to interpret policy changes in the Italian welfare state: an analytical toolkit Some basic hypotheses on the Italian reform path and the structure of the book

Part One: Main policy changes in the Italian welfare state over the past two decades one ‘Everything needs to change, so everything can stay the same’: the Italian welfare state facing new social risks Costanzo Ranci and Mauro Migliavacca

1 5 13

21

Introduction 21 Vectors of change: labour-market transformations and 22 resilient familism Income inequalities and redistributive dynamics 26 The new risks in the labour market 29 Dependency and care problems 30 Welfare policies: what changes? 35 The redistributive impact of non-recalibration 39 Conclusions 41

two

Two decades of pension reforms in Italy: shedding light on a series of mirror-images David Natali

49

Introduction 49 Italian pensions: two decades of reforms 50 Pensions during the Great Recession: reform after reform 54 The politics of pensions 56 A first assessment of the outcomes of the reforms 60 The Italian case in a European perspective 62 Conclusions 65

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The Italian welfare state in a European perspective

three

Employment policy: segmentation, deregulation and reforms in the Italian labour market Stefano Sacchi and Patrik Vesan

71

Introduction 71 The Italian labour market: trends and divides 72 Main policy changes since the 1990s 77 Labour-market reforms in the crisis 83 A comparison with the German and Spanish reform paths 87 Segmentation, inequality, stagnation: the discomfiting effects 90 of reforms at the margin Conclusions 93

four

Italian social assistance in the European context: residual innovation and uncertain futures Yuri Kazepov

101

Introduction 101 What social assistance is and how it changed over time 101 Minimum income measures in Europe 104 Minimum income and social assistance policies in Italy 113 Uncertain futures 125

five

Care policies in Italy between a national frozen landscape and local dynamism Marco Albertini and Emmanuele Pavolini

133

Introduction 133 The main policy changes over time 133 At the roots of the ‘frozen landscape’ in national care policies 140 The ‘frozen landscape’ and inequalities 144 Conclusions 150

six

Healthcare: difficult paths of reform Giovanna Vicarelli

157

Introduction 157 The years of incomplete federalism (from 2001 to 2008) 158 Measures to deal with the crisis (from 2008 to 2014) 160 Interdependencies and conflicts 162 Italian healthcare in international comparison 166 Conclusions 173

iv

Contents

seven

School in contemporary Italy: structural features and current policies Gabriele Ballarino

179

Introduction: school and the welfare state 179 The Italian school system in comparative perspective 180 The main policy changes over time 185 The actors and their interactions 193 The outcomes 196 Conclusions 200

eight

Higher education, between conservatism and permanent reform Gabriele Ballarino

207

Introduction: higher education as a part of the welfare state 207 Italian higher education in comparative perspective 208 Current higher education policies: the permanent reform 213 The key actors and their relations 219 The outcomes: the Italian higher education system and 224 social inequality Conclusions 228

nine

The tax system and welfare for families Maria Cecilia Guerra

235

Introduction 235 Tax credits for dependent family members 238 The family allowance 245 An uncoordinated set of instruments for monetary 248 compensation Other allowances for welfare purposes 250 Conclusions: from positive to normative analysis 252

Part Two: Europe, austerity and inequalities in the Italian welfare state ten The Europeanisation of the Italian welfare state: channels 259 of influence and trends Chiara Agostini, David Natali and Stefano Sacchi Introduction 259 European Union governance instruments and their influence 260 on national welfare states A decade of Europeanisation of the Italian welfare state 267 Have the Europeanisation processes changed during the crises? 275

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The Italian welfare state in a European perspective

eleven How many Italian welfare states are there? Emmanuele Pavolini

283

Introduction 283 How many Italian territorial models of social citizenship? 284 Changes over time: is the territorial gap widening or narrowing? 292 Different territorial models of social citizenship: is there 295 an Italian specificity? Conclusions 302

twelve Fiscal austerity and income distribution in Italy Massimo Baldini

307

Introduction 307 The distribution of income in Italy during the last decade 307 The distributive impact of austerity measures 313 Discussion 321

Conclusions 327 Emmanuele Pavolini and Ugo Ascoli Introduction 327 A quarter of a century of welfare reforms in Italy 327 The Italian welfare state over the last decades: outputs and 336 outcomes The Italian welfare state over the last decades: the factors and 346 actors influencing change Where is the Italian welfare state heading? 355

Index

361

vi

List of figures and tables Figures 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8

1.9

1.10

2.1 3.1

4.1 4.2 5.1 7.1 7.2 7.3

Relative poverty rates for children and the elderly in Italy, 27 1986–2010 Real average income by occupational position, dependent 27 employees, 1991–2012 Real average income by occupational position, self-employed 28 workers, 1991–2012 Employment gender gap for workers aged 25–49 for Italy 33 and the four biggest countries in Western Europe, 1983–2012 Parenthood impact on female employment rates for women 34 aged 25–49 in 27 EU countries, 2005 and 2012 Social expenditures in euros per capita, 1990–2011 36 Trend of expenditure on social protection in Italy, in 37 percentages of GDP, by macro-sector, 1990–2011 Trend of expenditure on old-age and survivor pensions in the 37 main European countries, in percentages of expenditure on overall social protection, 1991–2011 Trend in expenditure on disability benefits in the principal 38 European countries, in percentages of expenditure on overall social protection, 1991–2011 Trend in expenditure related to family/children in the principal 39 European countries, in percentages of expenditure on overall social protection, 1991–2011 Projections of public pension spending (% GDP), 1995–2045 61 Trends in expenditure on passive and active labour-market 82 policies as a percentage of GDP (left axis) and unemployment rates (right axis), 1990–2011 Changing scales in selected policy areas in four European 111 countries, 1989–2006 Net social assistance as a percentage of median equivalent 112 income, 2001–09 Trend in median household equivalent disposable income 149 by household head’s occupational social class (1977 = 100) School enrolments, by level (%), 1951–2009 184 Enrolments in upper-secondary schools, by track (%) 189 School expenditure as a percentage of gross domestic product 192

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The Italian welfare state in a European perspective

7.4

7.5 8.1 8.2

9.1

11.1 12.1 12.2 12.3 12.4 12.5 12.6

Probability of achieving an upper-secondary diploma over time, by social class, expressed as difference from the bourgeoisie (flat line) Gender differences in the probability of achieving an upper‑secondary diploma over time University matriculations, 1945–2009 Family background inequality: difference in probability of entering higher education between upper-secondary school graduates with tertiary-educated parents (flat line) and graduates with upper-secondary-educated (upper row) and up to lower-secondary-educated parents (lower row), by year of graduation and upper-secondary track Difference in the incidence of tax between a single taxpayer and a taxpayer with a dependent spouse and two children, both earning the average wage of a full-time industrial worker, 2000 and 2013 The regional functioning of the Italian welfare state: the main clusters Gini index of income inequality and relative poverty rate with variable line Relative poverty rate with poverty line fixed in real terms at the 2004 level Change in average disposable equivalent income from 2007 to 2011, by deciles Percentage change in disposable monetary income for households after the austerity package Percentage change in equivalent disposable monetary income for individuals after the austerity package Average incidence on equivalent monetary income of the austerity measures

198

199 210 225

236

290 308 309 310 318 318 319

Tables 1.1

1.2 1.3 2.1

Percentage reduction of the population in poverty determined by social transfers in the principal European countries, 1995–2012 Percentage reduction of the population aged over 65 in poverty determined by social transfers, 1995–2012 Percentage reduction of the population aged under 16 in poverty determined by social transfers, 1995–2012 Supplementary pension funds in Italy, 2009–13

viii

40

40 41 63

List of figures and tables

2.2 2.3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 4.1 4.2 4.3 4.4 4.5

4.6 4.7 5.1

5.2

5.3 5.4

Projections on pension spending and benefits levels 64 (Net Theoretical Replacement Rates)(2010–50) The role of the supplementary pension funds (coverage rate) 65 Employment and unemployment, 2013 (%) 73 Part-time work (15–64) as a share of total employment, 73 2013 (%) Territorial differences in employment and unemployment, 74 2013 (%) Employment by sector and geographical breakdown, 2013 (%) 75 Employment rates (15–64) of nationals, other EU citizens 75 and third-country nationals, 2013 (%) Fixed-term employment 2013 (%) 76 Italian labour-market reforms since the 1990s 78 GDP growth rates in selected Eurozone countries, 83 2007–2013 (%) Unemployment rates (15–64) in selected Eurozone 83 countries, 2007–13 (%) Main characteristics of social assistance schemes in Europe, 105 1980–90 Working-age population (15–64) covered by social 108 assistance schemes, 1980–99 (%) Main changes in social assistance schemes in Europe, 109 1990–2013 Social assistance cash benefits in PPS (€) in selected 113 countries, 2008–09 Minimum income and equivalence scales in some 117 municipalities before the Reddito Minimo di Inserimento pilot (1998) Annual funding allocated to the national fund for social 121 policies 2001–13 (million euros) Social assistance expenditure by budgetary item (%) 122 Italian public expenditure for family and children as a 139 percentage of average Western European expenditure over time Yearly average variation in family and children expenditure 139 in euros per capita (at constant 2005 prices): Italy and Western Europe Changes in care coverage over time: Italy in a comparative 140 perspective Female activity rates over time in Italy, Spain and Western 142 Europe: a comparison (1995–2013)

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The Italian welfare state in a European perspective

5.5 7.1

7.2

7.3 7.4 8.1

8.2 8.3 8.4 8.5 9.1 10.1 11.1 11.2 11.3 11.4 11.5

11.6

11.7

Results of a random effect logistic model on the likelihood of providing informal support School expansion in Italy in comparative perspective: achievement of upper secondary diploma in Europe, cohorts born 1920–79 Indicators of school expenditure – Italy compared to the 21 European Union member states and the Organisation for Economic Co‑operation and Development School and university teachers (2007/08), by school level and type of position Median literacy of 15-year-old students, by geographical area, compared with other countries The Italian higher education system in comparative perspective: stages of expansion of higher education in Europe, cohorts born 1920–79 Higher education supply in Italy, 1985–2009 Composition of higher education funding in Italy, 1958–2009 Italian expenditure for higher education in comparative perspective, 1995–2008 Attractiveness of Italian universities, 1999–2012 Comparison among the monetary supports for families European Union governance instruments and channels of influence The functioning of public welfare services at the regional level in Italy (2011–12) Italian regions and welfare provision: the main territorial clusters Italian regions and welfare provision: the performance gaps in the two main territorial clusters over time The two Italian clusters in an international comparative perspective The relationship between regional welfare-state performance and the level of economic development in Italy (2009–11) The relationship between regional welfare-state performance and the level of economic development in Italy (2009–11) The territorial functioning of welfare services in different European countries’ macro-regions: coverage and performances (2010–12)

x

146 183

193

194 196 209

212 214 218 227 249 261 286 291 293 295 296

299

300

List of figures and tables

11.8

12.1 12.2 13.1 13.2 13.3 13.4

13.5 13.6 13.7 13.8

The territorial functioning of welfare services in different 300 European countries’ macro-regions: the citizens’ opinions (2007) Change in average equivalent income by age groups (%) 311 Change in disposable income by various characteristics 320 Overall outcomes in the institutional setting of different 337 Italian social policies since the 1990s Outcomes of the reforms since the 1990s: the impact on 339 citizens and residents Social expenditure trends in Italy in a comparative perspective 341 Education, higher education and other social investment 344 policies in Italy in a comparative perspective (US dollars at constant prices and coverage rates) Main organised actors in the Italian welfare state by policy 347 field The changing roles of different organised actors in the last 348 quarter of a century Italian national governments since 1990 350 The distribution of social expenditure by function over time: 357 Italy in a comparative perspective (education and higher education not included) (percentage of total expenditure)

xi

Notes on contributors Chiara Agostini is currently researcher at the European Social Observatory and the Centro di Ricerca e Documentazione Luigi Einaudi. She was post-doctoral research fellow at the universities of Rome (2008–09), Bologna (2011–12) and Milan (2013). Her work mostly deals with the comparative analysis of social and education policy and European social governance in the same field. Marco Albertini is associate professor of sociology at the University of Bologna. He has been visiting and invited professor at the Universidad Pompeu Fabra (Spain) and junior researcher at the Center for Advanced Studies in the Social Sciences of the Juan March Institute. In 2011 and 2012 he was visiting scholar and Sunstrat guest researcher at the Swedish Institute for Social Research of Stockholm University. He is member of the board of directors of the Research Committee on Social Stratification and Mobility of the International Sociological Association. Albertini’s current research interests lie in the study of intergenerational relations, the consequences of separation and divorce, inequality and stratification, long-term care policies and ageing. He has recently published in Ageing & Society, Acta Sociologica, European Sociological Review and Research in Social Stratification and Mobility. Ugo Ascoli is full professor of economic sociology and social policy at the Marche Polytechnic University, Ancona. He has published many articles and books on migration issues, the relationship between family and the labour market in a peripheral economy, the Italian welfare state, the comparative analysis of non-profit organisations in industrialised countries and the privatisation process in the Italian welfare system. His research interests include welfare policies, voluntary organisations, the relationships between government and third sector in social policy, the role of voluntary action in the society. Massimo Baldini is associate professor of public economics in the Marco Biagi Department of Economics at the University of Modena and Reggio Emilia. His main research interests are poverty, inequality and the impact of tax-benefit and welfare systems on the economy. Gabriele Ballarino is full professor of economic sociology in the University of Milan, where he teaches sociology of education and economic sociology. His main research topic is the relation between

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educational systems and the economy, both at the micro and the macro level. He has published extensively, both in Italian and English, on inequality of educational opportunities by social class, gender and ethnicity; vocational training and the labour market; occupational returns to education; and the institutional changes of educational systems. He is a member of SASE and ISA-RC28. Maria Cecilia Guerra is full professor of public finance at the Marco Biagi Economics Department, University of Modena and Reggio Emilia. Her research fields are the design and reform of tax systems, welfare policies and fiscal federalism. At present she is senator of the Italian Republic (Democratic Party). She has previously held government posts as deputy minister of labour and social policies (May 2013 to February 2014); deputy minister for equal opportunities (July 2013 to February 2014) and undersecretary at the Ministry of Labour and Social Policies (November 2011 to April 2013). Yuri Kazepov is a professor of international urban sociology and compared welfare systems at the University of Vienna (Austria). Previously he taught at the University of Urbino (Italy). His fields of interest are urban governance, urban poverty and social policies in comparative perspective. He has undertaken comparative research at the European level in many projects (URBEX, GOETE, IMPROVE, ISPIRES, DIVERCITIES, SEFIRA). His publications include Cities of Europe. Changing contexts, local arrangements and the challenge to social cohesion (ed.) (2005, Blackwell); Rescaling social policies towards multilevel governance in Europe (2010, Ashgate); Il welfare frammentato (ed. with E. Barberis, 2013, Carocci). Mauro Migliavacca is assistant professor in economic sociology at the University of Genoa where he teaches social policy and economic sociology. He conducts research on the specificity of the south European welfare state and the work condition of young people, and the transformation of the family-work system, highlighting the gender asymmetries inside family. He has published articles and essays on social inequalities and the relationship between family structure and work condition. David Natali is associate professor at the University of Bologna. He is also teaching professor on the PhD programme in political science and sociology at the Scuola Normale Superiore of Pisa and senior researcher at the European Social Observatory of Brussels. He is

xiv

Notes on contributors

chair of the European Network for Social Policy Analysis (ESPANET) (Italian section). His work deals with the comparative analysis of social protection reforms across Europe, and on the role of the European Union in the field. He has recently published in West European Politics and South European Society an Politics. Emmanuele Pavolini is associate professor of economic sociology and social policy at the University of Macerata. His research focuses on health care policies, social care policies and the transformation of the Italian welfare state in a comparative perspective. Among his recent books there are Public health care systems between restructuring and retrenchment (ed. with A.M. Guillen, 2013, Palgrave) and Reforms in long-term care policies in Europe (ed. with C. Ranci) (2012, Springer). Costanzo Ranci is professor of economic sociology at the Polytechnic University of Milan. He has extensively published on social inequalities, new social risks and European welfare policies, mainly in a comparative perspective. Among his most recent publications are Social vulnerability in European cities in times of crisis (ed. with S. Sabatinelli and T. Brandsen, 2014, Palgrave Macmillan) and Reforms in long-term care policies in Europe (ed. with E. Pavolini, 2013, Springer). Stefano Sacchi is associate professor of political science at the University of Milan, where he teaches comparative political economy. He is also Carlo Alberto Affiliate of the Collegio Carlo Alberto of Turin. He has recently co-authored (with F. Berton and M. Richiardi) The political economy of work security and flexibility (2012, Policy Press) and co-edited The politics of structural reforms (2013, Edward Elgar). An expert of comparative social and labour market policy, he advised the Italian government on the introduction of a minimum income scheme and in the field of labour policy. He currently serves as the special adviser to the Italian labour minister. Patrik Vesan is assistant professor in political science at the Department of Economic and Political Sciences, Aosta Valley University. His research focuses on EU and Italian labour market policies. Recent publications include ‘The labour market’ in The Oxford handbook of Italian politics (M. Gilbert, E. Jones and G. Pasquino (eds), 2015, Oxford University Press); ‘Why public employment services always fail: double-sided asymmetric information and the placement of lowskill workers in six European countries’ (with Christian Albrekt Larsen, 2012, Public Administration); ‘Italy: partial adaptation of an atypical

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benefit system’ (with M. Jessoula) in Regulating the risk of unemployment: National adaptations to post-industrial labour markets in Europe (J. Clasen and D. Clegg (eds), 2011, Oxford University Press). Giovanna Vicarelli is full professor of sociology at Marche Polytechnic University and director of the Centre for Interdepartmental Research on Socio-Medical Integration. She is a former president of the Italian Sociological Association (AIS) ‘Sociology of Medicine and Health’ research committee and is a member of the AIS national board. She has published essays on healthcare and on transformations of the medical profession and female doctors.

xvi

Introduction Ugo Ascoli and Emmanuele Pavolini This book explores the evolution of the Italian welfare state over recent decades. It frames the Italian experience in a European comparative perspective at precisely the time when it is being buffeted by the economic crisis and the consequent austerity measures. Over the past two decades, transformations in social needs and the economy, on the one hand, and in social policies, on the other, have been reshaping the Italian welfare system. Consideration of the Italian experience may be interesting from an international perspective both for those concerned with Southern Europe, given that Italy has traditionally represented an ideal-type of the Southern European welfare state model (Ferrera, 1996), and for those interested in comparative welfare state analysis and, more generally, European studies. Italy is among the most prominent European economies in terms of gross domestic product (GDP) and population, and it is one of the countries that have been hardest hit by the recent economic crisis and the subsequent austerity measures. Italy has been placed under observation by the European Union (EU), which has requested and fostered numerous reforms, mostly affecting the welfare state. How the Italian welfare state and social inequalities are also changing as a consequence of the crisis (and the relative austerity plans) is good ground for analysis of how the relationship between the EU and individual member states is evolving.

The main traditional specific features of the Italian welfare state during the ‘golden age’ During the ‘golden age’ of the European welfare state after the Second World War, social policies in Italy grew strongly in terms of expenditure, generosity and coverage. As documented in Flora and Heidenheimer (1981), during the 1970s, the Italian situation was close to the average of the other Western European countries. However, at the beginning of the 1990s, the Italian welfare state model presented four main specificities in the European context: a mixed paradigm; a particularistic/clientelistic nature; a dual and fragmented model of functioning; and a familistic approach.

1

The Italian welfare state in a European perspective

The mixed paradigm logic The Italian welfare state adopted different forms of operational logic in different policy sectors (Ascoli, 1984; Ferrera, 1984), as follows: • a strictly traditional ‘corporatist’ approach in pensions and unemployment policies, albeit with a high level of fragmentation along occupational lines; • a ‘universalistic’ approach in health care and education; and • a scant development of social assistance and social care. The Italian pension system after the Second World War was based on Bismarckian logic, with the primacy of the statutory pension system, the very limited diffusion of supplementary pensions and an earningsrelated benefits system that resulted in a pension income similar to that received before retirement. A number of critical issues characterised this generous system (Ascoli, 1987), such as an imbalance in overall social protection expenditure towards social security spending (55% of total social spending, compared with a European average of 43%). This was also due to other factors, as follows: the improper use of pensions to cover ‘gaps’; the absence of minimum income programmes; the weakness of appropriate unemployment benefits; the creation of high budget deficits; a highly fragmented system along occupational lines (there were 47 pension funds), including numerous examples of unequal treatment depending on the worker’s category (Paci, 1989); and the importance of ‘hybrid’ programmes, such as ‘invalidity pensions’ and ‘seniority pensions’.1 In labour-market policies, Italy developed a system of intervention that, rather than strengthening unemployment insurance benefits, focused mainly on ‘short-time work’ schemes: the so-called ‘Cassa integrazione guadagni’, which subsidised a temporary reduction of working time so that enterprises could keep on workers rather than fire them. Moreover, until the 1990s, labour-market regulation was relatively rigid. In 1978, Italy introduced a National Health Service (NHS), thus dispensing with the previous health-care social insurance system. The reforms of the educational system in the 1960s and 1970s marked a period of historical discontinuity. The first broad reform was the introduction of a comprehensive system at primary- and middle-school level at the beginning of the 1960s, followed by further reforms of a universalistic nature, such as the integration of disabled children into schools and the start of ‘full-time’ classes.2

2

Introduction

National measures to combat poverty were not developed in these two decades (Saraceno, 2002). The only exceptions were measures for the elderly over 65 years old. In 1969, the introduction of a ‘social pension’ was the only programme based on a social right to income assistance in the case of economic need. The picture in social services was no different. Here, again, the state was unable to promote the diffusion of services, such as home care, residential care and so on (Fargion, 1997). A particularistic/clientelistic nature The nature of the Italian welfare state, based more on transfers than services, coupled with the low level of ‘stateness’, created opportunities for political exchanges and clientelism (Paci, 1989). Among the instruments adopted in the clientelistic-political exchange was the distorted use of ‘invalidity pensions’ and ‘unemployment benefits’ for employees in agriculture, which were often granted to people in economic difficulties but who were neither disabled nor really unemployed. Describing the Italian welfare state as a ‘particularistic and clientelistic’ model captured its essence as a variant of the ‘meritocraticparticularistic’ or ‘corporative’ model of Central-Western Europe: From the Continental model, the Italian Welfare State inherited only the fragmentation and institutional heterogeneity, but not the administrative and financial autonomy of the self-governing bodies appointed by the civil society. The Italian situation can be described as a party government case where the political class hegemonized any attempt at self-regulation by civil society. (Paci, 1989: 76–8, emphasis in original) In similar terms, Ferrera (1984: 274) also argued that ‘Italian clientelism in relation to the Welfare State is quite specific not only because it is very widespread, but mostly because it has been able to infiltrate social transfers, a sector regulated by universalistic standards in other countries’. Dualism and fragmentation The third main characteristic of the Italian welfare state was its marked dualism between ‘outsiders’ and ‘insiders’ in terms of welfare provision and labour-market integration due to the categoriality and

3

The Italian welfare state in a European perspective

fragmentation of policy design. Once a full-time stable occupation had been obtained, the level of job and income protection was relatively high, even after retirement, owing to the generosity of replacement rates, whereas those outside such labour conditions were left in a rather marginal position (Ferrera, 2005). Some scholars also started to use the term ‘dualistic’ to describe the heterogeneity of local welfare systems in Italy, which had a north–south divide (Fargion, 1997; Mingione, 2001). Familism Italy’s welfare state has also been termed ‘familistic’ as comparative studies have pointed out the strong role of households in the production of welfare (Naldini and Saraceno, 2008). The welfare system has assigned significant caring responsibilities to families, with the state intervening only in limited and urgent cases. While conservative-corporatist welfare states, such as Germany and Austria, have also deserved the familistic label, the key difference between these countries and Italy is that in the former, the male breadwinner model has been maintained through family and fiscal policies facilitating, if not encouraging, the role of women as carers in the private domain. By contrast, in the latter, familism has been largely ‘unsupported’ (Keck and Saraceno, 2010), meaning a peculiar kind of subsidiarity principle whereby this familistic culture is, in fact, the justification for the residual character of these policy domains. Apart from the strong role of families, private non-profit organisations, often linked to or directly part of the Catholic Church, have historically played an important part in the delivery of many different welfare services. In this way, the Church has maintained a strong influence over the development of the Italian welfare state. Until the beginning of the 1990s, studies on the Italian welfare state focused mainly on its specificity in the European context. Thereafter, the debate changed, with authors such as Ferrera (1996) and Rhodes (1997) arguing that, in addition to other models (Esping-Andersen, 1990), there was a fourth ‘Southern European’ welfare state model characterising Italy, Spain, Portugal and Greece. All these countries shared the four common elements indicated earlier. The more recent debate on the Italian welfare state has confirmed the main features illustrated so far, focusing on the characteristics of this ‘fourth Social Europe’ (Ferrera, 2010).

4

Introduction

How to interpret policy changes in the Italian welfare state: an analytical toolkit After two decades of reforms in the 1960s and 1970s, the Italian welfare state in the 1980s was mainly characterised by a ‘frozen landscape’. Most reform attempts failed, and the few changes made had a limited impact on its overall institutional structure (Jessoula and Alti, 2010). Instead, starting in the 1990s, a new broad process of reforms concerned the Italian welfare state. In particular, the 1990s, and the most recent years since the onset of, first, the economic crisis and then the austerity measures, witnessed a determined effort to transform the Italian welfare state. The present book is devoted to understanding what has been changed, what the main actors and factors responsible for these transformations are, how change has taken place, and what the outputs and outcomes of such processes have been. The discussion that follows seeks to frame interpretation of the Italian welfare state transformations within the broader debate on welfare state change since the end of the ‘golden decades’ and the beginning of so-called ‘permanent austerity’ (Pierson, 2001). It is difficult to determine how Western welfare states are changing. The international scientific literature offers a set of explanations and interpretations that are also very useful for understanding the specificities of the Italian situation in a comparative perspective. In particular, very salient is the debate on the results in terms of the outputs and outcomes of the policy changes introduced over the past two decades. As Ferrera (2005) puts it, recent decades have witnessed a crisis of the traditional welfare state as it was developed in the golden years after the Second World War. The crisis stemmed from the inadequacy of ‘old solutions’ based on ‘old premises’ (rapid economic growth; an industrial-Fordist economy and society; a stable and welldefined gendered division of labour within families; the centrality of the nation-state; and moderate and stable societal expectations concerning what the welfare state could deliver) to also face ‘new’ social risks (Taylor-Gooby, 2004) and socio-economic transformations (slow economic growth; a post-industrial society; the instability of the traditional family; an ageing population; globalisation and European integration; and increasing expectations concerning the amount of help that the welfare state can deliver). At least three main challenges to the traditional welfare state have since emerged:

5

The Italian welfare state in a European perspective

1. how to contain the rising costs associated with ‘old social risks’ (pensions, etc), while at the same time avoiding a deep legitimacy crisis for public institutions (and political parties); 2. how to deal with ‘new social risks’ previously less covered by traditional welfare states; and 3. how to adapt welfare state governance models to a more complex environment where globalisation and Europeanisation, on the one hand, and the nature of social needs, on the other, make it more difficult to maintain a state-centred welfare state. Two main concepts have been used in the international literature to describe the attempt to reframe welfare states in order to address these three challenges: retrenchment and recalibration. Retrenchment and the resilience of the welfare state Retrenchment was the first concept adopted, and it is still a quite relevant analytical tool with which to study current changes. Retrenchment is commonly used to describe policies that introduce cuts in social provision. The interpretation of welfare policy changes based on retrenchment has been severely criticised by Pierson (2001). On analysing trends in UK and US government social spending, Pierson found not only that it did not decline, but that it grew at an even faster rate than the economy as a whole. Since Pierson’s criticisms, welfare state resilience has become a major, but also contested, counter-argument to retrenchment interpretations. Pierson’s argument is that resilience is potentially based on a series of mechanisms and processes. Citizens oppose welfare cuts because they are risk-averse and prefer to maintain an expensive system rather than wait for a long-term improvement in the future. Given that welfare retrenchment imposes immediate costs on specific groups in return for diffuse, long-term and uncertain benefits for the population as a whole, opponents of cuts (the potential ‘losers’ in a reform process) fiercely mobilise against them. The most important explanation in Pierson’s argument is an institutionalist one: ‘policy legacies’ and ‘policy feedbacks’ make it difficult to introduce and implement cuts. In particular, ‘lock-in’ effects (past policy commitments narrowing present options) and ‘policy-takers’ (political groups created by the existence of a policy and interested in the perpetuation of the policy, such as final beneficiaries – eg senior citizens, people with disabilities – and welfare state workers – eg doctors, nurses, teachers, social workers) slow down or block cuts.

6

Introduction

Pierson argues that, apart from during the occurrence of severe external shocks, retrenchment can occur only when governments are able to avoid political blame for the cuts. Three potential blameavoidance strategies can be adopted: lowering the salience of negative consequences by diffusing these consequences over time; reducing traceability by blurring the link between programme cuts and the public policies that caused them (eg by transferring institutional responsibilities from national to local actors without adequate funding, thereby forcing local administrations to enact cuts); and adopting a ‘divide and conquer’ strategy by either compensating some of the potential opponents of the reform or delaying the implementation of cuts (‘lagged cutbacks’). However, Pierson argues that these three strategies often also have drawbacks that, in the end, make cuts less effective than previously imagined by reformers. Pierson’s analysis of the limitations in implementing real retrenchment policies has generated much debate (Levy, 2010). On the one side, various scholars have argued that retrenchment has, indeed, taken place, sometimes explicitly but sometimes through creeping forms of privatisation. On the other hand, scholars have begun to use different concepts to describe recent changes in social policies, in particular, the concept of ‘recalibration’. Explicit retrenchment Pierson’s critics have often underlined that globalisation and European integration have intensified pressures for retrenchment in recent years (Levy, 2010), especially after the onset of the economic crisis in 2008. First, various scholars (Korpi and Palme, 2003; Starke, 2006; Bonoli, 2012) have shown that in specific socio-economic conditions, costcontainment reforms can be framed in terms of ‘credit claiming’. When countries have confronted deep economic crises and very large budget deficits, politicians tend to argue that they are engaging in retrenchment not for its own sake, but in order to save public finances and restore economic growth and employment. Second, another set of criticisms has been brought against Pierson’s understanding of policy change, which is mainly based on institutional explanations connected to path dependency mechanisms and less on strictly political variables. Again Korpi and Palme (2003) and Starke (2006) have argued that secular right-wing governments, backed by large parliamentary majorities and in political systems with few veto players, tend to foster the introduction of retrenchment policies.

7

The Italian welfare state in a European perspective

Third, some of the main traditional social policy fields were, indeed, affected by retrenchment and cost containment throughout the 2000s, more than in the previous decade. As shown by Jessoula and Hinrichs (2012) and Bonoli and Natali (2012), although old-age pensions were expected to be one of the most resilient areas of the welfare state, many European countries adopted retrenchment-oriented reforms. Reforms started in the early 1990s, but the cuts were generally regarded as insufficient to guarantee the long-term sustainability of those generous schemes and, as a result, throughout the 2000s, there was a continuation of the trends set in motion in the previous decade. The cuts were quite large: countries like France and Germany reduced replacement rates from around 70% of earnings in the early 1990s to somewhere between 40% and 50%, to be effective in a few decades (Ebbinghaus, 2012). Also, other policy areas related to ‘old social risks’, such as unemployment compensation, were affected by retrenchment and cost containment, with the introduction of stricter eligibility rules and a lower level of generosity of provision. Moreover, labour-market regulation was also changed by introducing substantial forms of deregulation through new forms of employment contracts that were rather more flexible than standard ones (Sjoberg et al, 2010). Two different devices were often adopted in order to enact these reforms. They had already been cited by Pierson but they proved to be rather more effective than he expected. Reforms had relatively long ‘phasing in’ periods; however, after two decades, they started to substantially affect the level of decommodification of workers. Moreover, they had an uneven impact on beneficiaries (what Pierson termed ‘division’). In the past decade, labour-market and pensions reforms have affected the (future and present) rights of some groups (young people entering the labour market) more than others (current retirees and older workers), who benefit from the long phasing-in periods (Bonoli and Natali, 2012). Fourth, the impact of these reforms has affected not only the level of recommodification of workers, but also the level of dualism and dualisation (Emmenegger et al, 2012). With the term ‘dualisation’, these scholars refer to the increased differentiation of rights, entitlements and services provided to different categories of recipients. Thus, dualisation is a process characterised by the differential treatment of insiders and outsiders, creating or strengthening institutional dualisms. In particular, given that flexible contracts provide less employment security than standard ones and that these new contracts are often associated with reduced social protection coverage (eg in the event of unemployment,

8

Introduction

pregnancy, sickness or old age), the result is an increasingly dualised labour market, with insiders continuing to enjoy employment and social protection at levels close to those provided in post-war welfare states, while outsiders are instead exposed to considerably higher levels of insecurity. Fifth, the recent financial crisis that started in 2008 has deeply affected economies and, in many cases, generated more pressures for austerity, especially in Southern European and the English-speaking countries (Bonoli and Natali, 2012); there are signs that retrenchment has been presented through a ‘credit claiming’ strategy. Sixth, critics of Pierson’s resilience thesis have also concentrated on the metrics used to measure retrenchment (Levy, 2010) as Pierson’s analysis was based on government social expenditure as a share of GDP. Critics have argued that instead of only using measurements connected to GDP, it is necessary to connect expenditure with changes in social needs (eg a similar level of expenditure over time with different unemployment rates can mask a variation in the real coverage level of social protection) (Clayton and Pontusson, 1998). Other critics have pointed out that it is not only the level of expenditure that is important, but also its composition: an overall stable government social expenditure level can hide rises in some sectors and cuts in others, which may have quite strong redistributive effects between the ‘losers’ and ‘winners’ of reforms (Korpi and Palme, 2003). Creeping retrenchment Apart from direct retrenchment policies, a relatively large body of literature in the last decade argued that retrenchment policies can be based on mechanisms that are not the traditional explicit ones (when politicians announce reforms intended to cut back the welfare state), but based on more hidden and undeclared complex mechanisms. Hacker (2004) argued that in the US, there had been a hidden politics of social policy retrenchment based on the privatisation of risk without the privatisation of the welfare state. In particular, Hacker demonstrated that although most welfare programmes resisted retrenchment policies, at the same time, the overall social policy system was offering increasingly incomplete risk protection, given the deep changes in social needs. He showed that this trend was only partially an unintended consequence of political decisions; rather, it reflected deliberate strategies of reform adopted by welfare state opponents in the face of popular and change-resistant policies.

9

The Italian welfare state in a European perspective

Streeck and Thelen (2005) argued along similar lines that institutional change can also be incremental in form but disruptive in its outcomes; they labelled this type of change ‘gradual transformation’. In particular, far-reaching change can be accomplished through the accumulation of small, often seemingly insignificant, adjustments: gradual transformation means institutional discontinuity caused by incremental, ‘creeping’ change, often endogenous and, in some cases, produced by the very behaviour that an institution itself generates. Therefore, significant change can often arise from inherent ambiguities and ‘gaps’ that exist by design or emerge over time between formal institutions and their actual implementation or enforcement. From a perspective integrating the previous one with Hall’s (1993) typology of first-, second- and third-order change, Palier explains the ‘defreezing’ process that, in recent decades, has characterised the Bismarckian welfare systems on the basis of the accumulation of small, incremental changes: changes were initially incremental, passing through an intermediary phase based on a relatively ‘silent’ evolutionary institutional transformation (changes in financing, changes in power relations), that … facilitated structural reforms based on a new social policy paradigm.… Even these new social policies have not entirely replaced the former ones, but merely contributed to a conversion of the old system to the new goals. (Palier, 2010: 365) Partially contrary to Pierson’s hypothesis, these scholars argue that the structural accumulation of institutional transformations over many years has created a sort of ‘critical mass’, causing, without one single explicit political decision, a radical discontinuity with the old welfare system. Recalibration Albeit with different opinions and insights, the debate on welfare state trajectories in recent decades has started to go beyond the simple polarisation between retrenchment and resilience. Besides the possibility of (real or only planned) retrenchment, since the turn of the century, a new term has been introduced in the literature: ‘recalibration’. Ferrera, Hemerijck and Rhodes (2000) defined recalibration as an extensive form of welfare state remodelling along different dimensions: functional, distributive and institutional.

10

Introduction

Recalibration can be seen as an adaptive response to the changes in the socio-economic context that have taken place in recent decades, and it is linked to the question of how to improve policy performance under conditions of structural environmental change. Functional recalibration concerns the social risks covered by the welfare state, how they have evolved over time and how, increasingly, there are gaps in social protection. Functional recalibration is often associated with the concept of ‘old’ and ‘new’ social risks (TaylorGooby, 2004) related to the transition from a ‘male breadwinner’ industrial society to a ‘dual earner’ post-industrial one, and also affected by demographic ageing and flexible labour markets. Distributive recalibration concerns the rebalancing of social protection provisions across policy beneficiaries, stakeholder interests and public and private resources. As already underlined earlier, many European welfare states and labour markets face dualisation processes that increasingly create ‘insiders’ and ‘outsiders’. Institutional recalibration concerns reforms in the design of institutions, levels of decision-making and the governance of social and economic policy. In the traditional welfare state, the responsibility for ensuring social solidarity and cohesion ultimately rested with national (central) government in terms of policy formation, funding, administration and implementation. Various developments (eg EU integration, globalisation and citizens’ demands to play a more active role in social protection) have been challenging this institutional design, pushing towards new forms of ‘governance’. The keywords in attempting a governance change have been these: ‘rescaling’ (often in the form of political and administrative decentralisation, if not devolution); ‘privatisation’ (in terms of both provision, ie the welfare mix, and financing); more ‘joint planning’ among public and private actors; ‘managerialisation’; and ‘customisation’ of welfare services to meet individual needs. Adopting a recalibration approach can be useful for interpretation of the changes in European welfare states. In many cases, cost containment and cuts in traditional social policy fields (pensions and unemployment benefits), together with (partial) deregulation of the labour market, have been matched by programmes concerned with new functions, such as: helping (or pushing) non-working people back into employment; supplementing in-work income for the working poor; helping parents reconcile work and family life; promoting gender equality; supporting child development and human capital accumulation; and providing long-term care for individuals with chronic health and dependency problems.

11

The Italian welfare state in a European perspective

Examination of public expenditure and coverage data shows that the story of the last two decades has been one not only of retrenchment or ‘frozen landscapes’, but also of expansion in social policies, such as active labour market ones (Kenworthy, 2010) and child and long-term care (Keck and Saraceno, 2010; Ranci and Pavolini, 2012). The notion of ‘social investment’ has been put forward to describe this potential approach behind the functional reorientation of welfare states (Morel et al, 2012). Welfare states between retrenchment, resilience and recalibration: what are the potential negative outcomes? If we exclude Scandinavian countries, which seem to have followed a partly different path, the reforms of the past two decades have brought with them a series of negative consequences, more or less widespread depending on a country’s social and economic conditions, as well as its specific welfare institutional design. These consequences mainly concern increasing social inequalities due to the changes in welfare states and the inability of social policies to help people cope with new needs and structural economic changes. Dualisation trends are impacting on the level and characteristics of Western European societies (Emmenegger et al, 2012). The new welfare settlement seems characterised by the preservation of ‘golden era’ welfare state levels of economic security for insiders and by the development of a new societal category – outsiders – exposed to much higher levels of economic insecurity. As Palier (2013) argues, dualisation may be considered the ‘Bismarckian’ road to welfare state adaptation. More generally, a process of de-universalisation of social protection coverage seems to be taking place, especially in countries that predominantly relied upon employment-related social insurance for the provision of social protection. The process goes together with the deregulation of non-standard employment, which, consequently, tends to generate fewer social rights (Crouch and Keune, 2012). Exposure to economic uncertainty is becoming a key dimension of social stratification in post-industrial societies where welfare states are reducing their reach. Moreover, there is a robust debate on how to interpret other recent changes in the content of certain social policies. In this regard, there is potential for a ‘social investment strategy’; however, there are also problems in adopting one. On the one hand, functional and distributive recalibration is needed in order to cope with a series of

12

Introduction

‘new’ (but often also ‘old’) social risks, especially in countries where dualisation is taking place. On the other hand, empirical analysis on how a social investment strategy has been implemented in recent years provides relatively little support for the idea that such a strategy is spreading around Europe. As Palier (2013) argues, only a few countries have really implemented a social investment approach. Morel, Palier and Palme (2012) and Hemerijck (2013) find that neither Southern European countries (including Italy) nor Eastern European ones have really adopted a social investment approach. In general, the continental European countries remain traditional ‘compensatory welfare systems’, making few attempts to shift towards social investment, with partial exceptions in the field of family policy. The countries with the strongest social investment profiles are the Nordic ones, while the British case shows a shift towards more social investment-oriented policies. Moreover, De la Porte and Jacobsson (2012) demonstrate convincingly that what has often taken place in employment policies in Europe has been more ‘recommodification’ than social investment, owing to the increased conditionality of unemployment insurance, cuts in replacement rates and the restriction of the duration of benefit periods, as well as the weakness of activation schemes.

Some basic hypotheses on the Italian reform path and the structure of the book The hypotheses and interpretations offered in the previous section can be considered an important toolkit through which to analyse and understand what has happened, and is now happening, in the Italian welfare state. The present book has, first of all, a descriptive purpose: to illustrate how social policies function in Italy and how they have changed; to place the Italian case in the European framework; and to provide new materials for future comparative analysis devoted to highlighting similarities and differences and to further developing the existing literature on ‘welfare models’ and ‘welfare regimes’, as well as on paradigms and the innovations of European welfare states. Along with a descriptive aim, we nevertheless also try to provide an interpretation. The persistence of some of the main traditional features of the Italian welfare state – retrenchment, almost no recalibration, the continuity of policies through the crisis and multiple dualisation – together compose the interpretive picture we provide through the book. Some basic hypothesis guided the analysis. The main arguments of the book are as follows:

13

The Italian welfare state in a European perspective

1. The specificity of the Italian situation is that in comparison with many other Western European welfare states, the last two decades have witnessed reforms with mainly a retrenchment impact on the overall functioning of the welfare state; this has been the outcome of cuts in traditional policy fields not matched by any real (‘social investment’) policy towards ‘new social risks’ and ‘recalibration’. 2. Retrenchment has taken different forms (explicit or creeping) depending on the policy field and the moment in time. 3. There is a continuity between the reforms made before and during the crisis. The austerity measures that followed the financial and economic crisis that started in 2008 have hit the Italian welfare state hard, though, as yet, they have not changed the general (retrenchment) paradigm behind the reforms of the past 20 years, and the signs of distributive and functional recalibrations have been quite mild. 4. Also due to these transformations in the main social policy fields and the recent economic crisis, different types of social inequalities (territorial, age-based, class-based, etc) have increased over time, and it is difficult to find similar situations in other Western European countries. A process of ‘multiple dualisation’ is taking place. For instance, today, it is increasingly difficult to describe the Italian welfare state as a whole and unique institutional feature; rather, it consists of ‘two worlds’, with a Southern Italian model and a Northern Italian one. 5. The main traditional and specific features of the Italian welfare state during the ‘golden age’ (familism, dualisation, etc) have persisted over time. While a process of ‘updating’ to the changing environment has taken place, this ‘updating’ has not always taken the form of weakening the most specific facets of the Italian welfare state in a comparative perspective. The analysis in the book has been organised into two main parts. Part One comprises, first, a chapter that focuses on different individual and household social inequalities and processes of dualisation arising from the mismatch between the strengthening of ‘new’ and ‘old’ social risks and the absence of adequate policy responses and adaptations. The other chapters are on single policy fields and they have a similar structure: the main policy changes over the last two decades (focusing mostly on what has happened since the turn of the century, and on what has taken place since the onset of the crisis and austerity); the factors and the role of actors at the basis of the policy changes; and the effects of the policy changes (in terms of rights to access welfare state provision and expenditure). The policy fields studied have been chosen on the basis of their importance in the Italian and European welfare states, and they have

14

Introduction

been grouped around some core functions: the coverage of ‘old’ social risks (pensions, employment policies and labour-market regulation, health care); and the coverage of ‘new’ social risks (both on the side of social assistance, social care and family policies, and on the side of education, including schools and tertiary education). All these chapters have been constructed in order to compare the Italian situation with those of the other EU countries in order to better frame the Italian situation (and its specificities). Part Two of the book consists of three chapters that adopt a view cutting across policy fields. In particular, given the increasing influence of the EU in shaping national policymaking, especially in countries like Italy, a chapter at the beginning of Part Two of the book examines the role of the EU in the changes to Italian social policy. Another chapter focuses on a very important and partially distinctive Italian issue: the presence of territorial inequalities in access to welfare provision. A third chapter is centred on the analysis of the impact of the crisis and the consequent austerity measures on social inequalities. The conclusions of the book interpret the findings of the entire study, focusing on common or divergent patterns in various policy fields. In particular, the conclusions assess whether the hypotheses set out earlier are confirmed. The book’s structure and its chapters are the result of a common framework of analysis discussed and agreed upon by the whole group of researchers at different meetings. The research group was formed of an interdisciplinary team of scholars from sociology, political science and economics. The empirical research was carried out in the years from 2011 to 2014 and the analysis reaches the reforms and innovations carried out until mid-2014, shortly after the Letta government resigned. Notes The ‘seniority pension’ is a particular type of pension benefit that can be obtained before reaching the formal retirement age; this programme has assumed an important role in Italy as a means of easing labour supply during periods of high unemployment. The ‘invalidity pension’ is given to those who have a physical or mental disability. In reality, it is often used as an (improper) means to fight poverty, especially in Southern Italy, on a patronage and clientelistic logic (Ascoli, 1984). 1

Traditionally, the school system in Italy offers teaching hours only in the morning (from 8am to 1pm). The ‘full-time’ class means that schools also provide lessons in the afternoon. 2

15

The Italian welfare state in a European perspective

References Ascoli, U. (ed) (1984) Welfare state all’italiana, Roma-Bari: Laterza. Ascoli, U. (1987) ‘The Italian welfare state: between incrementalism and rationalisation’, in R.R. Friedman, N. Gilbert and M. Sherer (eds) Modern welfare states, Brighton: Wheatsheaf Books, pp 110–50. Bonoli, G. (2012) ‘Blame avoidance and credit claiming revisited’, in G. Bonoli and D. Natali (eds) The politics of the new welfare state, Oxford: Oxford University Press, pp 83–110. Bonoli, G. and Natali, D. (eds) (2012) The politics of the new welfare state, Oxford: Oxford University Press. Clayton, R. and Pontusson, J. (1998) ‘Welfare state retrenchment revisited’, World Politics, 51(1): 67–98. Crouch, C. and Keune, M. (2012) ‘The governance of economic uncertainty’, in G. Bonoli and D. Natali (eds) The politics of the new welfare state, Oxford: Oxford University Press, pp 45–67. De la Porte, C. and Jacobsson, K. (2012) ‘Social investment or recommodification’, in N. Morel, B. Palier and J. Palme (eds) Towards a social investment welfare state?, Bristol: Policy Press, pp 231–54. Ebbinghaus, B. (2012) ‘Europe’s transformations towards a renewed pension system’, in G. Bonoli and D. Natali (eds) The politics of the new welfare state, Oxford: Oxford University Press, pp 182–205. Emmenegger, P., Häusermann, S., Palier, B. and Seeleib-Kaiser, M. (eds) (2012) The age of dualization: the changing face of inequality in deindustrializing societies, Oxford: Oxford University Press. Esping-Andersen, G. (1990) The three worlds of welfare capitalism, Cambridge: Polity Press. Fargion, V. (1997) Geografia della cittadinanza sociale in Italia, Bologna: Il Mulino. Ferrera, M. (1984) Il welfare state in Italia. Sviluppo e crisi in prospettiva comparata, Bologna: Il Mulino. Ferrera, M. (1996) ‘The Southern model of welfare in social Europe’, Journal of European Social Policy, 6: 17–37. Ferrera, M. (2005) The boundaries of welfare, Oxford: Oxford University Press. Ferrera, M. (2010) ‘The South European countries’, in F.  Castles, S. Leibfried, J. Lewis, H. Obinger and C. Pierson (eds) The Oxford handbook of the welfare state, Oxford: Oxford University Press, pp 616–28. Ferrera, M., Hemerijck, A. and Rhodes, M. (2000) The future of social Europe, Oeiras: Celta Editora. Flora, P. and Heidenheimer, A.J. (eds) (1981) The development of welfare states in Europe and America, New Brunswick, NJ: Transaction Books.

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Introduction

Hacker, J. (2004) ‘Privitizing risk without privatizing the welfare state’, American Political Science Review, 98(2): 243–60. Hall, P. (1993) ‘Policy paradigms, social learning, and the state: the case of economic policymaking in Britain’, Comparative Politics, 25(3): 275–96. Hemerjick, A. (2013) ‘When changing welfare states and the Eurocrisis meet’, Sociologica, 1: 1–50. Jessoula, M. and Alti, T. (2010) ‘Italy: an uncompleted departure from Bismarck’, in B. Palier (ed.) A long good bye to Bismarck? The politics of welfare reforms in continental Europe, Amsterdam: Amsterdam University Press. Jessoula, M. and Hinrichs, K. (eds) (2012) Labour market flexibility and pensions reforms, Basingstoke: Palgrave. Keck, W. and Saraceno, C. (2010) ‘Can we identify intergenerational policy regimes in Europe?’, European Societies, 12: 675–96. Kenworthy, L. (2010) ‘Labour market activation’, in F.  Castles, S. Leibfried, J. Lewis, H. Obinger and C. Pierson (eds) The Oxford handbook of the welfare state, Oxford: Oxford University Press, pp 435–47. Korpi, W. and Palme, J. (2003) ‘Welfare-state regress in Western Europe’, Annual review of Sociology, 29: 589–609. Levy, M. (2010) ‘Welfare retrenchment’, in F. Castles, S. Leibfried, J. Lewis, H. Obinger and C. Pierson (eds) The Oxford handbook of the welfare state, Oxford: Oxford University Press, pp 552–68. Mingione, E. (2001) ‘Labour market segmentation and informal work’, in H.D. Gibson (ed) Economic transformation, democratization and integration into the European Union, Basingstoke: Palgrave, pp 149–92. Morel, N., Palier, B. and Palme, J. (2012) Towards a social investment welfare state?, Bristol: Policy Press. Naldini, M. and Saraceno, C. (2008) ‘Social and family policies in Italy: not totally frozen but far from structural reforms’, Social Policy & Administration, 42: 733–48. Paci, M. (1989) Pubblico e privato nei sistemi di welfare, Napoli: Liguori. Palier, B. (ed) (2010) A long good-bye to Bismarck. The politics of welfare reforms in continental Europe, Amsterdam: Amsterdam University Press. Palier, B. (2013) ‘Social policy paradigms, welfare state reforms and the crisis’, Stato e Mercato, 97: 7–66. Pierson, P. (ed) (2001) The new politics of the welfare state, Oxford: Oxford University Press. Ranci, C. and Pavolini, E. (eds) (2012) Reforms in long-term care policies in European countries, New York, NY: Springer.

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Rhodes, M. (ed) (1997) Southern European welfare states, London: Frank Cass. Saraceno, C. (ed) (2002) Social assistance dynamics in Europe. National and local poverty regimes, Bristol: Policy Press. Sjoberg, O., Palme, J. and Carroll, E. (2010) ‘Unemployment insurance’, in F.  Castles, S.  Leibfried, J.  Lewis, H.  Obinger and C.  Pierson (eds) The Oxford handbook of the welfare state, Oxford: Oxford University Press, pp 420–34. Starke, P. (2006) ‘The politics of welfare state retrenchment’, Social Policy & Administration, 40(1): 104–20. Streeck, W. and Thelen, K. (eds) (2005) Beyond continuity. Institutional change in advanced political economies, Oxford: Oxford University Press. Taylor-Gooby, P. (ed) (2004) New risks. New welfare: the transformation of the European welfare state, Oxford: Oxford University Press.

18

Part One Main policy changes in the Italian welfare state over the past two decades

19

ONE

‘Everything needs to change, so everything can stay the same’: the Italian welfare state facing new social risks Costanzo Ranci and Mauro Migliavacca

Introduction Italian society is very different from what it was 20 years ago. The social risks that the Italian population faced at the beginning of the 1990s have substantially changed, though some long-standing problems – such as poverty and unemployment, which are widespread in the South – still persist today. Although the main indicators of inequality exhibited a stable trend until the explosion of the current crisis, in the same period, major structural changes have largely redrawn the map of social risks (Brandolini, 1999; Checchi and Peragine, 2010; D’Alessio, 2012). The changes that have occurred over the past two decades have also had significant repercussions on inequalities among social groups. Some of the latter can be considered the ‘winners’ – the true beneficiaries of the changes. Other social groups have instead seen a relative worsening of their living standards in respect of the latter, and can therefore be considered the ‘losers’. Finally, some social groups were neither winners nor losers as they basically kept the position already obtained in the previous phase. While the past two decades have been characterised by a growth in per capita income close to zero (the value of per capita gross domestic product [GDP] at current prices in Italy rose from €19,100 in 1995 to €20,000 in 2009, with a real increase of 4.7% in 14 years1), the redistributive mechanism has substantially operated as a zero-sum game. As it has not been possible to reward the winners with the yield from the country’s overall economic growth, their advantages have basically been paid for through the relative losses suffered by the rest. In this chapter, we show how these social and economic changes

21

The Italian welfare state in a European perspective

have not been matched by analogous transformations in the welfare system. The amount of expenditure on social protection in Italy has grown at a rate greater than that of GDP over the last two decades (Pedersini and Regini, 2013). Nevertheless, during this time, there has been no reconfiguration of the Italian welfare state able to include the new social risks within the existing social protection system. The structure of the welfare system has been affected only by two significant institutional changes: the reforms of the pensions system introduced from 1995 (see Chapter Two); and the changes made to labour-market regulation since 1997 (see Chapter Three). If anything, observation of the redistributive effects exerted by the welfare system shows the reverse: the evolution of Italian welfare has contributed to an increase in social imbalances and inequalities. The key point is that in the absence of significant changes to the overall institutional architecture, welfare benefits have been distributed mainly to the advantage of the ‘insiders’, thus contributing to the further dualisation of the welfare system, and to the further exclusion of the ‘outsiders’. The outcome of this dynamic has been that the dualism between insiders and outsiders, which has historically characterised the Italian welfare state, as well as the other Southern European welfare states (Ferrera, 1996), has been exacerbated by the joint effect of welfare institutional inertia and changes in the social system (Emmenegger et al, 2013). The chapter is organised as follows. The next section describes the main structural changes that have taken place in Italian society over the past 20 years. The three subsequent sections are devoted to three emergent social risks in Italian society: the development of new income inequalities that shift the poverty risk to new social groups; the growing number of precarious workers; and the increase in care problems due to the ageing of the population and the persisting difficulties of reconciling care and work. Then, the next section considers welfare policies, observing the extent to which spending on social protection in Italy has been recalibrated in response to these changes. A second aspect examined is the system’s redistributive impact, which is analysed by considering how the poverty risk is reduced by social transfers, and what social categories have benefited most from them. The final section sets out an overall interpretation of these results.

Vectors of change: labour-market transformations and resilient familism At the beginning of the 1990s, Italian society rested on two fundamental pillars: occupational stability and strong ties of family solidarity

22

‘Everything needs to change, so everything can stay the same’

founded on the gender division of roles and the predominance of the male breadwinner household model (Naldini and Saraceno, 2008). The development of the welfare system in the previous decades was centred on job protection and had contributed to the close functional linkage between the organisational model dominant in the productive system (based on the almost full employment of males) and the one prevalent in the family sphere (founded on a rigid gendered division between paid and unpaid work). During the 1990s, the weakening of both these pillars contributed to the social and economic crisis of the middle and working class. The process concerned various European countries, and it has been described as a progressive erosion of intermediate positions producing social ‘desaffiliation’ (Castel, 2000). In Italy, the ‘crisis’ of the mid-century social compromise (Crouch, 1999) was aggravated by particularly slow economic growth, which concerned productivity and wage increases, as well as people’s standards of living. Labour productivity (measured as value added per worked hour) grew in the manufacturing sector by an annual 0.6% in the period 1996– 2007, as opposed to the 3.3% of the period 1981–95 (Brandolini and Bugamelli, 2009). As regards wages, while in the 1970s and 1980s, the average growth had been 2.5% per year, between 1993 and 2008, the gross pay of dependent labour grew at a rate of 0.6% – a slowdown which meant that wages could do no more than keep up with the inflation rate (Brandolini and Bugamelli, 2009). Finally, there was also an evident downturn in the standard of living: in the period 1991–2012, per capita GDP growth at market prices (2.1% on a yearly basis) was lower in Italy than in all the main European countries (3.7% in UK, 3.3% in Spain, 3% in Sweden, 2.9% in France and 2.8% in Germany), which increased the distance between Italy and its principal European partners. In this context of limited growth, the most significant change concerns the labour market, which has been subject to growing tensions due to the stagnation of productivity and the increase in international competitiveness. The employment rate trend in the period 1995–2008 evidences a positive trend in Italy as well as in all the main European countries, although the country’s gap with respect to the other countries only marginally diminished, in part, because of the persistent divide between the northern and southern regions. Moreover, a polarisation in employment opportunities has arisen between high-skilled and low-skilled occupations, contributing to a reduction of intermediate-skilled jobs (Checchi, 2012). This polarisation was one of the main causes of the increase in the working

23

The Italian welfare state in a European perspective

poor and the squeeze of the middle class. Moreover, the recent crisis has caused a substantial increase in total unemployment, which exceeded 12% in 2013, and especially in youth unemployment (15– 24 years old), which reached 40% in 2013, with a 53.7% peak for young women in Southern Italy (Blossfeld et al, 2012). The past two decades have mainly been characterised by massive recourse to flexible contracts, while the rules on dismissals have only been marginally modified (Simonazzi et al, 2009). The effect has been an increase in labour-market segmentation and the concentration of the weakest workers (young people, immigrants and low-skilled women) in the most flexible occupations. While wage differentiation still seems low in Italy compared with the other European countries (Pammolli and Salerno, 2009), the expansion of atypical jobs has gradually increased the wage differential between protected and unprotected categories (Barbieri and Cutuli, 2009). This has led to both an increase in economic inequalities and the formation of a group of low-skilled workers with low salaries and high occupational instability (predominant among young people, women and immigrants). In the southern regions, especially in metropolitan areas, the same dynamics have favoured the emergence of an outright underclass characterised by permanent exclusion from the labour market, economic poverty and severe material deprivation (Morlicchio and Pratschke, 2012; Orientale Caputo, 2012). Italian families have traditionally coped with employment difficulties by prolonging the residence of young adults in the parental home and through cohabitation by families belonging to different generations. These mechanisms are still at work but are increasingly being weakened by demographic changes, households’ increasing burden and persisting reconciliation difficulties (Naldini and Saraceno, 2008; Knijn and Saraceno, 2010). In the past two decades, the composition of Italian families has altered considerably, mainly due to the ageing of the population. Households composed of single individuals or couples without children have increased: while they represented one third of families in 1991, they accounted for almost half of all Italian households in 2012. In particular, traditional families consisting of parents and children decreased, falling from 45% to 35%, especially because of Italy’s very low birth rate (Naldini, 2013). Nevertheless, these major changes have been accompanied by the substantial persistence of consolidated forms of family organisation. Despite the progressive ageing of the Italian population, the proportion of over-65s cohabiting with a child is nearly the same as it was in the

24

‘Everything needs to change, so everything can stay the same’

early 1990s (around 20%). Also stable is the prolonged residence of children in the parental home due to deferred transition to adulthood. While at the beginning of the 1980s, only one woman aged 20– 29 years old in every five lived with her parents, in 2010, the figure was one in every two. The same applies to males of the same age, among whom cohabitation with parents increased from around 40% in the early 1980s to 66% in 2010 (Nazio and Saraceno, 2013). In general, therefore, the ongoing dynamics in Italian families show that the model of family solidarity is still strongly resilient in Italy (Pavolini and Ranci, 2009). However, the resilience of this model comes about within a greatly changed social and economic context that weakens the capacity of families to offer protection. Proof is provided by the persistently low fertility rate, which reached its lowest point in 2001 and then rose slightly again (mainly due to the contribution of immigrant women), while the average age at which women have their first child has constantly increased over the past decade to exceed 31 years of age (31.4 in 2012) (Adsera, 2011). Also weaker is the traditional familisation of care given to children, the elderly and dependent persons. A general reduction is apparent in the hours of caring devoted to the family, as well as in the number of families that exchange caring. While in 1998, 29% of elderly households received care from family members, in 2005, only 18% did so (Istat, 2006). In general, the social protection function performed by families persists, but it does so to a lesser extent in a period characterised by an increase in workloads. Also, the familybased mutual support between different generations has weakened, exposing numerous people to insecurity, especially the more elderly (Albertini and Kohli, 2013). It is against this background that new forms of social risk have emerged in Italian society. The dynamics of the labour market and their interweaving with the ongoing inertias and changes in family organisation have generated new situations of social vulnerability (Ranci, 2009). While in the society of the late 1980s, protection against social risks was largely ensured by the association among steady employment, the stable division of roles within the nuclear family and the progressive extension of the guarantees furnished by the welfare state, today, new social risks arise at the intersection among the precarisation of work, the weakening of family support and the inertia of the welfare system (Ranci, 2009). For these reasons, in what follows, we shall concentrate our analysis on the main social risks, and then observe how the Italian welfare system has changed in correspondence to:

25

The Italian welfare state in a European perspective

1. the progressive impoverishment of specific social groups; 2. the development of a large group of precarious workers; and 3. the greater difficulties of households to provide care to both children and the dependent elderly.

Income inequalities and redistributive dynamics Italy is among the European countries with the highest levels of income inequality. The Gini index for Italy (equal to 0.327) estimated by the Luxembourg Income Study (LIS) in 2010 was higher than that of the large continental countries and only lower than that of the other Southern European countries and the UK. While in the 1970s and 1980s, the predominant trend was a decrease in inequalities, the beginning of the 1990s saw an inversion of this tendency, whereby inequality increased during the first half of the 1990s and has substantially stabilised over the past two decades, specifically: the Gini index was around 0.420 in the early 1970s; dropped to almost 0.310 a decade later; rose to 0.370 at the end of the 1990s; and then only slightly decreased at the beginning of the 2000s. The recent financial crisis, as in many European countries, has resulted in a new slight increase in the Gini index, which was close to 0.360 in 2012. However, the stability of the Gini index in the past two decades conceals the fact that major changes have taken place in the income positions of individuals belonging to different age groups and different social classes (D’Alessio, 2012). As regards differences by age, there have been two evident trends in the past 20 years (see Figure 1.1). On the one hand, during the early 1990s, the poverty risk for children increased considerably; indeed, in only four years (between 1989 and 1993), it rose from 11% to almost 20%. In the following decade, the risk remained substantially the same, without significant improvements. On the other hand, the poverty risk for the elderly population, which stood at around 15% at the end of the 1980s, diminished considerably from the second half of the 1990s onwards, reaching 8% in 2010. As a result of these two parallel processes, not only did the poverty risk of families with children become higher than that of families composed of elderly persons, but the income polarisation between age groups also increased over the last decade. A further process of differentiation has concerned occupational groups. In spite of wide variations within specific occupational groups (eg as in the case of the self-employed), some occupational groups have improved their relative positions, while others have suffered relative impoverishment. Figure 1.2 shows that while the real income (revalued

26

‘Everything needs to change, so everything can stay the same’ Figure 1.1: Relative poverty rates for children and the elderly in Italy, 1986–2010 Elderly (50%)

Children (50%) 25,000 20,000 15,000 10,000 5,000 0

1986 1987 1989 1991 1993 1995 1998 2000 2004 2008 2010

Source: LIS (various years)

Figure 1.2: Real average income by occupational position, dependent employees, 1991–2012 Working class

White collars

Upper service class

50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 1991

1995

2000

2004

2008

2012

Source: Banca d’Italia, Indagine sul reddito delle famiglie italiane (various years)

with respect to 2012 current prices) of blue-collar and white-collar employees decreased slightly during the 1990s and 2000s, the average income of dependent employees belonging to the upper service class (executives and managers) underwent a considerable increase, halted only by the current crisis.

27

The Italian welfare state in a European perspective

Dependent employment therefore exhibits a clear income polarisation between the upper service class, on the one hand, and blue-collar and white-collar workers, on the other. The income situations of self-employed workers (see Figure 1.3), both upper-class (entrepreneurs and free professionals) and lower-class (traditional selfemployed workers), improved until 2005, but they then deteriorated, largely because of the economic crisis.2 At the end of the period observed, therefore, two dynamics of polarisation are apparent: the first is within dependent employment, and it increasingly distances the income positions of the upper professional groups from those of bluecollar and white-collar workers; the second redistributes income to the advantage of the self-employed and to the detriment of blue-collar and white-collar employees, at least until the recent crisis (Albertini, 2013). To conclude, notwithstanding the apparent immobility signalled by the stability of the Gini index, profound changes took place that have rearranged the relative positions of numerous social groups. Bluecollar workers and routine white-collar workers have suffered relative deprivation in respect of the upper service class comprising executives and managerial staff. Recent years have also seen improvement in the incomes of self-employed workers, though this has been halted Figure 1.3: Real average income by occupational position, self-employed workers, 1991–2012 Professionals

Pensioners

Traditional self-employed

50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000

1991

1995

2000

2004

2008

2012

Source: Banca d’Italia, Indagine sul reddito delle famiglie italiane (various years)

28

‘Everything needs to change, so everything can stay the same’

by the explosion of the financial crisis. Finally, the ongoing income redistribution over the past 20  years has created an increasing discrepancy between the generations to the advantage of the more elderly age groups and the disadvantage of families with small children. While the distance between age groups diminished during the 1990s, in the past 15 years it has widened, reversing the situation of the more elderly and pensioners: from social groups at severe risk of poverty they have turned into protected social groups, with only a minority of them still in a poor condition. The costs of this reversal have mainly been borne – in a macroeconomic context characterised by GDP growth close to zero – by young people, families with children and dependent employees. These groups, therefore, have been the main losers over the past two decades, at least in terms of income distribution.

The new risks in the labour market In recent decades, the structure of the Italian labour market, as in other European countries, has undergone major changes that have affected the configuration of the new social risks in various ways. The most significant of these changes has been the growth of female labourmarket participation and the increase in flexible and precarious work (Jessoula et al, 2010; Berton et al, 2012).3 Increased female labour-market participation has had a great impact on both the dynamics of the labour market (which have historically discriminated against and penalised women) and on work– family reconciliation. In Italy, between 1983 and 2012, the female employment rate grew by around 13 percentage points. However, this growth was less than in many other European countries.4 This gap is therefore a structural deficit that also highlights the lack in Italy of policies for female employment. In fact, the data on the proportion of tertiary-educated women in employment (ISCED 5–6)5 place Italy among the countries with the lowest levels of female labour-market participation, with practically nil growth over the past 15 years (Del Boca, 2002; León and Migliavacca, 2013; Naldini and Jurado, 2013). The second important change concerns the growth of temporary work, and it is one of the key (and also most controversial) issues in the current debate on the Italian labour market.6 This phenomenon, which mainly affects young people, differs significantly among the European countries (Barbieri, 2009; Migliavacca, 2008; Fellini and Migliavacca, 2009; Berton et al, 2012; Blossfeld et al, 2012). Over the past 17 years, apart from Spain (where the high share of temporary work is an exception in Europe) and the UK (where open-ended contracts can

29

The Italian welfare state in a European perspective

be more easily discontinued than in other European countries), the share of temporary work in total employment has oscillated around 15% in the main European countries. Italy’s specificity is evidenced by the internal composition of this group, especially when considering young people. In the 15 pre-1995 member states of the European Union (EU-15), the percentage of temporary employees (according to the Eurostat classification) aged 15 to 39 years old rose between 1995 and 2012 from 16% to 21.5%. In the case of Italy, young temporary employees increased in the same period from 9.7% to 21.8%, while among young women, the proportion rose from 11.6% to 23.6%. In the period observed (1995–2012), therefore, Italy was the European country that recorded the most accelerated growth of temporary work. The massive growth of temporary work has highlighted that, today, precariousness is one of the new forms of social risk, especially in cases where temporary work (especially if low-skilled) is not just a stage in the work career, but a condition that may persist for many years. In Italy, the spread of precariousness among young people increases the risk of remaining dependent on their parents and of having to postpone the age of family formation, with a consequent delay in transition to adulthood (Billari and Liefbroer, 2010; Buchmann and Kriesi, 2011). While women and young people are the categories most at risk, it should be pointed out that precariousness increasingly affects the adult population as well. In 2012, the share of temporary employees in the 25–49 age group represented 12.1% in Europe and 13.4% in Italy. Finally, due to the high territorial and productive segmentation of the Italian labour market, there is a greater risk of being trapped in precarious jobs, and the possibility that temporary work can be used to start a professional career diminishes considerably (Fullin, 2011).

Dependency and care problems A third social risk stems from the worsening of care problems caused mainly by demographic changes and increased female labour-market participation. The problems concern two main areas: care of the dependent elderly; and care of pre-school-age children. Over the past 20 years, the ageing of the Italian population has been considerable, with an exponential growth of the population aged over 80. While in 1993, the percentage share of the population aged over 80 was 3.7%, in 2013, it stood at 6.3%, an increase of 70% over 20 years. The most significant consequence for care problems has been the greater number of dependent persons requiring long-term care (Costa, 2013; Pavolini and Ranci, 2008; Ranci and Pavolini, 2013).

30

‘Everything needs to change, so everything can stay the same’

Yet, this increase has been less than expected, owing to the simultaneous improvement in the well-being and health conditions of the population. The progress appears notable: within five years (between 2000 and 2005), life expectancy at birth without disability increased by fully two years, while that for the population aged over 75 increased by 1.1 years. The fall in the disability rate for the elderly population has consequently been impressive: 20% in the 65–69 age group; 17% in the 70–74 one; 9% in the 75–79 one; and 7% in the over-80 age group. In parallel, the share of persons with severe disabilities has also decreased by around 10% in only five years. The net effect of the progressive extension of life expectancy and the improvement in living conditions is substantial stability in the number of dependent people, who are estimated at around 2.6 million. The difficulties concerning dependency, therefore, do not derive from the supposed steep rise in the number of care-dependent people, but rather from the major changes taking place in the organisation of care activities and in intergenerational relationships. There are various contributory factors (Naldini and Jurado, 2013; Ranci and Pavolini, 2013). Ongoing changes in forms of family cohabitation, even if not particularly evident in Italy, have increased the demand for care that cannot be satisfied through the help furnished by cohabiting members of the family: the number of disabled elderly people who live alone is increasing (in 2005, the share surpassed 40%), while the number of the elderly dependent living with a son or daughter has diminished (the share in 2005 was around 13%). In parallel, relationships between the generations have changed profoundly because of an increasingly skewed ratio between the number of people aged over 65 and that of people of working age (15–64 years old). Since the end of the 1980s, the old age dependency ratio has increased substantially over Europe to reach a value of more than 30% in Italy and Germany, with all the other big European countries below 30%. Compared with the other European countries, Italy has recorded the largest increase over the past 50 years. The impact of dependency is strong not only because of the absolute number of people in a state of need, but also because of the complexity of the potential negative effects. Considerable tensions are created in traditional care models, applying pressure on the organisation of families and the resilience of intergenerational ties. The presence of a dependent person increases the poverty risk for a family by 27% (Costa and Ranci, 2010). The inertia of public policies on long-term care has increased the demand for private services. This has given rise to a large private care market, which employs almost one million migrant

31

The Italian welfare state in a European perspective

care workers, of whom one third do not possess residence permits and another one third are employed without regular work contracts (Ranci and Sabatinelli, 2014). A second critical area concerns reconciliation between work and the care of pre-school-age children. This is a long-standing issue that almost entirely affects women/mothers (Saraceno, 1994) and is today exacerbated by the increase in female employment, the growth of double-income families and the parallel contraction of male breadwinner households. One of the most frequently analysed effects of the worsening of the work–family reconciliation problem is Italy’s very low fertility rate compared with those of the other countries of continental and Northern Europe. In 2011, the fertility rate was 1.43 in Italy, as against 1.32 in Spain, 1.92 in UK and 2.00 in France. This is a situation that makes reconciliation between work and childcare a crucial concern for social policies from several points of view: to promote an increase in the female activity rate; to improve the living conditions of families with children; and to increase the fertility of Italian women (Naldini and Saraceno, 2011). There is evidence that reconciliation problems are the cause of the particular difficulties regarding labour-market access encountered by Italian women. In the 25–49 age range, the gender gap relative to employment rates is almost double in Italy than in the other large European countries – including Spain, which in the 1980s, had a gender gap higher than Italy’s (see Figure 1.4). A large part of this gap is due to the assumption of female responsibility for childcare. Italy is one of the countries in which the presence of children has a strongly depressive effect on the employment rate among women of fertile age (see Figure 1.5). While until 2005, the Italian situation was similar, if not better, than that of Spain and Germany, recent years have seen a sharp improvement of the parenthood impact in those countries but a much more limited one in Italy. Of the European countries, only the English-speaking and two Central-Eastern (Czech Republic and Hungary) ones record a parenthood impact on female employment greater than that in Italy. Reconciliation problems stem from the difficulty in changing the gender distribution of family responsibilities. The past 10 years have seen a slight increase in the proportion of fathers who contribute to housework and childcare. Nevertheless, this seems due more to strategies by women than to action by men. The reduction of the distance, in fact, is imputable mainly to the decrease in the time devoted to housework by women and to the increase in their working time (Craig and Mullan, 2011).

32

33

Source: Eurostat (various years)

10

20

30

40

50

60

70

19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 89 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12

United Kingdom

Italy

France

Spain

Germany

Figure 1.4: Employment gender gap for workers aged 25–49 for Italy and the four biggest countries in Western Europe, 1983–2012

‘Everything needs to change, so everything can stay the same’

34 Source: Eurostat (various years)

–10

–5

0

5

10

15

20

25

30

35

40

Figure 1.5: Parenthood impact on female employment rates for women aged 25–49 in 27 EU countries, 2005 and 2012

Denmark Sweden Portugal Slovenia Croatia Lithuania Belgium Latvia Romania Netherlands Greece France Bulgaria Austria Finland Poland Cyprus Luxembourg Spain Macedonia Germany Slovakia Estonia Italy UK Czech Republic Hungary Ireland

2012

2005

The Italian welfare state in a European perspective

‘Everything needs to change, so everything can stay the same’

Overall, the difficulty of finding a solution to the problem of work– childcare reconciliation contributes to keeping the female employment rate low and to maintaining the gender inequality in the labour market high. Moreover, the persistence of a strong parenthood impact on female employment in Italy increases exposure to the risk of poverty for families with small children. As is well-known, the growth in the number of double-income families is an important defence against the risk of poverty. Indeed, during the 1990s, it counterbalanced the tendency of economic inequalities to increase (Förster and Mira D’Ercole, 2005). Today, in fact, families organised around the traditional male breadwinner model are at most risk of poverty – as shown by the reports of a government commission tasked with studying problems of social exclusion (Revelli, 2010). There seems to be a growing economic polarisation between double-income families and single-income ones that exposes mainly low-educated individuals to the risk of poverty.

Welfare policies: what changes? The remarkable social changes that have traversed Italian society over the past 20 years have generated new social risks that have been little considered by the traditional welfare system. The emergence of these social risks should have led to a ‘recalibration’ of the welfare system to render it better able to protect people against these difficulties, as happened in many other European countries (Taylor-Gooby, 2004). Instead, current trends in social expenditures confirm the fundamental inertia of the Italian welfare system. Between 1990 and 2009, public spending on social protection gradually increased in Italy, similarly to what happened in the main European countries (see Figure 1.6).7 Only since 2010 have social expenditures slightly decreased as a consequence of austerity measures, as happened in many other countries. The annual average rate of variation in expenditure during the period 1994–2011 was 1.34%, which was similar to the German rate (1.38%) and slightly less than the French one (1.87%). Only Spain had a significantly higher rate (2.31%). However, the growth in the volume of social expenditure has been matched by marked fixity in its subdivision by function. In fact, the decomposition of public expenditure in relation to GDP shows that the only dynamic element is expenditure on old-age and survivor pensions (which has grown by more than four percentage points over the past 20 years). Health-care expenditure has slightly increased (+0.8% over 20 years), while expenditure on the other functions has

35

The Italian welfare state in a European perspective Figure 1.6: Social expenditures in euros per capita, 1990–2011 Germany Italy

Spain Sweden

France United Kingdom

12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11

2,000

Source: Eurostat, European System of Integrated Social Protection Statistics (ESPROSS) data (various years)

remained substantially unchanged (see Figure 1.7). Hence, while one would expect – given the changes that have taken place in the risk profile of the Italian population – a reduction in the relative weight of old-age pensions and an increase in other forms of social protection, this has not happened. Thus far, the impact of austerity has been to halt the overall growth of expenditure, but it has not engendered any significant changes in its composition. Comparison with the dynamics during the same period of time in the other large European countries confirms the difficulty of recalibrating the Italian welfare system. Considering the share of social security spending (which includes old-age and survivor pensions) over the total amount of social protection expenditure, Italy spends considerably more than the other countries (see Figure 1.8). Over the past two decades, total real expenditure has slightly diminished (but has still been more than 60% of overall expenditure), while the difference with respect to the other large European countries has not changed. Moreover, the high proportion of the older population in Italy compared with other European countries has further prevented any profound recalibration of social security spending. Recent changes in the pension system have raised the retirement age and increased the contributory records that people need in order to get adequate

36

‘Everything needs to change, so everything can stay the same’ Figure 1.7: Trend of expenditure on social protection in Italy, in percentages of GDP, by macro-sector, 1990–2011 Old age + survivors

Sickness/health care

Disability

Family/children

Unemployment

Housing + social exclusion

30 25 20 15 10 5

Source: Eurostat, ESPROSS data (various years)

Figure 1.8: Trend of expenditure on old-age and survivor pensions in the main European countries, in percentages of expenditure on overall social protection, 1991–2011 Germany Italy

65

Spain Sweden

France United Kingdom

60 55 50 45 40

19

91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11

35

Source: Eurostat, ESPROSS data (various years)

37

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

0

The Italian welfare state in a European perspective

pension amount. However, the savings in spending obtained through these changes are not planned to be used to fund welfare programs addressing new social risks. The scant capacity of the Italian welfare system to switch to protection against the new social risks is also evidenced by the persisting paucity of expenditure to protect the categories most exposed to those risks. Expenditure in disability protection has been substantially stable over the past two decades, representing just under 7% of expenditure on overall social protection (see Figure 1.9). In the other European countries, with the exception of the UK since 1995 and Sweden since 2007, the main trend has been a slight increase in expenditure. The outcome is that Italy’s relative position has worsened with respect to the trends in the other European countries. The trend in expenditure related to family and children exhibits the same tendency (see Figure 1.10). Also, in this case, Italy started in the early 1990s from a position considerably below that of the main European countries and only above that of Spain. Over the past 20 years, the gap with respect to the continental countries has remained substantially unchanged, while in the meantime, since 2000, even Spain has overtaken Italy. The only country with which Italy has

Figure 1.9: Trend in expenditure on disability benefits in the principal European countries, in percentages of expenditure on overall social protection, 1991–2011 Germany Italy

Spain Sweden

France United Kingdom

16 14 12 10 8 6

19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11

4

Source: Eurostat, ESPROSS data (various years)

38

‘Everything needs to change, so everything can stay the same’ Figure 1.10: Trend in expenditure related to family/children in the principal European countries, in percentages of expenditure on overall social protection, 1991–2011 France United Kingdom

Spain Sweden

Germany Italy 14 12 10 8 6 4 2

20 07 20 08 20 09 20 10 20 11

05 06 20

20

03 04 20

02

20

20

00 01 20

99

20

19

97 98 19

96

19

19

94 95 19

93

19

19

19

19

91 92

0

Source: Eurostat, ESPROSS data (various years)

caught up is the UK, which considerably reduced expenditure in this sector between 1998 and 2006.

The redistributive impact of non-recalibration Given the difficulties in recalibrating Italian welfare delivery, one may ask what redistributive effect has been produced over time by the Italian welfare system. If inequalities and risk profiles have undergone major changes in the past two decades, what has been the effect on social inequalities of the profound inertia that has characterised the Italian welfare system? Some indications can be obtained by observing the poverty reduction brought about by social transfers (including pensions) (Caminada et al, 2012).8 Data presented in Table 1.1 show that the overall redistributive capacity of Italian welfare is lower than that of the continental and Nordic welfare regimes, and higher than that of Spain. The improvement achieved during the 1990s did not continue in the following decade until the crisis of 2007. After the onset of the crisis, protection against poverty substantially increased in the Southern

39

The Italian welfare state in a European perspective

Table 1.1: Percentage reduction of the population in poverty determined by social transfers in the principal European countries, 1995–2012

Germany Spain France Italy Sweden UK

1995 60.5 53.7 64.3 50.0 – 51.2

2000 74.4 51.4 61.0 57.1 – 53.7

2005 71.8 48.6 70.9 55.8 77.1 55.5

2010 64.5 50.9 70.1 58.2 69.0 61.2

2012 62.8 51.9 67.7 56.4 66.3 64.3

Source: Eurostat, ECHP and EU-SILC (various years)

European countries and in the UK because of the considerable growth of unemployment, though it was still lower than in the other large European countries. However, the distinctive feature of Italy is not so much the overall capacity of its welfare system to protect against the risk of poverty (which has remained substantially unchanged over the past 15 years) as the fact that such protection is provided to the benefit of some social categories rather than others. As already shown, the trend in expenditure on social protection favours the beneficiaries of old-age and survivor pensions, not households with small children and people with disabilities. Tables 1.2 and 1.3 show that the capacity of social transfers to reduce poverty for two distinct age groups differs between Italy and the other large European countries. During the second half of the 1990s and in the 2000s, the protection against poverty provided to the over-64 population first decreased and then began to grow again between 2005 and 2011, confirming a degree of protection for the elderly population in line with that of the other European countries. In the same period, the protection furnished to under-16 minors improved somewhat, and was similar to that of Spain, but it was still much Table 1.2: Percentage reduction of the population aged over 65 in poverty determined by social transfers, 1995–2012

Germany Spain France Italy Sweden UK

1995 83.0 79.2 79.1 77.8 – 63.2

2000 88.5 73.6 79.1 84.0 – 72.7

2005 85.7 65.2 82.8 73.3 89.0 72.3

Source: Eurostat, ECHP and EU-SILC (various years)

40

2010 85.0 75.2 89.1 80.2 83.3 75.7

2012 84.0 82.3 89.2 80.5 81.1 82.0

‘Everything needs to change, so everything can stay the same’ Table 1.3: Percentage reduction of the population aged under 16 in poverty determined by social transfers, 1995–2012

Germany Spain France Italy Sweden UK

1995 40.0 29.4 52.9 17.2 – 33.3

2000 56.7 24.2 41.9 19.4 – 34.1

2005 61.5 23.3 59.8 27.6 74.5 46.4

2010 48.3 24.3 52.1 29.2 61.4 55.8

2012 53.0 22.7 46.3 25.8 57.9 60.1

Source: Eurostat, ECHP and EU-SILC (various years)

less than the amount of protection provided by the other European countries. While in continental countries, social transfers reduced the poverty risk of persons aged under 16 by 45–60%, in Italy, they did so by less than 30% (see Table 1.3). Overall, therefore, over the past 20 years, the Italian welfare system has increased protection for the elderly population, composed mainly of pensioners, while protection for families with small children, which are the most exposed to new social risks, is still significantly lower than that provided in other European welfare systems.

Conclusions This chapter has sought to describe the main changes that took place in social risk profiles during the 1990s and 2000s in Italy, and to verify the extent to which the Italian welfare system adjusted to those changes. We have shown that in Italy, as in the other large European countries, profound social changes have given rise to new inequalities. In parallel, they have generated new risks for social groups varyingly affected by the ongoing changes in the labour market, in the organisation of the family and in the demographic structure of the population. The new social risks mainly concern families with children, young people entering the labour market, women who must reconcile work and care responsibilities, and dependent people. Overall, the changes that have taken place in the risk profile of the Italian population show that during the two decades considered, some social categories have benefited more than others. Among the ‘winners’ are higher-income earners, senior managers, entrepreneurs and professionals. Among the ‘losers’ are blue-collar and whitecollar dependent employees, young people, temporary workers, male breadwinner families with severe problems of work–care reconciliation,

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The Italian welfare state in a European perspective

families with children, and dependent persons. Pensioners and the 64to 80-year-old population in general, together with self-employed workers (a relevant component of the Italian middle class), have not faced major changes in their relative position as a whole, even though inequalities and polarisations grew even within these social groups. The welfare system has generally maintained the level of expenditure and the capacity to protect against poverty acquired at the beginning of the 1990s. Moreover, during the past 20 years, there has been a further slight increase in the level of per capita social expenditure, a tendency that aligns Italy with the other European countries. This increase in expenditure, however, has been absorbed to a large extent by pension programmes for the elderly population and to a lesser extent by health care, while programmes for families, the disabled, the socially excluded and persons with housing problems have been residual and strongly undersized with respect to those in the other large European countries. Furthermore, the decomposition of expenditure by function shows not only the strong oversizing of expenditure on old-age and survivor pensions, but also the substantial invariability of such expenditure over the past 20 years. The overall resilience of the welfare system has therefore been accompanied by a marked inertia of spending flows, which have continued to favour the traditional beneficiaries of Italian welfare. The ‘insiders’ are still privileged in comparison to the ‘outsiders’, so that the welfare system is poorly suited to respond to the new profiles of social risk. The evolution of the Italian welfare system until 2011 contributed to increasing, rather than reducing, social dualism. At the same time, it contributed more to strengthening the position of the ‘winner’ social groups than to attenuating the hardships of the ‘losers’. This outcome can be interpreted in various ways. One possible interpretation is that it is due to the external financial constraints imposed by the European Stability Pact. According to this interpretation, the lack of financial resources in a period characterised by enormous public debt, scant economic growth and, more recently, the financial crisis, has ‘frozen’ the system. From this perspective, the outcome is a ‘policy drift’ (Streeck and Thelen, 2005): a regressive reconfiguration of the welfare system due the substantial absence of institutional innovation. However, this explanation does not consider the political and social factors endogenous to the system that have obstructed the recalibration of the Italian welfare system. It seems clear from the data presented earlier that the inability to reconfigure the system is due to the tendency of social expenditure to respond mainly to the interests of

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the insiders. The difficulty of recalibration can be considered not only the unintentional result of a system unmodifiable because of external constraints, but also the result of an institutional inertia that is related to the resistance of the insiders against changes in the final destinations of social expenditure flows (Emmenegger et al, 2013). On this view, the failure to recalibrate Italian welfare can be seen as the outcome of a social and political-institutional dynamic whereby some specific social groups have been the ‘winners’ at the expense of other social groups, who have been the ‘losers’. Notes Data from Eurostat, available at: http://epp.eurostat.ec.europa.eu/portal/ page/portal/national_accounts/introduction 1

A peculiarity of the Italian labour market is the high incidence of selfemployed workers, who represent 24% of the overall labour force (Ranci, 2012). The average share of self-employment in the 27 European Union (EU) member states is 12%. 2

Two other significant changes should be mentioned. The first concerns the increased weight of immigrant workers. Due to the exponential growth of immigration into Italy, this has reached almost 10% of total employment. 3

The Italian data are affected by the lack of comparable data on informal work by women, which is particularly common in Italy. However, a substantial part of this phenomenon is recorded in the figures on activity rates, whereas it is obviously not included in the data on female employment. 4

First and second stage of tertiary education (Bachelor’s, Master’s or equivalent level).

5

In Italy, temporary work started to be introduced on a large scale in 1998, following specific labour-market reforms (Law 196 of 1997 and Law 30 of 2003). 6

The analyses that follow use data from ESPROSS, which do not include expenditure on education. 7

The analysis that follows also considers old-age and disability pensions among social transfers, but it does not consider services furnished in-kind. Since it is well-known that benefits in-kind are more limited in Italy than in the other European countries, the results reached in this analysis are proportionally better for Italy than they would be if the benefit deriving from access by citizens to public services were included in the poverty reduction effect.

8

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References Adsera, A. (2011) ‘Where are the babies? Labor market conditions and fertility in Europe’, European Journal of Population/Revue européenne de Démographie, 27(1): 1–32. Albertini, M. (2013) ‘The relation between social class and economic inequality: a strengthening or weakening nexus? Evidence from the last three decades of inequality in Italy’, Research in Social Stratification and Mobility, 33: 27–39. Albertini, M. and Kohli, M. (2013) ‘The generational contract in the family: an analysis of transfer regimes in Europe’, European Sociological Review, 29(4): 828–40. Barbieri, P. (2009) ‘Flexible employment and inequality in Europe’, European Sociological Review, 25(6): 621–8. Barbieri, P. and Cutuli, G. (2009) ‘Equal job, unequal pay. Fixed term contracts and wage differentials in the Italian labor market’, Quaderni di Sociologi , Dipartimento di Sociologia e Ricerca Sociale, no 45, Universita’ di Trento. Berton, F., Richiardi, M. and Sacchi, S. (2012) The political economy of work security and flexibility: Italy in comparative perspective, Bristol: Policy Press. Billari, C. and Liefbroer, A.C. (2010) ‘Towards a new pattern of transition to adulthood?’, Advances in Life Course Research, 15(2): 59–75. Blossfeld, H.P., Buchholz, S., Hofäcker, D. and Bertolini, S. (2012) ‘Selective flexibilization and deregulation of the labor market. The answer of continental and Southern Europe’, Stato e mercato, 32(3): 363–90. Brandolini, A. (1999) ‘The distribution of personal income in postwar Italy: source description, data quality, and the time pattern of income inequality’, Giornale degli economisti e Annali di economia, 58(2): 183–239. Brandolini, A. and Bugamelli, M. (eds.) (2009) Rapporto sulle tendenze nel sistema produttivo italiano, Occasional papers n. 45, Roma: Banca d’Italia. Buchmann, M.C. and Kriesi, I. (2011) ‘Transition to adulthood in Europe’, Annual Review of Sociology, 37: 481–503. Caminada, K., Goudswaard, K. and Koster, F. (2012) ‘Social income transfers and poverty: a cross-country analysis for OECD countries’, International Journal of Social Welfare, 21(2): 115–26. Castel, R. (2000) ‘The roads to disaffiliation: insecure work and vulnerable relationships’, International Journal of Urban and Regional Research, 24(3): 519–35.

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Checchi, D. (2012) ‘Labour market and inequality trends in Italy’, in H. Magara and S. Sacchi (eds) The politics of structural reforms: social and industrial policy change in Italy and Japan, Northampton: Edward Elgar Publishing, pp 148–70. Checchi, D. and Peragine, V. (2010) ‘Inequality of opportunity in Italy’, The Journal of Economic Inequality, 8(4): 429–50. Costa, G. (2013) ‘Long-term care Italian policies: a case of inertial institutional change’, in C. Ranci and E. Pavolini (eds) Reforms in long-term care policies in Europe, New York, NY: Springer, pp 221–41. Costa, G. and Ranci, C. (2010) ‘Dependency as a factor of vulnerability in Europe’, Transforming Care Conference, Copenhagen. Craig, L. and Mullan, K. (2011) ‘How mothers and fathers share childcare: a cross-national time-use comparison’, American Sociological Review, 76(6): 834–61. Crouch, C. (1999) Social change in Western Europe, Oxford: Oxford University Press. D’Alessio, G. (2012) ‘Wealth and inequality in Italy’, Bank of Italy Occasional Paper 115. Del Boca, D. (2002) ‘The effect of child care and part-time employment on labor supply and fertility of Italian women’, Journal of Population Economics, 14: 549–73. Emmenegger, P., Häusermann, S., Palier, B. and Seeleib-Kaiser, M. (2013) ‘Structural change and the politics of dualization’, Rassegna Italiana di Sociologia, 14(2): 201–26. Fellini, I. and Migliavacca, M. (2009) ‘Unstable employment in Western Europe: exploring the individual and household dimensions’, in C. Ranci (ed) Social vulnerability in Europe. The new configuration of social risks, Basingstoke, Hampshire: Palgrave Macmillan, pp 88–125. Ferrera, M. (1996) ‘The Southern model of welfare in social Europe’, Journal of European Social Policy, 1: 12–37. Förster, M.F. and Mira D’Ercole, M. (2005) ‘Income distribution and poverty in OECD countries in the second half of the 1990s’, OECD Social, Employment and Migration Working Paper No. 77. Fullin, G. (2011) ‘Unemployment trap or high job turnover? Ethnic penalties and labour market transitions in Italy’, International Journal of Comparative Sociology, 52(4): 284–305. Istat (2006) Rapporto Annuale 2006, Roma: Istat. Jessoula, M., Graziano, P. and Madama, I. (2010) ‘“Selective flexicurity” in segmented labour markets: the case of Italian “mid-siders”’, Journal of Social Policy, 39(4): 561–83.

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Knijn, T. and Saraceno, C. (2010) ‘Changes in the regulation of responsibilities towards childcare needs in Italy and the Netherlands: different timing, increasingly different approaches’, Journal of European Social Policy, 20(5): 444–55. León, M. and Migliavacca, M. (2013) ‘Italy and Spain: still the case of familistic welfare models?’, Population Review, 52(1): 25–42. Migliavacca, M. (2008) Famiglie e lavoro. Trasformazioni ed equilibri nell’Europa mediterranea, Milano: Bruno Mondadori. Morlicchio, E. and Pratschke, J. (2012) ‘Social polarisation, the labour market and economic restructuring in Europe: an urban perspective’, Urban Studies, 49(9): 1891–907. Naldini, M. (2013) Family in the Mediterranean welfare states, London: Cass. Naldini, M. and Jurado, T. (2013) ‘Family and welfare state reorientation in Spain and inertia in Italy from a European perspective’, Population Review, 52(1): 43–61. Naldini, M. and Saraceno, C. (2008) ‘Social and family policies in Italy: not totally frozen but far from structural reforms’, Social Policy & Administration, 42(7): 733–48. Naldini, M. and Saraceno, C. (2011) Conciliare famiglia e lavoro. Vecchi e nuovi patti tra sessi e generazioni, Bologna: Il Mulino. Nazio, T. and Saraceno, C. (2013) ‘Does cohabitation lead to weaker intergenerational bonds than marriage? A comparison between Italy and the United Kingdom’, European Sociological Review, 29(3): 549–64. Orientale Caputo, G. (2012) Come una danza immobile. Tre anni di disoccupazione, lavoro nero e povertà a Napoli, Padova: Ledizioni. Pammolli, F. and Salerno, N.C. (2009) ‘I differenziali territoriali del costo del lavoro’, Cerm, 1: 1–3. Pavolini, E. and Ranci, C. (2008) ‘Restructuring the welfare state: reforms in long-term care in Western European countries’, Journal of European Social Policy, 18: 246–59. Pavolini, E. and Ranci, C. (2009) ‘Beyond the male breadwinner family model’, in C. Ranci (ed) Social vulnerability in Europe. The new configuration of social risks, Basingstoke, Hampshire: Palgrave Macmillan. Pedersini, R. and Regini, M. (2013) ‘Coping with the crisis in Italy: employment relations and social dialogue amidst the recession’, DIALOGUE Working Paper: 1–30. Ranci, C. (ed) (2009) Social vulnerability in Europe. The new configuration of social risks, Basingstoke, Hampshire: Palgrave Macmillan. Ranci, C. (ed) (2012) Partite IVA: il lavoro autonomo nella crisi italiana, Bologna: Il Mulino.

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Ranci, C. and Pavolini, E. (eds) (2013) Reforms in long-term care policies in Europe, New York, NY: Springer. Ranci, C. and Sabatinelli, S. (2014) ‘Long term and child care policies in Italy between familism and privatisation’, in M. Leon (ed) Care regimes in transitional European societies, Basingstoke, Hampshire: Palgrave. Revelli, M. (2010) Poveri noi, Torino: Einaudi. Saraceno, C. (1994) ‘The ambivalent familism of the Italian welfare state’, Social Policy, 1(1): 60–82. Simonazzi, A., Villa, P., Lucidi, F. and Naticchioni, P. (2009) ‘Continuity and change in the Italian model’, in G.  Bosch, S.  Lehndorff and J. Rubery (eds), European employment models in flux, London: Palgrave Macmillan, pp 201–22. Streeck, W.E. and Thelen, K. (eds) (2005) Beyond continuity: institutional change in advanced political economies, Oxford: Oxford University Press. Taylor-Gooby, P. (2004) New risks, new welfare. The transformation of the European welfare state, Oxford: Oxford University Press.

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TWO

Two decades of pension reforms in Italy: shedding light on a series of mirror-images David Natali

Introduction Public pension spending to counter the risks associated with old age and widowhood represents about 60% of total social spending, Such a central role of pensions in the welfare budget has meant that the welfare reform process in Italy has largely focused on old-age protection. Pension reform has thus been a vital element in the overall push for: functional recalibration, that is, reducing the role of pension spending in the overall welfare state budget; distributive recalibration, that is, reducing the fragmentation of social rights across social and occupational groups; and institutional recalibration, that is, moving towards a multipillar model. In such a context, when we look back at the last two decades of pension policy, we see a threefold pension paradox: a sort of series of ‘mirror images’, where evidence is ambivalent and difficult to interpret. The first paradox relates to the trend in reforms. Neoinstitutionalism has told us that a costly pension system is very difficult to reform and retrench: the higher pension spending and entitlements are, the harder it is to pass reforms (Pierson, 2001). Yet, the Italian pension system has undergone many reforms over the last few decades (the first major reform dates back to 1992 and the most recent is the one passed in 2011; in-between, there were at least three major reforms and many further legislative measures). Thus, the question to address is how to explain such an intense reform process in a ‘sticky’ institutional context. The second paradox has to do with the outcomes of reforms. Many authors have stressed the huge impact of the measures introduced so far: in the long-term, pension spending will decline, as well as benefits, while supplementary funds have increased their role (Jessoula, 2012a). Italy, however, is still a big spender on pensions

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in Europe, and two decades on from the launch of supplementary pension funds, these still cover only a minority of workers. The same ambiguity affects the inequities produced by the system: in the past, the Italian pension system was characterised by clear segmentation of pension rights across occupational (public-sector employees versus private-sector workers and the self-employed) and social groups (eg along gender and territorial lines). However, while the issue has been addressed by the recent reforms, the system is still characterised by huge inequities (for instance, between genders and regions, as well as between standard and non-standard jobs). So, the question is whether reforms have really been effective in tackling major policy challenges (eg the huge financial strains on public pensions; the dualisation of pension rights). The third and last paradox relates to pension politics: trade unions have been a key player in reforms. Many have described Italy as a typical example of the resurgence of social concertation. Yet, at the end of two decades of reforms, the role of trade unions has declined and their ability to guide the reforms is questionable. Is it still possible to talk of pension reform in Italy based on the corporatist arena? To shed light on these apparent paradoxes, in the following sections, we examine the reforms passed in the years between 2000 and 2012 (with a brief summary of events at the end of the 20th century). The second section sheds light on the key traits of the reforms passed so far. The third section focuses on the most recent reforms introduced in the shadow of the Great Recession, both by the Berlusconi government in 2009/10 and then by the Monti government in 2011. The fourth section addresses the first and third paradoxes about the politics of pension reforms. The fifth section looks at the second paradox mentioned above and at the main outcomes in terms of spending trends and the levels of benefit, with a specific focus on the role of public schemes and supplementary pension funds. The sixth section puts the Italian choices in context, comparing Italian pension policy with what has happened in some other European countries. The seventh section contains conclusions while assessing whether and how pension reforms have contributed to the multidimensional recalibration of the Italian welfare system mentioned above.

Italian pensions: two decades of reforms At the beginning of the 1990s, social protection in Italy was an example of the conservative-corporatist model (following the typology proposed by Esping-Andersen). In this welfare regime, social protection

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benefits are paid on the basis of insurance principles, programmes are managed by corporatist bodies and social services are relatively underdeveloped, in contrast to transfers. Pensions, in particular, are mainly financed by social contributions (rather than by taxes) and are organised in line with the ‘pay-as-you-go’ (PAYG) and the ‘defined benefit’ logic (Myles and Pierson, 2001). Benefits are earnings-related and current contributions finance current benefits. The overall goal is status maintenance in retirement, while the system is divided into different schemes and is differentiated according to occupational groups. Such an institutional context was consistent with the ‘stickiness’ of pension programmes inherited from the ‘golden age’ of the welfare state. In Italy, this stability was also a consequence of the key role of social partners, who play an administrative role, in that they represent those who pay for the system and receive benefits from it. The institutional design of pension programmes, together with key organisational resources of social partners, gave them a role of de facto veto players (Natali and Rhodes, 2008). Their role had an effect on the strategies that policymakers were obliged to adopt in order to maximise consensus for reforms. All this was consistent with path dependency and incremental reforms. As stressed in the literature, factors such as the policy legacy were decisive constraints on policy changes. Yet, since the early 1990s, Italy has had an impressive reform record. The most important reforms were those undertaken by the Amato government in 1992 and the Dini government in 1995. Both of these had two purposes: the overcoming of the financial crisis and the reduction of inequities. From a financial point of view, the Amato reform introduced measures (increased retirement age and a stricter link between contributions and benefits) that resulted in huge reductions in pension spending. This formed a key component of the drive to implement the ‘sound finance’ paradigm in a turbulent context, with the fall of the so-called First Republic and the exit of the Italian currency from the European Monetary System in 1992. As regards inequity, other actions were taken. In parallel, the way in which supplementary pension funds were regulated was changed. Incentives were given so that the latter would be seen as a further pillar of the system, capable of guaranteeing the same level of social protection (notwithstanding the reduction of benefits from the public schemes). In particular, two types of supplementary pension funds were set up: so-called ‘closed’ funds, established and managed by social partners and limited to certain categories of workers; and ‘open’ funds, managed

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by financial institutions with no restriction on membership (Jessoula, 2009; Natali, 2011). The Dini reform confirmed the overall logic of the Amato project, but embraced a wider range of goals. In the face of financial strains, the benefit structure was modified, involving a shift from a ‘defined benefit’ to a ‘defined contribution’ basis for pension calculation.1 In order to improve equity, public- and private-sector employees were obliged to contribute to the scheme in equal measure, while selfemployed contributions were increased (Ferrera and Gualmini, 2004). The pension net was extended to workers on flexible contracts to improve the effectiveness of pension programmes and enlarge the base of contributions. All this amounted to some distributive recalibration. This reform (as well as the previous one) was to be implemented very gradually. These reforms produced a radical change in the Italian pension system. Many authors have spoken of paradigmatic changes, shifting the pension system from a typical social insurance system to a multi-pillar model, with public PAYG schemes and, in parallel, supplementary pension funds (Jessoula, 2012b). They had practical financial effects as well as institutional impacts (for an assessment of the financial effects of cutbacks, see Figure 2.1). Recalibrating pensions in the 2000s: from paradigmatic to parametric changes While the reforms of the 1990s represented a watershed (compared to the stalemate of the previous decades) and a radical innovation, policy changes did not produce the ultimate solution to the main pressures on pensions. In particular, two challenges were still to be addressed: the strains on the public budget (with the persistent high level of pension spending, especially in the short and medium term); and the limited development of the supplementary pension funds. This led to further intervention at the beginning of the 21st century. Thus, the ‘never-ending’ innovation continued through the Berlusconi reform of 2004. The pension reform passed by the Parliament combined cutbacks with innovations to raise employment rates among older age cohorts and other measures designed to increase pension system revenues. Cutbacks had to be implemented after 1 January 2008. The main innovation in old-age benefits was an increase in the legal retirement age: the flexible age range established by the 1995 Dini reform (from 57 to 65 for both men and women) was replaced by a fixed limit of 65 for men and 60 for women.

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A full pension could still be obtained after the 40-year minimum contribution period, regardless of age. What is more, the previous retirement age for employees of 57, with a minimum of 35 years of contributions, was increased to 60 in 2008/09, to 61 in 2010/13 and to 62 after 2014. The reform also introduced new measures to increase the financial resources of public schemes, including the so-called ‘solidarity contribution’ of 4% deducted from very high-level pension benefits, an increase in the contributions paid by workers in new and more flexible jobs, and a further distinction (following the trend of previous reforms) between social insurance benefits (funded from contributions) and social assistance benefits (financed from taxation). Contribution and tax incentives – the so-called super bonus – were introduced to increase the effective retirement age. For workers reaching the requisite age for seniority pensions,2 the law provides two alternatives to retirement: to continue working, with subsequent contributions providing an increase in the level of benefit eventually received; or to work and receive those contributions directly as pay, representing a gross wage increase of around a third, while the level of the retirement benefit is frozen. The new legislation aimed at curbing short- and medium-term spending also tried to encourage the development of supplementary schemes. The legislative decree of 2005, in fact, allowed for the transfer of severance pay, better defined as a deferred wage (TFR), into the supplementary pension funds through auto-enrolment. This represented a partial departure from the voluntary approach followed in the previous decade. If the worker does not explicitly request the receipt of their severance pay/deferred wage, contributions are transferred to supplementary ‘closed’ funds. If closed funds are not available, the worker’s contributions are transferred to the social protection budget. If specifically requested, their severance pay/ differed wage can be directed to an ‘open’ pension fund. That part of the reform was postponed to 2008. The Prodi reform of 2007 partly deviated from the previous steps. For the first time since the 1990s, the second Prodi government (supported by a left-of-centre majority) aimed to increase pension spending for the period 2008–17 by about €30 billion (related to both social insurance and solidarity benefits). This was not consistent with the functional recalibration mentioned earlier. The political process was characterised by the resurgence of social concertation, which had been abandoned in the previous 2004 reform process. The first part of the reform consisted in bringing forward the auto-enrolment mechanism

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for the launch of supplementary schemes, from 2008 to 2007. The agreement set out more favourable conditions for the accumulation of contributions for atypical workers (ie through buying back periods of study and full coverage in the case of interrupted careers), together with a redefinition of the list of occupational groups with harsh working conditions (lavori usuranti) and less stringent constraints on the annual ‘windows’ for retirement. More importantly, the abrupt increase in the legal retirement age decided by the Berlusconi government in 2004 (from 57 to 60 from 2008, with 35 years of seniority) was replaced by a much more gradual increase that reduced the expected savings (–€10 billion between 2008 and 2017) (Fornero, 2008). The increase in spending was expected to be offset by rationalising the administration of pension schemes and increasing the mandatory contributions to be paid by atypical workers. It was also agreed that the coefficients applying to the level of pension contributions would be revised automatically from 2010 (Boeri and Brugiavini, 2007).

Pensions during the Great Recession: reform after reform The Great Recession hit Italy hard, with evident consequences on budgetary conditions. As in previous years, financial constraints were one of the main reasons for further intervention on pensions. This time, additional input came from the European Court of Justice (ECJ), which, in 2007, found Italy to have exercised gender discrimination in setting the retirement age for men and women in the public sector (see Chapter Ten). The Berlusconi government decided to introduce revised pension legislation in 2009, to equalise the retirement age for men and women in the public sector at 65, with a transition period of nine years. As stressed earlier, the new measure was a result of both the ECJ rulings and the first budgetary consequences of the economic crisis. The Italian government had to pass measures to stabilise the public budget deficit in a context of severe recession. The increase in the legal retirement age for women in the public sector was thus accompanied by an automatic increase in the retirement age (for both men and women) in line with the gradual increase in life expectancy. This measure had to be effective from 2015. A second reform package was then adopted in 2010. Due to the persistent economic recession and the progressive deterioration of the public budget, the Berlusconi government reduced the transition period for the full implementation of the measures introduced in 2009. As a consequence of the new law of 2010, the equalisation of the retirement age for men and women (in the public sector) became operational from 2012, and the automatic

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adjustment of the legal retirement age to life expectancy came into force from 2010 (Jessoula and Pavolini, 2013). However, the economic and financial context became even more gloomy in 2011. The Eurozone crisis started to endanger Italy after a domino effect spread it from Greece to Ireland, Portugal and then to Spain. In the context of the so-called sovereign debt crisis, which originated in Greece, global financial markets perceived Italy to be the weakest part of the Eurozone. Investors saw a higher risk associated with investing in Italian bonds, and thus started to require a higher return to compensate for such a risk. The so-called ‘spread’ (the gap between the interests paid by the German and Italian governments to obtain funds on the financial market to sustain the public debt) increased steadily during 2011 (Jessoula and Pavolini, 2013). A debt crisis in Italy could have a devastating effect on the entire Eurozone (De la Porte and Natali, 2014). In such a dramatic context, the European Union (EU) applied clear pressure on Italian policymakers. In early August 2011, the European Central Bank (ECB) announced a plan to purchase Italian government bonds in order to keep yields under control.3 Even though Italy did not sign any memorandum of understanding (like those signed by Greece, Ireland and Portugal), some form of conditionality was then introduced. On 5 August 2011, the ECB (in the person of the then president and his successor) sent a letter to the Italian government and set out a precise list of measures to promote growth and to balance the budget. Among the measures envisaged, the ECB asked for a new pension reform. These mounting tensions led Berlusconi to resign in November 2011. A new technocratic government headed by Mario Monti – the former EU Commissioner – was set up. The new government was supported by a vast parliamentary majority from the previous opposition and government parties. In a month, the new government approved a €30 billion austerity plan. The ‘Save-Italy’ decree was an attempt to control public spending and to rapidly reduce the national debt. The plan included a new pension reform. All this was consistent with the detailed measures proposed by the ECB in August and the European Commission in November 2011. Law Decree 201/11 (December 2011) – then translated into Law 214/11 – introduced major changes: a move towards a single retirement age for men and women (66 years and seven months by 2018) for employees in both the public and private sectors, and the self-employed, and a flexible retirement age, encouraging people to work longer. The periodic adjustment of the retirement age in line with increases in average life expectancy was planned for 2013, with

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a rise of three months, and further increases every three years up to 2019. Eventually, from 2012, it was decided to fully enforce the defined contribution pension scheme introduced in earlier reforms to replace the earnings-related defined benefit scheme. The seniority pension – allowing workers with at least 35 years of pension contributions to retire early – was eliminated. To bring pension spending under control for 2012/13, pensions above €1,400 were not indexed (De la Porte and Natali, 2014: 23). Reforms passed in the second half of 2011 were expected to impact on both public pension sustainability and thus on Italian fiscal consolidation. Accordingly, the reduction of public pension expenditure in terms of gross domestic product (GDP) was deemed to be 0.2 percentage points in 2012, 0.9 in 2015 and 1.4 in 2020, then gradually declining to 1.1 percentage points in 2025, 0.9 in 2030 and 0.5 in 2035 (Jessoula and Pavolini, 2013).

The politics of pensions An analysis of the political dynamics that have characterised the long reform process in Italy allows us to address the first and third paradoxes mentioned earlier: the huge number of reforms in a sticky institutional context; and the progressive decline of social partners in a context usually described as the realm of social concertation. To introduce the key features of Italian pension politics, we should focus on three main aspects: the external constraints imposed by the EU (to be addressed in Chapter Ten); the peculiar role of technocrats; and the complexity of the pro-reform consensus across political and social forces. The rise and fall of social concertation in the 1990s and 2000s With respect to the politics of concertation, a vast literature has examined the key dynamics of the interplay between political decisionmakers and social partner representatives (Natali and Rhodes, 2008; Jessoula, 2011). Trade unions and employers’ organisations have played a central role in policymaking on pensions, and reforms – especially in the 1990s – have come about through social concertation. Trade unions (and employers’ organisations) were also crucial in the 1990s. Their role, however, largely declined in the 2000s because of the increased complexity of the pension issue arena (with more players in it) and because they were divided internally (for the broader trends in social concertation and pension reform across Europe, see Sarfati and Ghellab, 2012).

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The Amato and especially the Dini reforms were the result of dialogue between political actors, trade unions and employers. The Dini reform in particular demonstrated the stable relationship between the government and unions, which embarked on an intensive phase of bargaining. During the months that separated the beginning of the pension reform negotiations from their conclusion in May, union experts and Ministry of Labour advisors jointly developed the parameters of change. The final project was essentially based on union proposals (Natali and Rhodes, 2008). The 21st century has revealed important new aspects of pension politics. While close dialogue between the government and trade unions in the 1990s was critical in shaping policy content, in 2004, the executive’s position largely prevailed. The Berlusconi government adopted what has been called a ‘stop–go’ strategy. After a first proposal in 2001, trade union and political opposition was addressed through dialogue between the political parties of the governing coalition and then with the social partners. The government proposed new measures, stepped back in the face of union opposition and engaged in several months of policy diplomacy before modifying the reform proposal by addressing some of the unions’ concerns (Natali and Rhodes, 2005). Even if a deal was not reached, final measures were adopted. In the case of the Welfare Protocol of 2007, the left-of-centre government developed an intense dialogue with the parliamentary majority, on the one hand, and the social partners, on the other. At the end of 2006, the government set up a roundtable with the social partners to agree new measures for the reform of welfare programmes: social protection, labour-market regulation and economic competitiveness.4 After months of negotiation, the agreement was signed in July 2007 and then transformed into a separate bill submitted to the Parliament, which was then approved. Again, the two negotiating tables – political and corporatist – worked in parallel, and, in the end, a deal was reached between the partners. As Jessoula (2011) argues, in the meantime, the political process became even more complex due to the development of supplementary pension funds. This was the result of reforms in the 1990s that promoted a multi-pillar pension design, with more room for pension funds due to the retrenchment of statutory schemes. From a political point of view, this led to a policy arena where banks, financial institutions and investors played their roles and lobbied for more favourable conditions for pension funds. It was precisely these new dynamics that helped to shape the introduction of autoenrolment between 2004 and 2007.

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The division in the trade union camp provides a further explanation for the decline of social concertation. In the period 2009–10, for example, the Berlusconi government passed two anti-crisis packages, which included an increase in the statutory pensionable age. In both cases, the left-wing trade union Confederazione Generale Italiana del Lavoro (CGIL) was against these proposals, while the more centrist Confederazione Italiana Sindacato dei Lavoratori (CISL) was in favour. As stressed by Jessoula (2012b), the legislative interventions during 2009–11 – as compared to the reforms adopted in the 1990s, which were characterised by pro-union measures (eg exemptions and long phasing-in periods) – aimed to reduce expenditure by tightening eligibility conditions for old age and early retirement in the short term and not just in the long term. This meant that the interests of older workers (and pensioners) were also affected, thus provoking union opposition. This opposition proved less effective than in the past, and the reforms were approved. If we look back at the politics of pension reform, we thus see both social dialogue and conflict. Legislative innovations, however, have followed similar guidelines. All of them aimed at improving the financial sustainability of public pensions. This has been the most important trait of the innovations finally introduced. However, this dimension has been combined with measures to modernise the Italian pension system and to improve its coverage of new and old social risks. The former consist of the protection of new career patterns, while the latter relate to the provision of minimum protection against poverty (through minimum pensions). The reforms under examination have involved efforts to deal with major redistributive distortions typical of the old system. Thus, domestic politics (the struggle between Left and Right) does not seem to have had an impact on the broad lines of innovation. The only exception is the Prodi reform of 2007, which was characterised by a projected net short-term increase in public spending. This came from a left-of-centre government that gave priority to improved pension coverage. All in all, the role of technocrats seems to have been decisive in setting a more coherent path of policy change. This was the case of the Dini government in 1995 and the Monti government in 2011, which established the overall design of the Italian public–private mix. The politics of multidimensionality The content of reforms (policy output) has been important to their adoption. In line with Bonoli and Natali (2012), we have here

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examples of the politics of multidimensionality, whereby deals have been struck on the basis of modernising compromises and dualisation. Such a consensus-seeking strategy, however, has had the effect of slowing down the effects and the capacity to effectively address the main policy challenges. While the dialogue with social partners and between political parties may explain why radical reforms were adopted, the long series of measures introduced to rebalance the Italian pension system is also proof of the capacity of decision-makers to arrange complex sets of measures in order to maximise consensus and reduce blame. Pension reforms are multidimensional. Policymakers may, in fact, focus on different topics and address different policy challenges at the same time. Some of these challenges concern the financial viability of pension programmes and the need to contain costs. At the same time, some (old and/or new) risks may need further protection and thus an increase in spending; this is the case of atypical jobs and, more frequently, interrupted careers. As a consequence, policymakers may offset measures to reduce costs with others improving old-age protection. Further challenges may stem from the comprehensive character of the protection provided and the logic of public provision (eg in terms of activation of the elderly). Policymakers have used all these dimensions to strike deals between political and social actors in which at least some of the preferences of each participant have been included (Bonoli and Natali, 2012). At the end of the 20th century, public retirement programmes had almost universal coverage, but some groups were still excluded. This was the case of the self-employed, who, in some European countries, had more limited protection against old-age risks. On the other hand, the emergence of new risks led to new gaps in public protection. This was true for atypical workers (with non-standard contracts), who enjoyed limited public protection until the 1990s. Both shortcomings in public protection allowed policymakers to put together attractive reform packages. The Dini reform, for instance, revised minimum pensions. In addition, new forms of redistribution have been introduced, such as contribution credits for periods of time spent out of the labour market for caring, training or education (Natali, 2011). Another strategy to minimise the opposition to reforms has been dualisation. The road taken – in Italy as in many other European countries – has been a reduction in the all-encompassing character of social protection arrangements. This is a path pursued in countries where the opposition against outright retrenchment has traditionally been very strong, and seems to be more politically feasible (Bonoli

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and Natali, 2012). In the field of pensions, dualisation has affected age groups and generations. The introduction of long phasing-in periods in the pension reform packages provided an opportunity to reduce electoral and political risks (see also Jacobs, 2008). A long transition period may mean that the main losers from a reform will be the current young generations, who are less likely to take action against cutbacks than the politically powerful pensioners and older cohorts of workers. This was particularly true for the Dini reform of 1995: cutbacks were introduced through a long phase-in period of 40 years (between 1995 and 2035). While pension reforms have been shaped by the need to contain public spending and reduce inequalities inherited from the past, new measures have contributed to dualisation, such as the uneven spread of pension funds and the limited revision of legislation to fully protect atypical workers. The next section summarises the key outcomes of the reform process. The distributional effects of the reforms, in particular, largely confirm the intergenerational split and the distribution of cutbacks across occupational groups. This is consistent with the hypothesis of the (apparently) persistent dualisation of old-age protection in Italy. If we, however, adopt a diachronic approach, we can see that the number of insiders has been reduced over time. This is the case in the gradual reduction of the transition period for full implementation of the new measures (eg the Notional Defined Contribution system (NDC) mechanism introduced by the Dini reform of 1995 had to be fully implemented by 2035; however, the last Monti reform was fully implemented from 2012). As a consequence, some of the age cohorts originally excluded from cutbacks have now been included in the target group. Furthermore, the same is true for the occupational split between private-sector workers and public-sector employees. The former were partly excluded from the first reforms of the 1990s, especially with regard to the defence of seniority benefits. Seniority pensions, however, became progressively less generous (as a result of the 1995 reforms) and were eventually scrapped in 2011. All this seems to prove that dualisation was a short-term strategy to encourage adoption of the initial cutbacks, but did not then resist further attempts to effect more homogeneous cutbacks.

A first assessment of the outcomes of the reforms In assessing the outcomes of the reforms, we come up against the second apparent paradox relating to the changes in the Italian pension system: despite all the measures adopted in the last decades, Italy is still

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a big spender on pensions, and financial pressures are still constraining policymakers. To summarise the financial consequences of the reforms, we first look at the projected evolution of pension spending. As we see in Figure 2.1, between 1995 and 2045, pension spending is expected to slightly increase: from 13% of GDP in 1995 to 15% in 2040. At first glance, this seems to show a limited impact of the reform process. Yet, if we look at the long-term evolution and the difference from the projections of the 1990s, the picture is very different. Before the reform process started, projections looked gloomy: pension spending was expected to grow to 23% of GDP in 2040. Since then, each reform passed since the early 1990s has been able to reduce the peak and lead to a more sustainable situation. In 2040, we expect pension spending to be about 8 percentage points lower than the peak projected in the 1990s. The apparent paradox can thus be explained by the stock of pension entitlements inherited from the past, largely unchanged, and the possibility to reduce the flows of future benefits. The latter will produce their effect in the longer term. As a consequence, analysts agree on the risks for the future adequacy of pension benefits. As stressed by Jessoula (2011), this is the case of workers with interrupted careers and low wages. Figure 2.1: Projections of public pension spending (% GDP), 1995–2045 After 1995 and 1997 reforms

After Law 214/11

After 2004–2009–2010 reforms

Before reforms

After 1992 reform 25 23 21 19 17 15 13 1995

2005

2015

2025

Source: Jessoula (2012b)

61

2032

2037

2040

2045

The Italian welfare state in a European perspective

A further dimension of the impact of reforms is the distribution of cost-containment measures across social and occupational groups. A vast literature has focused on this issue and provided full evidence of the distributional consequences of the measures introduced so far. On the one hand are reforms aimed at reducing inequalities between occupational groups. To increase system equity, public- and privatesector employees were obliged to contribute to the scheme in equal measure, while self-employed workers’ contributions were raised (Natali and Rhodes, 2008; Natali and Stamati, 2013a). On the other hand, new sources of inequities emerged between generations, genders and types of contract (standard versus non-standard). This is confirmed by data on the spread of supplementary pension schemes. Since the 1990s, supplementary schemes have increased their role, for example, in terms of members. In 2013, about 24% of the labour force was covered by second- and third-pillar pensions (more than 6,000,000 workers) (COVIP, 2014). The take-up of pension funds has been limited to a minority of workers and the situation has been very uneven. According to figures published by the Italian public agency for supplementary pension schemes (COVIP) in 2014, there are key differences in take-up between occupational categories (public and private sector; the selfemployed and employees), or depending on company size, gender or region. Public-sector employees are not covered by supplementary funds (about 160,000 employees are covered), while about 4.3 million private-sector workers are. About 1.6  million self-employed are covered, while about 4.5 million dependent workers are pension fund members, with the former mainly being covered by individual plans. Workers in small and medium enterprises are also less likely to be covered than those in large enterprises, while Southern Italian workers and women are much less frequently covered than male and Northern Italian workers (Natali and Stamati, 2013a).

The Italian case in a European perspective Compared with other European countries, Italy shows much similarity in policy trends, both in terms of output and outcomes. With regard to the former, if we look at the trends between the early 2000s and 2011/12, we observe some kind of ‘contingent convergence’ (Ebbinghaus, 2012). In contemporary literature, pension systems are usually grouped into two clusters: social insurance and multi-pillar clusters. Both have experienced growing strains on public schemes, with the resulting intervention to contain total spending and benefit

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Two decades of pension reforms in Italy Table 2.1: Supplementary pension funds in Italy, 2009–13

Members Closed funds Open funds Pre-existent funds Total pension funds Individual plans (PIPs) Total Assets Closed funds Open funds Pre-existent funds Total pension funds Individual plans (PIPs) Total

1999

2005

2009

2013

701,127 136,305 654,625 1,492,057 – 1,492,057

1,155,168 407,022 665,561 2,227,751 811,199 3,038,950

2,040,150 820,385 673,079 3,507,361 1,547,923 5,055,284

1,950,552 984,584 654,627 3,589,763 2,614,000 6,203,763

7,615 2,954 32,441 43,010 3,338 46,348

18,757 6,269 38,943 63,991 8,966 72,957

34,504 11,990 50,376 96,930 19,513 116,443

– – – – – –

Source: COVIP (2014)

levels. This has been done, for instance, through: the increase of the statutory retirement age; a more limited indexation of benefits; or the introduction of coefficients to link entitlements to life expectancy. Italy, as well as many other European countries, has adopted reforms involving cost-containment measures, and the gradual formation of a multi-pillar system. This has been confirmed by recent developments in the shadow of the Great Recession. European countries have experienced a two-step strategy in response to the crisis. In the first years of the crisis (2009–10), they introduced anti-cyclical measures: ad hoc measures and/or more long-lasting policy decisions aimed at reducing the negative social consequences of the crisis while improving the adequacy of pension benefits. The second part of the strategy (from 2010/11 onwards) has involved austerity measures to improve the financial viability of pensions, such as revised indexation, an increase in the retirement age or a stricter link between contributions and benefits. Recent cutbacks have been consistent with the longer-term curtailments introduced over the last few decades (Natali and Stamati, 2013b). While European countries have followed similar approaches (and used the same toolkit) to tackle the main challenges to their pension systems, they have also differed in the packages that they have implemented since the crisis. A first source of differences has been the pension model inherited from the past. Multi-pillar systems have seen a more explicit attempt to address problems in private pension

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funds. In the case of multi-pillar forerunners, a key issue has been the regulation of supplementary pension funds. Social insurance countries have concentrated more on the first pillar. In the case of Italy, a country very much affected by recession, pension reforms have been included in packages to stabilise the public budget deficit. The same is true for the outcome of reforms. Recent trends in both spending and pension benefits are summarised in Table 2.2. Data show the expected steep long-term downwards trend in both spending and benefits. This is the result of expected trends on the labour market and of the cost-containment measures introduced in the last decades. Italy is projected to have stable pension spending, with a slight increase at the end of the period under scrutiny. This confirms the national projections proposed earlier. Such a slight increase is not the consequence of an expansion of pension rights. Rather, it is the result of demographic trends: the increase in life expectancy is projected to contribute to the ongoing increase in the number of older people (European Commission, 2012). This will probably increase total spending despite cost containment. The increase in the statutory retirement age, the stricter link between contributions and benefits, and the introduction of automatic measures to adjust coefficients to life expectancy are all leading to a reduction in average protection and to the individualisation of old-age risks. While the state provided guarantees against most of these risks in the pre-reform pension systems, since the last wave Table 2.2: Projections on pension spending and benefits levels (Net Theoretical Replacement Rates)(2010–50)

Countries France Germany Italy The Netherlands Spain Poland Sweden UK EU

Public pension spending (% GDP) 2010 2050 14.56 15.16 10.79 12.97 15.30 15.66 6.5 10.43 10.11 13.95 11.80 10.04 9.60 9.88 7.67 8.18 11.34 12.80

Net Theoretical Replacement Ratesa 2010–50 –18.73 4.57 –20.40 –4.02 –8.06 –32.17 –7.30 –2.06 –

Note: a Ratio between the first net pension and the last net revenue before retirement for a 65-year-old worker with 40 years of contributions Source: European Commission and SPC (2012)

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of reforms, many risks are to be addressed by individuals. This is particularly the case for the contribution-based systems: those that have seen the introduction of the NDC logic in the statutory pillar and the increase of supplementary pension funds. It is true for Italy, as well as for Poland and, to some extent, Sweden. In these systems, even the first pillar does not provide fixed protection, which largely depends on economic and demographic indicators. The latter shape the replacement rate in order to ensure the financial sustainability of the system. The same trend is observable for supplementary pension funds: in the UK, for instance, there has been a shift from definedbenefit schemes to defined-contribution schemes. In the latter, there is no redistribution of resources. As stressed earlier, there has been some convergence in the evolution of the public–private mix. Supplementary pensions are playing an increased role in Western Europe. Here, again, Italy is totally consistent with broad European trends (see Table 2.3). As stressed earlier, a trend of ‘contingent convergence’ means that different countries are following similar reform trajectories, but national specificities remain. With respect to an increased role for the second and especially third pillars, for instance, continental and Southern Europe have shown how long it can take to redesign pension systems. While all the countries have seen a growth in the scope of pension funds, the latter are still of minor importance (with low coverage rates compared to the more traditional multi-pillar systems).

Table 2.3: The role of the supplementary pension funds (coverage rate)

Total coverage Occupational funds Individual funds

Germany (2008) 51.6 24.9 40.5

Italya (2010) 21.3 11.8 9.5

The Netherlands (2010) 93.4 92.9 30.4

Spain (2006) 22.7 4.1 19.1

UK (2009) 53.0 38.7 12.9

Note: aAs stressed earlier, the last available figure for Italy shows a further increase of the coverage up to 25% of the workforce Source: CEC and SPC (2012)

Conclusions The Italian pension system has undergone an impressive set of reforms over the last two decades. The summary of these reforms has shown three apparent paradoxes that are part of what we describe as a series

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of reflections, as in a mirror. The first relates to the number of reforms passed by policymakers despite the well-documented ‘stickiness’ of pensions. As shown earlier, this paradox has been explained in terms of the ability of decision-makers to strike complex deals between political and social forces. Social concertation was of particular importance in the 1990s, while, later on, domestic party politics has gained momentum. Compromises have been struck, involving different aspects of the reform: cost-containment has been gained in exchange for some limited increase of protection for specific groups, and by differentiated treatment of the working population. The latter has led to an intergenerational split, with younger cohorts more affected by the retrenchment of pension rights. At the same time, reforms have been possible because of two further elements: the external constraints applied by the EU; and the active role of technocrats, who have shaped new policy measures. The second paradox concerns the impression we might gain of large-scale reforms able to address both excessive costs and inequalities, and, in parallel, persistent high-level public spending and the segmentation of pension rights across social and occupational groups. Evidence provided earlier has shown that the legislative measures introduced so far have improved the system’s financial viability. This is confirmed by long-term projections, and the comparison between actual spending and what was expected in the 1980s (before the reforms). The apparent stability of public spending is the result of a number of factors: population ageing (which reduces the impact of benefit retrenchment); and the long phase-in periods of the measures agreed on. The average reduction in pensions is expected to reach its apex in the next decades and to put the system’s adequacy at risk. As for the distributional effects, recent measures have addressed some of the more traditional inequities of the statutory system (between public- and private-sector workers, as well as between dependent workers and the self-employed). Yet, new sources of ‘dualisation’ have emerged from the transformation of the labour market (with the increased role of non-standard contracts) and the spread of supplementary pension funds. This seems to confirm that dualisation has been a key strategy to reduce the opposition to policy changes, concentrating the burden of the new measures on some groups (younger cohorts). We have seen, however, that a more diachronic approach shows a progressive reduction in the group of insiders, for example, the transition period to full implementation of the new system (introduced in 1995) has been reduced from 40 to less than 20 years. Dualisation, clearly, can be a short-term effect

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Two decades of pension reforms in Italy

of reforms, leading on to more widespread cost containment in the medium and long term. The third paradox concerns the politics of pensions. Many have stressed that social partners (especially trade unions) have been decisive in supporting reforms and allowing policy change. Evidence shows, however, that they have largely lost their key role. This has been due to a number of factors: first, the pension arena has become more and more crowded (with the resurgence of political parties in the 2000s, and the emergence of new actors such as the financial sector, interested in the development of pension funds). The second factor has been increased division in the trade union camp, as demonstrated by the reform process in the last few years. All this, combined with greater pressure from the EU (in the context of the Great Recession), has led to a weakened role for trade unions. Political parties, on the other hand, gained a more central role in the 2000s, leading to a more varied set of measures: further retrenchment under the right-of-centre government in 2004 and increased spending after the 2007 reform by the left-of-centre government. The overall reform path, however, has remained consistent to some extent. This has been the effect of the key role of technocrats, who, in the more problematic phases, have been able to pass unpopular measures. Two decades of reforms have thus made considerable changes to pension policy and its political dynamics. If we use the term ‘recalibration’, as proposed by the editors in the introductory chapter, we see partial achievements. With regard to functional recalibration, that is, more balanced spending on old-age protection and the other social risks, we see a limited revision of the old welfare system. Pension spending is still the major part of welfare spending and has decreased only marginally (from 61% in 1995 to 57% in 2009). As far as institutional recalibration is concerned – the new mix between public and non-public schemes consistent with the shift towards a multi-pillar pension model – the development of supplementary pensions has been limited and uneven, with the female labour force, the younger population, public-sector employees and workers in small and medium enterprises underrepresented in pension fund membership. There has been some distributive recalibration. Some of the more traditional inequalities in the systems (favouring the selfemployed and public-sector employees) have been eliminated. New sources of inequalities, however, have emerged between standard and non-standard employment relations. At the same time, gender gaps in pension protection remain. As a consequence, the road to adjustment and recalibration is still long and winding.

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Notes While a ‘defined benefit’ pension is primarily related to the employee’s salary on retirement, a ‘defined contribution’ pension is related to contributions paid. Thus, this shift produced the strengthening of the actuarial principle.

1

Seniority pensions are benefits paid to workers on the basis of a certain period of contributions, regardless of the age of retirement. 2

The purchase of member states’ debt started, in fact, in 2010. On 14 May, the ECB announced that it would buy unlimited amounts of Eurozone debt under the newly created Securities Markets Programme (SMP). 3

In 1995, workers also voted in a company-based referendum to approve the protocol: about 82% of voters agreed to the pact signed by the government and social partners. 4

References Boeri, T. and Brugiavini, A. (2007) ‘Non è l’ultima sigaretta, forse neanche la penultima’, Available at: www.lavoce.info (accessed 23 July 2007). Bonoli, G. and Natali, D. (2012) ‘Multidimensional transformations in the early 21st century welfare states’, in G. Bonoli and D. Natali (eds) The politics of the new welfare state, Oxford: Oxford University Press, pp 287–306. COVIP (Commissione di Vigilanza sui Fondi Pensione) (2014) Annual report 2013, Rome: Covip. De la Porte, C. and Natali, D. (2014) ‘Altered Europeanisation of pension reform in the context of the great recession: Denmark and Italy compared’, West European Politics, vol 4, no 37, pp. 732–49. Ebbinghaus, B. (2012) ‘Europe’s transformations towards a renewed pension system’, in G. Bonoli and D. Natali (eds) The politics of the new welfare state, Oxford: OUP, pp 182–205. European Commission (2012) ‘White Paper: an agenda for adequate, safe and sustainable pensions’, Brussels, COM(2012), 55 final. European Commission and SPC (Social Protection Committee) (2012) ‘Pension adequacy report 2012’, joint report prepared by the European Commission and the Social Protection Committee. Available at: http://ec.europa.eu/social/main.jsp?catId=752&langId=en Ferrera, M. and Gualmini, E. (2004) Rescued by Europe? Social and labour market reforms in Italy from Maastricht to Berlusconi, Amsterdam: Amsterdam University Press. Fornero, E. (2008) ‘Stop and go in the Italian pension reform process’, European Papers on the New Welfare, no 09, pp 1–2.

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Jacobs, A.M. (2008) ‘The politics of when: redistribution, investment and policy making for the long term’, British Journal of Political Science, 38(4): 193–220. Jessoula, M. (2009) La politica pensionistica, Bologna: Il Mulino. Jessoula, M. (2011) ‘Italy: from Bismarckian pensions to multipillarization under adverse conditions’, in B. Ebbinghaus (ed.) The varieties of pension governance: Pension privatization in Europe, Oxford: Oxford University Press. Jessoula, M. (2012a) ‘Like in a Skinner box: external constraints and the reform of retirement eligibility rules in Italy’, Working PaperLPF (ISSN 2036-1246), 4/2012. Jessoula, M. (2012b) ‘A risky combination in Italy: selective flexibility and defined contributions pensions’, in K. Hinrichs and M. Jessoula (eds) Labour market flexibility and pension reforms, Basingstoke: PalgraveMacMillan, pp 62–92. Jessoula, M. and Pavolini, E. (2013) ‘Italy annual national report 2012: pensions, health and long-term care’, annual ASISP report for DG Employment, Social Affairs and Equal Opportunities. Myles, J. and Pierson, P. (2001) ‘The comparative political economy of pension reform’, in P. Pierson (ed) The new politics of the welfare state, Oxford: Oxford University Press, pp 305–33. Natali, D. (2011) ‘Le Politiche Pensionistiche’, in U. Ascoli (ed) Il welfare in Italia, Bologna: Il Mulino, pp 57–78. Natali D. and Rhodes, M. (2005) ‘The Berlusconi pension reform and the double cleavage of distributive politics in Italy’, in C. Guarnieri and J.L. Newell (eds) Italian politics. Quo vadis?, New York-Oxford: Berghahn Books, pp 172–89. Natali, D. and Rhodes, M. (2008) ‘The new politics of pension reforms in continental Europe’, in C. Arza and M. Kohli (eds) The political economy of pensions: politics, policy models and outcomes in Europe, London: Routledge, pp 25–46. Natali, D. and Stamati, F. (2013a) ‘Le pensioni categoriali in Italia: legislazione emessa in opera del nuovo sistema multi pilastro’, in E. Pavolini, U. Ascoli and M.L. Mirabile (eds) Tempi Moderni. Il welfare nelle aziende in Italia, Bologna: Il Mulino, pp 83–114. Natali, D. and Stamati, F. (2013b) Reforming pensions in Europe: a comparative country analysis 8/2013, Brussels: ETUI Working Paper Series, pp 1–50. Pierson, P. (2001) ‘Coping with permanent austerity: welfare state restructuring in affluent democracies’, in P. Pierson (ed) The new politics of the welfare state, Oxford: Oxford University Press, pp 410–56.

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Sarfati, H. and Ghellab, Y. (2012) ‘The political economy of pension reforms in times of global crisis: state unilateralism or social dialogue?’, ILO DIALOGUE Working Paper Series, no 37.

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THREE

Employment policy: segmentation, deregulation and reforms in the Italian labour market Stefano Sacchi and Patrik Vesan

Introduction The Italian labour market has undergone dramatic changes over the last 20  years. It has been strongly liberalised since the mid-1990s through a series of reforms, initially aimed at fixed-term employment relationships only but, more recently, also targeting open-ended contracts. The share of employees with fixed-term contracts has tripled since the beginning of the 1990s, and increased fivefold in the younger age groups. In 2012, more than 80% of new labour contracts established in Italy were fixed-term contracts, and 40% of them lasted less than six months (ISFOL, 2013a), with potentially dreadful effects on productivity. At the same time, income support has also been reformed, with the upgrading of existing schemes and, lately, the introduction of new ones. Contrary to what has happened in most European countries, therefore, the level of income protection for those who lose their job has been increased (admittedly from a low starting level). Similarly to trends occurring across all advanced capitalist countries, an emphasis on benefit recipient activation and the establishment of ensuing work conditionality requirements have been introduced. However, the upgrading of income support has not maintained the pace of (both regulatory and structural) changes in the labour market, bringing about a condition of ‘flex-insecurity’ (Berton et  al, 2012). As for the activation measures, their implementation has been soft and incomplete, in part, as a consequence of the ineffectiveness of Public Employment Services (PES), both in the control of beneficiaries and in the provision of services to the unemployed. Moreover, investment in active labour-market measures has been mostly directed to hiring subsidies for employers rather than to vocational training and employment services, therefore failing to

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address structural problems. The area of active labour-market policies (ALMPs) is, indeed, the field of labour policy where the distance between Italy and the other large European countries is the greatest, in a context characterised by huge regional variability in the availability of both institutional capacity and labour-market opportunities. This chapter is structured as follows: the next section provides the reader with a basic depiction of the Italian labour market, its evolution during the crisis and its main segmentation dimensions. The third section reviews the main labour and income support reforms since the 1990s, identifying three cycles of reform, roughly coinciding with the 1990s, the 2000s and the period since the beginning of the economic crisis in 2008. It then elaborates on the first two cycles of reform, while the fourth section focuses on the reforms introduced during the crisis. The fifth section compares the Italian reform path to those of the two other large West European countries that have introduced substantial labour reforms over the past 20 years, Germany and Spain. The sixth section reviews the empirical evidence as to the effects of the reforms on employment, individual life chances and systemic variables such as overall productivity. The final section concludes.

The Italian labour market: trends and divides Employment in Italy grew for more than 10 years, starting in the mid-1990s until the onset of the economic crisis in 2008. Between 1995 and 2008, total employment grew by 1.2% a year on average, over 3 million units in absolute terms (from 19.7 million to 23 million in the age class 15–64). In the same period, the real gross domestic product (GDP) growth rate equalled 1.3% per year on average. The employment rate in the 15–64 age class grew about eight percentage points, from 51% to 59%. The male employment rate rose from 66.5% to 70%, and the female rate from 35% to 47%.1 The impact on employment of the economic crisis that started in 2008 has been momentous, resulting in an overall loss of 1 million jobs between 2008 and 2013. Unemployment rate figures reverted to those of the mid-1990s and actually overtook them, reaching an overall unemployment rate of 12.4% and a youth unemployment rate of 40% in 2013. Between 2008 and 2013, Italian GDP reverted to that of 2000, with a negative real growth rate of 1.5% per year on average over the period.2 The Italian labour market features a comparatively high level of self-employment and is notoriously highly segmented, as can be seen from Tables 3.1 to 3.5. A first dimension of segmentation pertains to

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gender: with a backdrop of lower employment rates than the 15 pre1998 member states of the European Union (EU-15) average, female employment rates are almost 20 percentage points lower than male ones, as compared to a 10-percentage point difference in the EU-15 (see Table 3.1). Female unemployment rates are also higher than those of males. As elsewhere in Europe, the share of part-time employment is higher among women, but despite the incidence of part-time employment being lower than in the EU-15 average (overall and across both genders), Italy features an extremely high share of involuntary parttime employment: roughly twice as much the EU-15 average, both for men and women (see Table 3.2). This means that almost one in five employed women is actually underemployed – with respect to her preferences – as compared to one in 10 in the EU-15.

Table 3.1: Employment and unemployment, 2013 (%) Italy 42.0 22.3 55.6 64.8 46.5 12.4 11.7 13.2 40.0

Share of females in total employment Share of self-employment Employment rate – total Employment rate – males Employment rate – females Unemployment rate – total Unemployment rate – males Unemployment rate – females Youth unemployment rate

EU-15 46.0 12.7 65.1 70.2 59.9 11.1 11.2 11.1 22.7

Note: Age class 15–64 unless otherwise stated Source: Eurostat, Labour Force Statistics database

Table 3.2: Part-time work (15–64) as a share of total employment, 2013 (%)

Share of part-time Share of part-time – males Share of part-time – females Share of involuntary part-time (over total part-time employment) Share of involuntary part-time (over total part-time employment) – males Share of involuntary part-time (over total part-time employment) – females Source: Eurostat, Labour Force Statistics database

73

Italy 17.7 7.4 31.8 63.0

EU-15 22.8 9.8 38.8 28.8

76.7

39.5

58.6

25.8

The Italian welfare state in a European perspective

The second dimension of segmentation is, notoriously, the territorial one: the North accounts for more than half of total employment, and the employment rate in the North is more than 20 percentage points higher than in the South (see Table 3.3). The gap is even bigger for women, with a 26-percentage point difference. As a matter of fact, in the South, only one out of three women is employed. Unemployment rates in the South are two-and-a-half times as high as in the North. The figures for the Centre typically hover between those pertaining to the North and the Italian averages. The differences between North and South are also reflected in the higher incidence of underground employment in the latter (by this, we mean employment that does not abide by tax and social security regulations). Measured in terms of full-time equivalents, underground employment was 12% of total employment in 2010 at the national level, but less than 9% in the North, about 10% in the Centre and 20% in the South (data not reported in tables) (Istat, 2011). Large differences across sectors exist, with the share of underground employment in agriculture being as high as 25% in every territorial area, and lower than 2% in manufacturing in the North (while it is 16% in the South). However, sectoral specialisation of Italian regions, with an industrial North and a more rural South (see Table 3.4), does not fully account for territorial differences as the share of underground employment in construction is about 6% in the North but three times as high in the South, and that in services is about 10% in the North and twice as much in the South. A peculiar feature of the Italian labour market is reflected in Table 3.5, which compares employment rates in Italy of Italian nationals to Table 3.3: Territorial differences in employment and unemployment, 2013 (%) North 52.4 64.2 71.8 56.6 8.6 7.8 9.6 31.2 30.7 31.9

Area’s share of Italy’s total employment Employment rate – total Employment rate – males Employment rate – females Unemployment rate – total Unemployment rate – males Unemployment rate – females Youth unemployment rate – total Youth unemployment rate – males Youth unemployment rate – females Note: Age class 15–64 unless otherwise stated Source: Istat database

74

Centre 21.1 59.9 68.1 52.0 11.0 10.0 12.3 39.8 36.6 43.8

South 26.4 42.0 53.7 30.6 19.9 18.9 21.6 51.6 50.3 53.7

Italy 100 55.6 64.8 46.5 12.4 11.7 13.2 40.0 39.0 41.4

Employment policy Table 3.4: Employment by sector and geographical breakdown, 2013 (%) North Sectoral share of area’s total employment Industry (except construction) 25.3 Construction 6.9 Services 65.5 Agriculture 2.3 Column total 100

Centre

South

Italy

16.6 7.3 73.8 2.3 100

13.3 7.4 72.6 6.7 100

20.3 7.1 69.1 3.4 100

Source: Istat database

Table 3.5: Employment rates (15–64) of nationals, other EU citizens and thirdcountry nationals, 2013 (%)

Employment rate – national citizens Employment rate – EU-27 citizens (excluding Italians) Employment rate – third-country national Employment rate – national citizens, males Employment rate – EU-27 citizens (excluding Italians), males Employment rate – third-country national, males Employment rate – national citizens, females Employment rate – EU-27 citizens (excluding Italians), females Employment rate – third-country national, females

Italy 55.3 63.0 55.9 64.5 71.2 66.7 46.5 57.2 45.2

EU-15 65.8 68.0 52.5 70.6 74.8 61.7 59.9 61.6 43.8

Source: Eurostat, Labour Force Statistics database

those of nationals of the other 27 member states of the EU (EU-27) and those of third-country nationals. As a means of reference, the same comparison is carried out for the average EU-15 country. While in the average EU-15 country, the employment rate of third-country nationals hovers well below that of nationals (some 13 percentage points overall, and 16 percentage points for women), in Italy, the two figures are close, and actually two percentage points higher for thirdcountry males than for Italian males. Of course, this reflects interaction between employment opportunities/choices and immigration/ legalisation policies, but the overall pattern is also testified to by the difference in employment rates between non-Italian EU nationals and Italians, which is much higher than that in the average EU-15 country. Finally, a distinctive fault line in the Italian labour market divides the old and the young (see also Chapter One). This can be seen by looking at youth unemployment figures (see Tables 3.1 and 3.3), with territorial differences again, however, that show how even in the North, youth unemployment rates are almost four times as high

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The Italian welfare state in a European perspective

as total unemployment rates, as compared to twice as high in the EU-15 average. The divide between old and young workers is also reflected in patterns of fixed-term employment, as shown in Table 3.6. Although the share of fixed-term employment in dependent employment in Italy is close to the EU-15 average, it is more than 10 percentage points higher among younger workers. As a matter of fact, a closer look at these figures shows the tight coupling between labour-market reforms over the past 20 years and the dynamics of the Italian labour market. As we will see in the next section, since 1997, Italy has undergone a sequence of reforms that progressively and considerably deregulated fixed-term work (including both direct-hire fixed-term and temporary agency work). The Organisation for Economic Co-operation and Development’s (OECD’s) employment protection legislation index for fixed-term workers, which measures the extent of legal regulation of such work arrangements within a 0–6 point range, fell from 4.88 in the early 1990s to 2.0 in 2013 (by far the highest reduction in the OECD in the period), and a reform approved in May 2014 is bound to reduce it further. As a consequence of deregulation, fixed-term employment in Italy has almost tripled over the past 20 years: in 1990, its share of total dependent employment was only about 5%, half of the French, German and European levels (10.5% in all three cases); however, it increased to about 14% in 2012, while, in the same period, it grew to 15% in France and 14% in Germany and the European members of the OECD taken as a whole.3 Meanwhile, the share of employees with fixed-term contracts in the 15–24 age bracket increased fivefold, from 11% in 1990 to 53% in 2012 (and from 38% to 55.5% in France, from 34% to 54% in Germany, and from 26% to 39% in the European members of the OECD taken as a whole).4 These figures testify to a considerable divergence between stock and flow quantities in the Italian labour market: while still more than eight Table 3.6: Fixed-term employment 2013 (%) Share of fixed-term employment among: Dependent employment Dependent employment – males Dependent employment – females Dependent employment – 15–24 Dependent employment – 15–24, males Dependent employment – 15–24, females Note: Age class 15–64 unless otherwise stated Source: Eurostat, Labour Force Statistics database

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Italy 13.2 12.4 14.2 52.5 51.9 53.5

EU-15 13.8 13.2 14.5 43.2 43.6 42.8

Employment policy

employees out of 10 hold an open-ended contract, less than one new contract in five is open-ended (ISFOL, 2013a), and of the latter, six out of 10 go to workers aged over 34, and only one in 10 goes to workers aged less than 25 (MLPS, 2014). This means that only 2% of new contracts are open-ended and involve a young worker. Also, 40% of all fixed-term contracts last for less than six months, and 50% for less than a year (ISFOL, 2013a). Transitions from fixed-term to open-ended contracts are not easy: while, to that aim, holding a fixed-term contract is better that being unemployed (there thus being evidence of a portof-entry effect of fixed-term contracts into open-ended employment), the most likely outcome after a separation is to find the same type of contract as before, thereby highlighting a great deal of persistence (Berton et al, 2012). This is most likely the effect of reduced investment in human capital for (and by) fixed-term workers. How this affects Italy’s productivity will be analysed in the fifth section.

Main policy changes since the 1990s We can distinguish three major reform cycles that have characterised Italian labour-market policy since the 1990s (see Table 3.7). The first and the second cycles correspond roughly to the 1990s and the 2000s, until the onset of the Great Recession. The first occurred largely under crisis management, widely supported and technocratic governments after the Maastricht crisis and, in the second half of the 1990s, centre-left governments. The second mainly occurred under centre-right governments that ruled for most of the 2000s (but a centreleft government during 2006–08 introduced incremental changes in unemployment benefits). Such governments differed markedly in their political orientations, societal support and ultimate aims and strategies under differing international political-economy conditions (Vesan, 2013). Governments in the 1990s were geared towards rescue and then modernisation of Italy via exploitation of the external constraint stemming from membership of the EU; governments in the 2000s could benefit from relaxation of such external constraints, low interest rates in the newly established Eurozone and growing employment despite sluggish economic growth. Regardless of such major differences, and of differing strategies for summoning consensus and legitimising reforms, their labour policy action was strikingly similar, aiming at opening employment opportunities through labour-market deregulation. In particular, although the Berlusconi governments of the 2000s repeatedly attempted (and failed) to make dismissal of open-ended workers easier, both reform cycles are marked by deregulation at the margin, for fixed-

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Notes: C-L = centre-left; C-R = centre-right; ASPI = Assicurazione sociale per l’impiego

Main reforms Social pacts signed by the Amato (1992, widespread support), Ciampi (1993, widespread support), Dini (1995, technocratic), Prodi (1996, C-L) and D’Alema (1998, C-L) governments Legalisation of temporary agency work and promotion of part-time work and apprenticeships (1997, ‘Treu law’ C-L Prodi government) Implementation of EU directive on part-time work (2000, C-L Amato government) End of public monopoly on employment services (1997, C-L Prodi government) Decentralisation of public employment services – PES (1997, C-L Prodi government) Introduction of conditionality for jobseekers (2000, C-L Amato government) Increase in the replacement rate of unemployment benefits (from 15% to 40%) over the period 2nd cycle (early Liberalisation of fixed-term employment contract (2001, C-R Berlusconi government) 2000s–2008) Law 30/2003 (‘Biagi law’): promotion of several forms of fixed-term contracts (2003, C-R Berlusconi government) Introduction of a ‘service pact’ between the PES and jobseekers (2007, C-L Prodi government) Further increase in the replacement rate (from 40% to 60%) and in the duration of unemployment benefits (from 6–9 months to 8–12 months) (2007, C-L Prodi government) 3rd cycle (2008–2012) Extension of short-time work schemes and development of ‘emergency social shock absorbers’ to face the crisis (2009, C-R Berlusconi government) Introduction of ‘proximity agreements’ at the firm or local level, with the capacity to derogate minimal statutory standards written in labour law (2011, C-R Berlusconi government) Revision of discipline of individual dismissal of open-ended workers (2012, ‘Fornero law’, non-partisan Monti government) Reform of the unemployment benefit system with the introduction of ASPI and mni-ASPI (2012, ‘Fornero law’, Monti government, widespread support) Further deregulation of fixed-term contracts (2013, Letta government, widespread support) Further deregulation of fixed-term contracts (2013, Letta government, widespread support) Blueprint for reform of unemployment benefits, short-time work, non-standard contracts and governance of PES (2013, Letta government, widespread support)

Reform cycles 1st cycle (ca 1990s)

Table 3.7: Italian labour-market reforms since the 1990s

The Italian welfare state in a European perspective

Employment policy

term contracts only. At the same time, between the early 1990s and the onset of the crisis, Italy witnessed a moderate increase in income protection offered through unemployment benefits, without however reforming their basic structure, nor calling into question the relative predominance of schemes geared towards core workers, such as – in the Italian experience – short-time work schemes.5 The result has been far more flexibility, coupled with only slightly improved security, which is generally unavailable for those targeted by flexibility, such as younger cohorts of workers. These changes have been paralleled by a novel emphasis on benefit conditionality, on the one hand, and employability and employment services, on the other. The latter, however, has taken place without any serious investment in ALMP or the construction of a modern system of PES, and has rather operated through the liberalisation of employment services. The third cycle of reforms is inaugurated by the economic crisis that hit Italy in the second half of 2008. In a first phase, the ruling Berlusconi government attempted to face the employment consequences of the crisis and the gaps in unemployment protection in a largely incremental fashion, through the extensive use of shorttime work. The second phase started when the crisis escalated and turned into a sovereign debt crisis. Increasing pressures from external sources and the EU in particular prompted attempts and commitments to reform dismissal rules for open-ended workers while providing better economic protection for the unemployed (Sacchi, 2015; see also Chapter Ten). This was actually carried out by the technocratic Monti government. This stage is still ongoing, with the government formed in 2014 by Renzi introducing yet another piece of liberalisation of fixed-term contracts, but, at the same time, planning a reduction of existing labour contracts coupled with further easing of the Employment Protection Legislation index (EPL) for new open-ended contracts and an overall reform of unemployment benefits, shorttime work and the governance of PES and ALMP (these reforms are actually being implemented at the time this volume goes into press). The rest of this section focuses on the first two cycles of reform, spanning the 1990s and 2000s until the beginning of the economic crisis. The next section focuses on Italy’s labour-market policy since the beginning of the Great Recession. Labour-market reforms before the crisis The first cycle began in the middle of a deep economic and political crisis and in reaction to rising unemployment rates that exceeded

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The Italian welfare state in a European perspective

12% in 1997; youth unemployment rates, in particular, reached 35%. In this period, governments made large use of short-term work schemes and mobility allowance, a scheme introduced in 1991 in order to protect the open-ended employees of larger firms in case of collective dismissals. These schemes provided beneficiaries with high replacement rates, although with low benefit ceilings. However, they only catered to some categories of workers, mainly standard workers in medium and large firms.6 The other employees could, at best, be eligible for the unemployment benefits, whose replacement rate gradually increased from 15% in 1991 to 40% in 2000 (Jessoula and Vesan, 2009). Unemployment benefit coverage was, however, very low (in the region of 30% of the unemployed) due to strict eligibility requirements, a short duration and an incomplete take-up rate. During the 1990s, several tripartite agreements signed between the governments and the social partners facilitated the adoption of innovative measures aimed at supporting economic and labour-market recovery (Regini and Colombo, 2011). As for labour policy, in 1997, a sweeping reform introduced three important novelties: the legalisation of temporary agency work; the abolition of the public monopoly on job services; and the devolution of the competences on ALMP to the regions (and the provinces). This also entailed a change in the mission of PES, from administrative registration of the unemployed to the provision of specific assistance services to jobseekers, as well as employers. In addition, local job centres were called to implement conditionality policies, that is, policies aimed at making the receipt of unemployment benefits conditional on the respect of certain rules of good behaviour that, while long present in a mild form in the Italian social security legislation, had never been taken seriously (Vesan, 2012). Moreover, apprenticeship and part-time arrangements were made easier, and the implementation of the European directive on part-time work in 2000 liberalised this further. The second reform cycle began in 2001, with the appointment of a new centre-right government led by Silvio Berlusconi. The policy measures adopted in this period aimed at further labourmarket liberalisation. In 2001, the adoption of the European directive on fixed-term work greatly deregulated the use of this contract. In 2003, a reform law reviewed and extended the available range of non-standard employment contracts in the private sector at the same time as further liberalising the market for employment services. 7 Moreover, some attempts were also made at reducing employment protection for open-ended workers in larger companies, who were covered by enhanced protection against dismissal (see the next

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section). Overall, these attempts failed until the outburst of the sovereign debt crisis in the summer of 2011 induced policy change in this regard. As that which occurred in the 1990s, the liberalisation at the margins of the Italian labour market that occurred in the 2000s was not matched by any structural reforms of the income support system, despite much repeating of the mantra of flexicurity. As a matter of fact, both generosity and duration of standard unemployment benefits were increased in an incremental fashion under the brief rule of the centreleft government in the period 2006–08 (see Table 3.7). Their strict eligibility requirements, however, went untouched, thus leaving large portions of formally eligible workers with no actual access to benefits in case of job loss, in particular, among non-standard workers due to their fragmented careers and low wages (Berton et al, 2012). It can be estimated that if they lost their job, about 5% of open-ended workers, 25% of direct-hire fixed-term workers and 45% of temporary agency workers would not qualify for unemployment benefits.8 Moreover, despite some timid attempts at introducing one at the end of the 1990s (Sacchi and Bastagli, 2005), Italy had, and still has, no guaranteed minimum income scheme to cater for those that do not qualify for unemployment benefits, or draw benefits to full duration without finding a job, or are not formally eligible for unemployment benefits in the first place, such as the self-employed. At the onset of the economic crisis, in 2008, this left about 1.6 million employees without access to income support if they lost their job, on top of about 5 million self-employed. Just as with unemployment benefits, the other missing element of flexicurity, that is, ALMP, in particular, services for the unemployed, has been neglected despite many declarations, and has manifested itself mainly in a new emphasis on benefit conditionality and activation of beneficiaries of unemployment benefits. As mentioned, since 2000, it has become mandatory for the jobseeker to provide a declaration of immediate availability to work, to accept any ‘suitable’ job offer and to adhere to a certain set of commitments ranging from simple meetings at the job centre to participating in training courses. This was repeatedly reasserted in the following years. However, conditionality has only been lightly implemented, with serious obstacles coming from major territorial differences in the performance of local PES, being particularly poor in the South (though not only there) (ISFOL, 2009; MLPS, 2013). Overall investment in PES remains scanty: in 2010, expenditure in labour-market services accounted for 0.03% of GDP in Italy, as compared with 0.3% in France, 0.33% in the UK, 0.39% in

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The Italian welfare state in a European perspective

Germany and 0.48% in Denmark.9 Also, PES are severely understaffed as compared to other European countries: in 2011, there were 254 registered unemployed per PES operator in Italy, as compared with 56 in France, 30 in Germany, 24 in Denmark and 17 in the UK (Italia Lavoro, 2014). As for the whole of ALMP, there was actually a period, spanning from 1997 to 2003, when investments in such policies markedly increased, exceeding the total spending for passive policies during 2001–03. However, this trend did not last and, since 2004, the expenditure for unemployment support measures has greatly increased, surpassing once again the investment in active policies (see Figure 3.1). Also, analysing the changes in the two main expenditure items for active labour policies – training and employment incentives – it can be seen that while spending on training policies displays an unsteady trend, the expenditure for employment incentives rose sharply from 1995 to 2003, to settle at a much lower level in the second half of the 2000s. Thus, the growing expenditure for active labour policies in the 1997–2003 period can be entirely ascribed to incentives for employers, in particular, to hire new workers (Sacchi and Vesan, 2011). Figure 3.1: Trends in expenditure on passive and active labour-market policies as a percentage of GDP (left axis) and unemployment rates (right axis), 1990–2011 Passive labour-market policies – left axis Active labour-market policies – left axis Unemployment rate – right axis 1.6

13

1.4

12

1.2

11 10

1

9

0.8

8

0.6

7 6

0.2

5

0

4

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

0.4

Source: OECD database on Labour market programmes

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Employment policy

Labour-market reforms in the crisis The economic crisis hit Italy very hard. GDP shrank in 2008 by 1.2%, while it grew in Germany, Spain and the Eurozone that year, and was stagnant in France (see Table 3.8). In 2009, against the backdrop of a GDP loss of 4.4% in the Eurozone, Italy lost 5.5% of its GDP, the highest figure across large Eurozone members. In 2010 and 2011, Italian GDP growth was far smaller than that of the Eurozone and other large Eurozone members, with the exception of Spain. In the crisis, Italy introduced virtually no stimulus package, deciding – contrary to most Eurozone members – to target the primary budget surplus (ie the budget surplus prior to the service of public debt) even in the face of such a dramatic loss of output. Despite all this, Italy’s unemployment figures remained relatively contained until 2012, and certainly much lower than those of Spain (see Table 3.9). This has to do with the strategy pursued by the government in power at the time (a centre-right government led by Berlusconi): using short-time work to cushion the employment effects of the crisis (beneficiaries from short-time work are still counted as employed). To address the gaps in social protection highlighted in the previous section, the government chose not to introduce a reform of the unemployment compensation system, as this would have entailed the establishment of Table 3.8: GDP growth rates in selected Eurozone countries, 2007–2013 (%)

Italy Spain Germany France Eurozone

2007 1.7 3.5 3.3. 2.3 3.0

2008 –1.2 0.9 1.1 –0.1 0.4

2009 –5.5 –3.8 –5.1 –3.1 –4.4

2010 1.7 –0.2 4.0 1.7 2.0

2011 0.4 0.1 3.3 2.0 1.6

2012 –2.4 –1.6 0.7 0 –0.7

2013 –1.9 –1.2 0.4 0.2 –0.4

Source: Eurostat

Table 3.9: Unemployment rates (15–64) in selected Eurozone countries, 2007–13 (%)

Italy Spain Germany France Eurozone

2007 6.2 8.3 8.8 8.0 7.5

2008 6.8 11.3 7.6 7.4 7.6

2009 7.9 18.0 7.9 9.1 9.6

Source: Eurostat, Labour Force Statistics database

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2010 8.5 20.0 7.2 9.3 10.2

2011 8.5 21.5 6.0 9.2 10.2

2012 10.8 24.9 5.6 9.9 11.5

2013 12.4 26.2 5.4 9.9 12.0

The Italian welfare state in a European perspective

new social rights, giving rise to rights-based claims from beneficiaries that would then have to be serviced by the public budget. Rather, it made it easier for firms to access short-time work schemes and extended their duration virtually without limits. At the same time, it introduced ‘emergency social shock absorbers’ (ammortizzatori sociali in deroga), extending short-time work and mobility allowance as regards their overall duration and the categories of admissible workers, enterprises and sectors. Contrary to unemployment benefits, however, such measures do not provide the worker with a right to a benefit after certain requirements are met: these are discretionary schemes, dependent upon approval on the part of the public authority after joint examination by trade unions and the firm. This allowed the government to keep expenditure under control as resources for emergency shock-absorbers were given to the regions – which administered the schemes according to regional tripartite agreements – only after rounds of negotiations with the Treasury over the amount needed. These changes were welcomed by all the actors involved: the government effectively managed to contain unemployment for some time; employers retained workforces at extremely low cost, while new entrants (firms previously excluded) actually free-rode on contribution-based schemes at the expense of general revenue; trade unions saw their role as institutional brokers increased; and regional governments acquired resources that could be used to increase their legitimacy and de facto expanded their competencies into passive labour-market policies. In other words, a distributive coalition formed around such measures (Sacchi, 2013a). In order to allow the use of European structural funds to finance emergency shock absorbers, conditionality was attached to them, requiring beneficiaries to take part in training programmes (see Chapter Ten). The extent of actual implementation of this provision and its effectiveness has been affected by territorial differences in the institutional capabilities of PES (ISFOL, 2013b). This state of affairs, and the political-economy equilibrium revolving around the use of short-time work, came to a sudden halt in the summer of 2011, when Italy’s sovereign debt came under attack on the international financial markets. Spurred by a request from the European Central Bank (Sacchi, 2015), the government introduced a reform that opened up the possibility of derogating national dismissal regulations through collective bargaining agreements signed by union representatives at the territorial or company level, even against the will of central-level unions. In an attempt to regain access to the markets and support of the other Eurozone member states through

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the introduction of structural reforms, in the final days of its rule, the Berlusconi government committed itself to a thorough reform to ease the dismissal of open-ended workers, which was then introduced by its successor, the non-partisan government led by Monti in 2012. To understand the insistence on reform of employment protection for open-ended workers, it is to be recalled that there is no automatic severance payment in Italy. In case of dismissal, workers can file a lawsuit to challenge the motives of dismissal, which have to be justified according to specific disciplinary or economic reasons. A law introduced in 1970 (the Worker Statute) and its subsequent amendments established the firm-size-differentiated protection of workers whose dismissal is deemed unfair by a judge. While in firms with less than 15 employees, the employer can pay a monetary compensation to the unfairly dismissed worker to make dismissal effective, until the 2012 reform, employees of firms with 15 staff or more whose dismissal was ruled unfair in court had a right to be reinstated in their job as if dismissal had never occurred, thereby also entailing the right to receive the entire amount of their wages and social contributions lost since the day of dismissal. The effects of dismissal being ruled unfair have now been changed, but enhanced protection of those employed in firms larger than the 15-employee threshold still occurs, thereby creating another dimension of segmentation in the Italian labour market. It is to be added that courts applied strict tests of necessity to the economic or productive motives put forward to justify dismissal. The actual relevance of such a provision for the effective functioning of the labour market (other than the obvious dimension of segmentation) is disputed, and the empirical evidence of its effects on the system of firms and, through it, on the economic system in its entirety – dwarfism of companies, fragmentation of Italian production and orientation of productive specialisation towards traditional sectors, with limited space for product innovation – appears highly controversial (Sacchi, 2013b). On the other hand, the degree of uncertainty about the outcome of individual firings, along with the associated time and costs, may be counted among the factors that discourage foreign investment in the country. In any case, enhanced protection of openended workers in larger firms came to be recognised by international organisations and the media as the hallmark of the Italian labour market, seen as the epitome of a very rigid one, despite all contrary empirical evidence (Contini and Revelli, 1992; Contini and Trivellato, 2005; Berton et al, 2012). The reform introduced by the Monti government in June 2012 is multifaceted (Sacchi, 2013b). By far its most important aspect

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The Italian welfare state in a European perspective

lies in the new discipline of individual dismissal in firms with 15 employees or more. Although no severance payment is introduced, when an employer intends to dismiss a worker for economic reasons, a conciliation procedure becomes mandatory. This aims at fostering agreement between the employer and the worker on economic compensation for the dismissal without going to court. If an agreement is not reached (or if the motives of the dismissal are disciplinary rather than economic), in order to get monetary compensation, the worker must challenge the justification of the dismissal in a court. Generally speaking, unless the dismissal is found to be discriminatory and therefore null and void, if the judge finds the motives of the dismissal to be illegitimate, no reinstatement occurs and monetary compensation between 12 and 24 monthly wages is envisaged. Reinstatement can still occur in particular, circumscribed cases (if the economic dismissal suffers from a ‘manifest lack of motive’, or if the event leading to disciplinary dismissal did not take place or, according to collective agreements, should have been sanctioned otherwise).10 A further important innovation introduced by the 2012 reform regards the unemployment compensation system. Mobility allowance will be phased out as of 2017, and standard unemployment benefits have been replaced by a new unemployment benefit (Assicurazione sociale per l’impiego; ASPI) characterised by a higher replacement rate, a longer duration and the inclusion of categories of workers previously excluded.11 Moreover, ASPI has been flanked by another new scheme, called mini-ASPI, to cater for workers with reduced contribution records. By contrast, short-time work schemes were not modified due to strong vetoes from the social partners. With the reform introduced by the Monti government, the era of reforms at the margin seemed to have come to an end, being supplanted by thorough reforms that targeted hitherto unaffected core workers, with an explicit goal of reducing labour-market segmentation. This also marked a discontinuity in the role played by trade unions in labour policymaking since the 1990s. In the 1990s, the unions had been crucial partners of governments as labour market (and pension) reforms had stemmed out of social pacts. In the 2000s, cooperation between governments and the unions still occurred (leading to agreements in 2002 and 2007 and ensuing reforms), although the Berlusconi governments tried to divide unions and make agreements with the centrist unions Confederazione italiana sindacato lavoratori (CISL) and Unione italiana lavoratori (UIL) while excluding the leftist Confederazione generale italiana del lavoro (CGIL). As mentioned, in the first phase of the economic crisis, a distributive coalition was

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Employment policy

formed, revolving around the ‘emergency social shock absorbers’. With the deepening of the crisis, and of the external pressures to reform individual dismissal rules, the overall framework changed. The Monti government introduced a harsh pension reform by almost merely informing the unions, and then the labour-market reform was the product of consultation with the social partners rather than concertation, at least with respect to individual dismissals.12 However, the most recent episodes in the now 20-year-long story of labour-market deregulation in Italy have targeted fixed-term contracts again in an effort to tackle youth unemployment. Extending the scope of a similar provision introduced by the Letta government in 2013, in 2014, the government led by Renzi abolished any necessity to provide a motivation for establishing a fixed-term contract up to a duration of three years. This provision was introduced by decree and not concerted with the trade unions. The Renzi government has also presented a blueprint for a further reform of the Italian labour market, reducing the number and variety of non-standard contracts and easing EPL for all new open-ended contracts, envisaging only monetary compensation in case of economic dismissal later found to be unlawful. The blueprint also envisages a reform of the unemployment benefit system, extending eligibility and duration and introducing means-tested unemployment assistance for those who draw the unemployment benefit to the end without finding a job. At the same time, the blueprint aims to thoroughly streamline short-time work schemes and to reform the governance of ALMP through the introduction of a National Employment Agency and the integration of unemployment benefit and ALMP management through a one-stopshop approach. The reform of ALMP also envisages the adoption of modern systems of statistical profiling of beneficiaries, an approach now used in the implementation of the Youth Guarantee in the period 2014–15.13

A comparison with the German and Spanish reform paths Before moving to an appraisal of Italian labour-market reforms over the past 20 years, it may be useful to place them against the backdrop of the substantial reforms that occurred in the same period in two other large European labour markets, those of Germany and Spain.14 As occurred in Italy until 2012, over the past decades, Germany has introduced reforms affecting non-standard contracts but has left its employment protection regime for open-ended workers largely untouched. Generally speaking, employment protection beyond basic

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principles regulated by the Civil Code (good faith, non-discrimination, etc) applies only over a 10-employee threshold. Individual workers can be lawfully dismissed only for ‘socially justified’ reasons related to the employee’s person or conduct or related to urgent operational business requirements that render the continuation of the employment relationship impossible. In the case of dismissal for economic reasons, the employer must undertake a social selection of the employees on the basis of seniority, age, family obligations and disability. Severance pay is due if a worker is dismissed for economic reasons, and s/he abstains from initiating a legal procedure. It amounts to half a month’s salary for each year of employment. Finally, if a court finds that dismissal has been unlawful, it will declare it invalid from the beginning, leading to the worker’s reinstatement in the job and to payment of all forgone wages from dismissal, unless it deems continuation of the employment relationship to be unsustainable, in which case it may dissolve the relationship provided a dissolution request has been filed by either party (which, of course, is generally the case). If so, the employer must pay the worker compensation that generally amounts to 12 months of salary, or 18 for older workers or when firm seniority exceeds 20 years. In the face of stable rules for open-ended contracts, reforms at the margin started to be enacted in the mid-1980s, a decade earlier than in Italy, when it was permitted to sign fixed-term contracts (up to 18 months) without a ‘valid reason’, namely, without specification of motives, and regulation pertaining to temporary agency work was eased.15 Further liberalisation of both fixed-term and temporary agency contracts occurred in the 1990s at the end of the long period of Christian Democratic rule. In its first years, the new Red–Green coalition, which went into power in 1998, aimed at re-regulating fixed-term contracts and limiting the use on the part of employers of so-called ‘marginal’ part-time work, a form of part-time work involving reduced hours and low wages that was exempted from social contributions and benefits. The same Red–Green coalition, however, changed its stance in its second term and pursued a series of labour-market and social protection reforms between 2003 and 2005. These reforms were based on the work of the Hartz Commission, an expert commission appointed in 2002. While also relevant for changes introduced in the unemployment compensation system and as regards the organisation of employment services towards a more marked activation approach, the Hartz reforms further deregulated non-standard contracts, be they marginal part-time contracts (in particular, the so-called ‘minijobs’, which were still excluded from unemployment and health-care insurance), fixed-term contracts or

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temporary agency contracts, to an extent still unknown to the Italian labour market. Similarly to Germany, Spain’s reform path already featured massive deregulation of non-standard contracts in the 1980s. However, since then, this has been followed by a chain of reforms re-regulating fixedterm contracts and deregulating open-ended contracts in an attempt to make the latter more attractive to firms, culminating in reforms introduced in 2010 and 2012 in the wake of the crisis.16 Dismissal of open-ended workers can take place for disciplinary (ie gross misconduct on the part of the worker) or objective reasons. To be valid, the latter require justification, following criteria that were fairly strict until the reform introduced in 2010 by the Socialist government led by Zapatero. Individual dismissals are subject to direct judicial control, and the Spanish courts traditionally interpreted the grounds for objective dismissals in a restrictive way. This has consequences for the employer insofar as the costs of objective dismissal are higher when this is ruled to be unfair. Still, the employer can always choose to meet the costs and terminate the employment relationship. Until the reform introduced in 2012 by the Conservative government led by Rajoy, such costs were remarkably high (see later), against a background in which fixed-term contracts were already liberalised in 1984 so as to entail virtually no need for valid justification on the part of the employer. This led to an upsurge of the incidence of such contracts in the Spanish labour market: from less than 10% to over a third of the dependent workforce between the early 1980s and the early 1990s. As a reaction to this state of affairs, attempts were made in the 1990s and 2000s at re-regulating fixed-term contracts so as to reduce their incidence, with regulatory interventions closely following each other. At the same time, temporary work agencies were made legal. Changes were introduced as regards dismissal for openended workers, including the introduction of open-ended contracts entailing reduced severance pay in the case of unfair dismissal, on the one hand, and procedures to dismiss open-ended workers more easily and eschewing judicial control in exchange for higher severance compensation, on the other – all to little avail. The recent 2010 and 2012 reforms have further increased the regulation of fixed-term contracts. At the same time, they have made it considerably easier, and less costly, to dismiss open-ended workers. Dismissal procedures were unified and all dismissals can now be subject to judicial screening. While disciplinary dismissals judged legitimate entail no compensation to the worker, dismissal for valid objective reasons entail a severance payment (20 days per year of firm seniority

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up to a maximum sum of 12 months’ pay17). However, if the dismissal (for whichever reason it occurred) is ruled to be unfair, the employer must (unless s/he decides to reinstate the worker) pay compensation amounting to 33  days of pay per year of firm seniority, up to a maximum of 24 months’ pay, with no compensation for forgone wages; overall, this is a greatly reduced amount as compared to the previous regime.18 Moreover, dismissals for economic reasons have been made easier by providing firmer grounds for the notion of justified objective dismissals to apply. Dismissal is now also allowed in the case of current and even expected losses, or a continuous decrease in the employer’s revenues that may affect the financial viability of the firm or its ability to maintain employment levels. Dismissal is also justified when there has been any relevant change within the production means of the firm or the organisation of work, or a significant decrease in demand for its products. In a further effort to reduce the discretion of the Spanish courts in judging the issue of objective dismissal, the 2012 reform specifies that a decrease in the employer’s revenues or sales for three subsequent quarters is considered sufficient to justify dismissal on economic grounds. As compared to the two large West European labour markets that have undergone waves of reform in the past two decades, Italy initially followed a German path, substantially deregulating fixedterm contracts while leaving open-ended ones untouched for a long time. Then, in the context of the sovereign debt crisis, it shifted from this path and, similarly to Spain, substantially reduced employment protection for open-ended contacts. Shortly after, however, and certainly differently from Spain, it deregulated fixed-term contracts again. The latest episode in this seemingly erratic reform path may come from the implementation of a blueprint envisaging further deregulation of newly established open-ended relationships.

Segmentation, inequality, stagnation: the discomfiting effects of reforms at the margin The long cycle of reforms at the margin from the mid-1990s to 2014, only interrupted by the 2012 reform, has liberalised non-standard work in Italy more than in any other OECD country since the 1990s. The aim of all these reforms was to tackle unemployment, youth unemployment in particular, opening employment chances for those outside the (regular) labour market and thereby increasing employment levels. The inherent assumption has been that non-standard work would be a port of entry into the (regular) labour market, and then

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would function as a springboard towards better and more stable jobs. Available empirical evidence does not seem to corroborate this assumption. The effect of liberalisation of non-standard work on employment growth is debated. While Boeri and Garibaldi (2007) find evidence of a transitional ‘honeymoon’ job-creating effect of the reforms, according to Kahn (2010), the deregulation of fixed-term labour contracts that occurred in most European countries seems to have produced not an increase in the employment rate, but, rather, the substitution of openended with fixed-term positions. Moreover, the functioning of fixedterm contracts as stepping stones towards open-ended positions is also questioned by empirical findings, with mixed evidence (Gagliarducci, 2005; Ichino et al, 2008; Picchio, 2008; Barbieri and Scherer, 2009). As a matter of fact, Berton et  al (2011) studied employment transitions and, after controlling for various individual characteristics, observed that transitions to open-ended contracts are always more likely for the employed, irrespective of the contract they hold, than for the non-employed. However, the most likely occupational status in the future is that of being hired with the same type of contract that one currently holds. This is evidence of persistence in the current employment arrangement, and testifies to entrapment into nonstandard contracts in Italy. When this piece of evidence is considered together with evidence on entry into the labour market described earlier, the generational dimension of labour-market segmentation in Italy becomes totally apparent, and all the more so when looking at the distributional correlates of non-standard work. As shown by Berton et al (2012), non-standard workers have more discontinuous careers and lower (or, at best, comparable) salaries than standard workers. Controlling for several individual characteristics, including occupation, there is a strong correlation between holding a non-standard contract and the probability of being low-paid, that is, having a hourly wage lower than two thirds of the overall median (Berton et al, 2014). This does not change even if severe economic disadvantage is gauged over a medium-term time frame, rather than at every single point in time, in order to provide a more comprehensive assessment of the link between flexibility and economic insecurity, or precariousness.19 Economic insecurity affects non-standard workers much more than standard ones. Controlling for numerous individual factors, a non-standard contract makes a worker twice as likely to be in a disadvantaged situation than a full-time, open-ended contract. Also, overcoming economic precariousness is much harder for non-standard than for standard workers, while it is much easier for non-standard workers to become

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precarious from a previous situation of non-precariousness (Berton et al, 2012). As seen earlier, reforms at the margin liberalised the labour market without substantially reforming the income maintenance systems, thus contributing to strengthening the relationship between flexibility and insecurity. The major reform introduced by the Monti government in 2012 aimed at curbing segmentation by reducing protection for openended workers, but, at the same time, it expanded protection for those who lose their job. The introduction of ASPI and mini-ASPI in lieu of the older unemployment benefits brought about enhanced eligibility to income maintenance schemes, mainly thanks to mini-ASPI. As compared to the scheme it replaced – a ‘reduced requirement’ benefit that had been introduced in the 1980s – it gets rid of a two-year minimum vesting period requirement, thus enlarging the pool of potential beneficiaries to include those who have only recently entered the labour market. It can be estimated that after the 2012 reform, the number of employees that would not receive income support if they lost their job has been reduced to about 900,000 workers. However, several issues remain open. While considerably reduced, the shares of those would not be able to draw an unemployment benefit because of insufficient contributions is still high among non-standard workers: about 20% among directhire fixed-term workers and about 40% among temporary agency workers.20 Moreover, a large share of non-standard workers are actually eligible for only the minor scheme, mini-ASPI: only 52% of directhire fixed-term workers and 31% of temporary agency workers are eligible for the more generous scheme, ASPI, as compared to 90% of open-ended workers. While providing the same amount as ASPI, mini-ASPI has a lower duration, as it can last for a maximum of six months for those with the stronger contribution record (namely, for mini-ASPI, one full year of contributions over the past year). About half-a-million workers, if unemployed, would draw a benefit for no longer than three months. As already mentioned, workers who are not eligible or do not qualify for unemployment benefits, or draw their benefits to the very end without finding a job, have no further support from the Italian welfare state. While some discussions on the introduction of a nationwide minimum income scheme occurred in the course of 2013 (see Chapter Ten), no strong action has yet been taken on this front. As seen in the previous section, a blueprint for an overhaul of the income support system, extending the reach of unemployment benefits while streamlining short-time work, was introduced by the Renzi government over the course of 2014. The

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same blueprint tackles the governance of PES and ALMP, so far, the Cinderella of Italian labour policy. While the fate of these provisions is yet to be seen, what the Renzi government introduced by decree has been further deregulation of fixed-term contracts, thereby adding to the dualism between standard and non-standard workers. If this seems to have had severe detrimental effects on individual life chances over the past 20 years, particularly for the younger cohorts of workers, the way in which nonstandard work has been introduced and is used by firms has further ominous consequences at the systemic level, on Italy’s productivity and competitiveness more in general. Employers have an incentive to make only limited investments in the training of fixed-term employees, thereby bringing about underinvestment in human capital formation, maintenance and upgrading. A negative relationship between the growth in fixed-term employment and productivity growth in Italy has been documented both for labour productivity (Lucidi, 2012) and total factor productivity (Cappellari et al, 2012; Lotti and Viviano, 2012; ISFOL, 2013c). Moreover, the effect of using non-standard work is different across firms: it depresses value-added among less productive firms, which are, however, the ones that make the most out of it in terms of labour cost reduction (ISFOL, 2013c). Therefore, non-standard work tends to provide employers with incentives that are beneficial to them only in the very short run, being offset by lower value-added in the medium run. However, these incentives may have dire systemic consequences, contributing to push Italy down the ‘low road to competitiveness’, that is, a strategy based on a ‘low-wage, lowskill, low-involvement and low-quality equilibrium’ (Regini, 2000: 26).

Conclusions Since the 1990s, Italian labour-market policies have undergone important changes and the reform process is still underway. The liberalisation of employment relationships – first, with reference to fixed-term contracts and, more recently, also to open-ended contracts – has represented a common trait of the reform impulse prompted by both centre-left and centre-right government coalitions. As regards the unemployment compensation system, some incremental improvements have been adopted before and during the economic crisis. Moreover, an important reform was realised under the Monti government, while the current cabinet led by Renzi is outlining a new path-breaking proposal that, if adopted, will redesign income support in case of job

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loss and partial unemployment (thus also envisaging a reform of shortterm work schemes). By contrast, the third leg of the flexicurity approach, that is, active labour-market measures, is still the weakest one. The level of expenditure on these measures, after a gradual increase in the period 1993–2003, has been reduced and remains comparatively low. Nevertheless, the Italian delay in this area can be better understood by looking not only at the low investment in these policies, but also at their intrinsic characteristics. Active labour policies in Italy are mainly focused on hiring incentives, which are often subject to deadweight loss, and general training programmes simply aimed at ‘parking’ jobseekers. Moreover, the persistence of wide territorial gaps in the institutional capabilities of employment services holds back the development of an effective national activation system. The trajectory followed by the Italian labour-market reforms has been the result of pressures and vetoes exerted by different actors (such as political parties and trade unions) that have played a variable role during the three aforementioned cycles of reform. With regard to the trade unions, their influence on policymaking has been reduced over the years. Since the beginning of 2000, the centre-right cabinets led by Berlusconi abandoned the concertation practices that were pursued throughout the 1990s by governments in search of stronger legitimacy. Nevertheless, this did not prevent trade unions from continuing to hold a strong veto power, blocking a reform of dismissal rules for open-ended contracts attempted by the Berlusconi government in 2002. During the second cycle of reforms, the demise of social concertation in Italy was followed by the successful attempt made by the Berlusconi government to split the trade-union front, isolating the leftist and biggest Italian union – CGIL – while continuing to collaborate with the centrist unions and employers associations. The outbreak of the Great Recession has again brought together the Italian unions in the fight against austerity. However, this regained unity of purpose did not translate into their empowerment. By contrast, the economic crisis has had a twofold impact on their role in labour-market policymaking. On the one hand, unions succeeded in maintaining centre-stage in the management of emergency social shock absorbers. On the other hand, once the sovereign debt crisis kicked in, their ability to veto austerity reforms has been relatively low. The need to face the severe Italian financial crisis and restore the confidence of the international markets has prompted the adoption of immediate and bold measures, leaving trade unions with little room

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for manoeuvre. In this context, Italian unions have merely survived, managing to be effective only in limited instances.21 As regards political parties, since the 1990s, both centre-right and centre-left coalitions have converted to liberalisation policies, while the veto power of political opponents, especially the far-left parties, has reduced. Labour-market deregulation has also been pursued by governments of opposite political orientations for pragmatic reasons. Unlike those of unemployment benefits and ALMP, such reforms are purely regulative, thereby not having a direct and immediate impact on the national budget. However, this does not mean that the strategy of labour-market deregulation has not had any effect on the Italian economy, since it does seem to have strongly affected Italy’s productivity and competitiveness. After 20 years of both incremental and path-breaking policy reforms, the Italian labour market continues to be characterised by a deep territorial divide, accompanied by gender and generational segmentation, made worse by the effects of reforms at the margin. As a matter of fact, these reforms were introduced as a royal road to the enhancement of employment, and therefore the life chances of wide sections of the population – women and the young, first and foremost. While it is certainly possible that the counterfactual would be crudely worse – entailing lower regular, and possibly higher irregular, employment – the available evidence suggests that far from paving a royal road, 20 years of reforms have traced an uncomfortable mule track, at best. Notes 1

Employment data from Eurostat Statistics; GDP data from Istat.

2

Employment data from Eurostat Statistics; GDP data from Istat.

3

OECD Statistics Data.

4

OECD Statistics Data.

Short-time work provides a wage replacement in order to compensate for a temporary reduction in working time while maintaining the existing employment relationship. The German Kurzarbeit arrangement is a short-time work scheme. Italy has two such schemes in place: a conjunctural one, Cassa Integrazione Guadagni Ordinaria (CIGO), introduced in 1945; and a structural one, Cassa Integrazione Guadagni Straordinaria (CIGS), introduced in 1968 (see Sacchi et al, 2011).

5

Throughout the chapter, by standard (work, contracts, workers, arrangements) we mean (full-time) open-ended. By non-standard, we mean fixed-term

6

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(work, contracts, workers, arrangements), that is, all that envisage a contractual or statutory term to the employment relationship. When necessary, we then single out specific types of contracts and workers (eg direct-hire fixed-term workers, temporary agency workers, etc). This reform was based on an agreement between the government and the social partners, with the exception of the leftist trade union Confederazione generale italiana del lavoro (CGIL). 7

Estimations from microsimulations carried out by Stefano Sacchi with the help of Roberto Quaranta on the Inps-LOSAI database. 8

9

Data from Eurostat.

In case of reinstatement, forgone wages to be paid by the employer are capped at 12 months, irrespective of the time elapsed since the dismissal.

10

ASPI provides a benefit for up to one year (18 months for workers aged 55 years and more with a strong contribution record), equal to 75% of the previous wage (up to a ceiling), decreasing every six months. Benefit ceilings apply. This benefit has been extended to apprentices, cooperative workers and art workers, who were all previously excluded.

11

For an account of the policymaking process of the reform, see Sacchi (2013b).

12

The Youth Guarantee is a programme financed by the EU for 2014–20 that aims to provide all under 25 year olds in member states and regions ridden with youth unemployment (with a rate higher than 25%) with a good-quality offer of work, education, training or apprenticeship within four months of termination of education or unemployment. Italy started implementing the Youth Guarantee in May 2014, targeting under 30 year olds, with a financial allocation of €1.5 million for the period 2014–15. 13

14

This section draws heavily on Berton et al (2012: ch 3).

A ruling of the Federal Constitutional Court had declared unconstitutional the public monopoly of employment agencies in 1967, but trade unions and the then ruling Social Democrats had strictly regulated temporary agency work.

15

At the same time, however, in transposing the EU Temporary Agency Work Directive, the 2010 reform has fully liberalised temporary agency work.

16

17

Reduced for firms employing less than 25 employees.

Being 45  days of pay per year of firm seniority, up to a maximum of 42 months’ pay, plus the forgone wages from the moment of dismissal to the moment of the ruling stating the unlawfulness of the dismissal.

18

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For the full elaboration of this point, see Berton et al (2012).

Estimations from microsimulations carried out by Stefano Sacchi with the help of Roberto Quaranta on the Inps-LOSAI database.

20

One is CGIL preventing the 2012 reform of economic dismissal from being harsher than originally planned; the other is backing the employers association in opposing an overhaul of short-time work, also in 2012 (see Sacchi, 2013b). 21

References Barbieri, P. and Scherer, S. (2009) ‘Labour market flexibilization and its consequences in Italy’, European Sociological Review, 25(6): 677–92. Berton, F., Devicienti, F. and Pacelli, L. (2011) ‘Are temporary jobs a port of entry into permanent employment? Evidence from matched employer–employee data’, International Journal of Manpower, 32(8): 879–99. Berton, F., Richiardi, M. and Sacchi, S. (2012) The political economy of work security and flexibility, Bristol: Policy Press. Berton, F., Richiardi, M. and Sacchi, S. (2014) ‘Non-standard work, low-paid work and employment dynamics: evidence from an occupational perspective’, in W. Eichhorst and P. Marx (eds) Nonstandard employment in a comparative perspective, Cheltenham: Edward Elgar. Boeri, T. and Garibaldi, P. (2007) ‘Two tier reforms of employment protection: a honeymoon effect?’, Economic Journal, 117(521): 357–85. Cappellari, L., Dell’Aringa, C. and Leonardi, M. (2012) ‘Temporary employment, job flows and productivity: a tale of two reforms’, Economic Journal, 122(4): 188–215. Contini, B. and Revelli, R. (1992) Imprese, occupazione e retribuzioni al microscopio. Studi sull’economia italiana alle luci delle fonti statistiche Inps, Bologna: il Mulino. Contini, B. and Trivellato, U. (eds) (2005) Eppur si muove. Dinamiche e persistenze nel mercato del lavoro italiano, Bologna: Il Mulino. Gagliarducci, S. (2005) ‘The dynamics of repeated temporary jobs’, Labour Economics, 12(4): 429–48. Ichino, A., Mealli, F. and Nannicini, T. (2008) ‘From temporary help jobs to permanent employment: what can we learn from matching estimators and their sensitivity?’, Journal of Applied Econometrics, 23(3): 305–27. ISFOL (Istituto per lo sviluppo della formazione professionale dei lavoratori) (2009) Monitoraggio dei servizi per l’impiego 2008, Roma: ISFOL. ISFOL (2013a) Gli effetti della legge n. 92/2012 sulla dinamica degli avviamenti dei contratti di lavoro, Rapporto N. 3, Roma: ISFOL.

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ISFOL (2013b) Ammortizzatori sociali in deroga e politiche attive del lavoro: l’attuazione regionale dell’accordo Stato-regioni 2009–2012, Roma: ISFOL. ISFOL (2013c) Mercato del lavoro, capitale umano ed imprese: una prospettiva di politica del lavoro, Roma: ISFOL. Istat (2011) Noi Italia, retrievable from noi-italia.istat.it/fileadmin/ user_upload/allegati/106.pdf Italia Lavoro (2014) Benchmarking sui Servizi pubblici per l’impiego in Europa, Roma: Staff di Statistica Studi e Ricerche sul Mercato del Lavoro (SSRMdL). Jessoula, M. and Vesan, P. (2009) ‘Italy: limited adaptation of an atypical system’, in J. Clasen and D. Clegg (eds) Regulating the risk of unemployment. National adaptations to post-industrial labour markets in Europe, Oxford, Oxford University Press, pp 142–63. Kahn, L.M. (2010) ‘Employment protection reforms, employment and the incidence of temporary jobs in Europe: 1996–2001’, Labour Economics, 17(1): 1–15. Lotti, F. and Viviano, E. (2012) ‘Temporary workers, uncertainty and productivity’, mimeo. Lucidi, F. (2012) ‘Is there a trade-off between labour flexibility and productivity growth? Some evidence from Italian firms’, in T. Addabbo and G. Solinas (eds) Non-standard employment and quality of work. The case of Italy, Heidelberg: Springer, pp 261–85. MLPS (Ministero del Lavoro e delle Politiche Sociali) (2013) Indagine sui servizi per l’impiego, Roma: Ministero del Lavoro e delle Politiche Sociali. MLPS (2014) Il primo anno di applicazione della legge 92/2012, Roma: Ministero del Lavoro e delle Politiche Sociali. Picchio, M. (2008) ‘Temporary contracts and transitions to stable jobs in Italy’, Labour, 22: 147–74. Regini, M. (2000) ‘The dilemmas of labour market regulation’, in G. Esping-Andersen and M. Regini (eds) Why deregulate labour markets?, Oxford: Oxford University Press, pp 11–29. Regini, M. and Colombo, S. (2011) ‘Italy: the rise and decline of social pacts’, in S. Avdagic, M. Rhodes and J. Visser (eds) Social pacts in Europe: emergence, evolution and institutionalization, Oxford: Oxford University Press, pp 118–46. Sacchi, S. (2013a) ‘Italy’s labour policy and policymaking in the crisis: from distributive coalitions to the shadow of hierarchy’, in H. Magara and S. Sacchi (eds) The politics of structural reforms. Social and industrial policy change in Italy and Japan, Cheltenham: Edward Elgar, pp 192–214.

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Sacchi, S. (2013b) ‘Social policy reform in the Italian debt crisis: pensions, labor, unemployment benefits’, Italian Politics, 28(1): 207–26. Sacchi, S. (2015) ‘Conditionality by other means. EU involvement in Italy’s structural reforms in the sovereign debt crisis’, Comparative European Politics, vol 13, pp 77-92. Sacchi, S. and Bastagli, F. (2005) ‘Italy: striving uphill but stopping halfway. The troubled journey of the experimental minimum insertion income’, in M. Ferrera (ed) Welfare state reform in Southern Europe, London: Routledge, pp 84–140. Sacchi, S. and Vesan, P. (2011) ‘Interpreting employment policy change in Italy since the 1990s: nature and dynamics’, Carlo Alberto Notebook no  228, retrievable from www.carloalberto.org/assets/ working-papers/no.228.pdf. Sacchi, S., Pancaldi, F. and Arisi, C. (2011) ‘The economic crisis as a trigger of convergence? Short-time work in Italy, Germany and Austria’, Social Policy and Administration, 45(4): 465–87. Vesan, P. (2012) ‘La politica del lavoro’, in M. Ferrera (ed) Le politiche sociali. L’Italia in prospettiva comparata, Bologna: Il Mulino, pp 113–69. Vesan, P. (2013) ‘Development trends in the politics of Italian labour market reforms: between continuity and discontinuity’, paper presented at the ECPR General Conference, Bordeaux, September.

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Italian social assistance in the European context: residual innovation and uncertain futures Yuri Kazepov

Introduction Social assistance schemes play a special role within social policies as they are supposed to be the final safety net for people in economic need. They include measures ranging from general policies against poverty to fragmented measures aimed at social inclusion, from exemptions from fees to means-tested support for elderly homecare. This heterogeneity makes it difficult to cover the whole policy spectrum. Moreover, these measures differ in terms of access criteria, generosity, logic and territorial level of regulation. In this chapter, I will try to identify some general trends common to most social assistance domains, focusing, however, my efforts on social assistance sensu stricto and its cash dimension. In order to address these issues, the chapter is divided into three parts. The first part presents overall trends of paradigmatic shifts within social assistance schemes. The second part presents a synthetic overview of different social assistance models existing in Europe and how they changed, considering the territorial levels that regulate, manage and implement social assistance schemes and the actors involved. Finally, the third part addresses the Italian case framed within this comparative perspective, highlighting its specificities compared to the European context.

What social assistance is and how it changed over time We usually understand ‘social assistance’ to mean all provisions – both cash and in-kind – that cover a specific need and foresee a means test in order to access them. These conditions are usually verified by administrative staff or social workers. Historically, social assistance measures were the first public policies addressing conditions of need (Alber, 1982). Since

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their adoption, they have undergone important transformations in their institutional architecture, the actors involved, the foreseen provisions, their degree of legitimacy and in their main regulatory principles. It is possible to periodise these transformations and analytically identify three main generations. The first generation of social assistance policies dates back to the 17th century (Lis and Soly, 1986), when Elisabeth I adopted the Act for the Relief of the Poor in England. That Act foresaw a tax on the poor and obliged local public authorities to take on responsibility for people in a condition of need. The first of a series of Poor Laws, the Act regulated poverty in a way that benefits were granted only to the poor belonging to the local community (to avoid vagrancy). They were highly stigmatising and aimed at public order rather than the well-being of the poor (Geremek, 2003). In other countries, for example, Southern European ones, where the Catholic Church exerted a pervasive influence on social life, it was mainly charities that took care of the poor (Alber, 1982). These legacies still influence the institutional design of social assistance policies in most countries, including Italy. The second-generation policies witnessed in most European countries – in particular, after the Second World War – defined income thresholds below which conditions of need were considered unacceptable. In the frame of selective universalism (Hansen and Weisbrod, 1969), they aimed at overcoming the categorical nature of first-generation measures, targeting all people in need through a means test. One of the main characteristics of second-generation social assistance measures is their passive nature, which foresees a cash benefit vis-a-vis a means test against a given threshold. In most European countries, the amount of benefit corresponds to the difference between actual income and that threshold. Since the 1990s, important changes involved in demographic transition (eg low fertility rates, marriage instability, migration processes, new family arrangements) and deep socio-economic crisis (unemployment, jobless growth, etc) brought about new social risks (Taylor-Gooby, 2004; Bonoli, 2006). In particular, the spread of long-term unemployment and the growing economic need of those who were exiting the contributorybased income support to enter social assistance schemes created the premises of the shift towards third-generation measures. The increased financial burden for funding social assistance schemes (in most cases, on municipalities), and the fact that the new poor were mainly unemployed tout court, brought about the development of activation measures. Besides a cash benefit, these measures also foresee training, requalification, active participation in the labour market and social and psychological support. By doing so, they modified the working logics of social assistance, as well as access mechanisms. Despite these commonalities, however, this shift

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did not deploy homogeneously, but, rather, reproduced the differences among welfare systems in the emerging institutional arrangements as well, with ambivalent features. On the one hand, the right to benefits was increasingly subject to a compulsory return (participating in a training measure, providing proof of job-seeking, etc) that was expected as a condition to access the benefit itself (Serrano-Pascual and Magnusson, 2007). On the other hand, it established the basis for more efficient emancipatory and empowering practices as it focused on capabilities (Sen, 1985). These changes influenced the territorial organisation of policies, as well as the involvement of new actors, bringing about a localisation of social assistance policies and a widening plethora of actors within the welfare mix (Ascoli and Ranci, 2002; Kazepov, 2008, 2010). The shift from one generation of social assistance measures to another took place within an extended time window, following the process of modernisation (Wilensky, 1975). While the first generation of social assistance policies lasted quite a long time and had a much higher degree of variation (Flora and Heidenheimer, 1981), the second did not last as long. The same is true for the transition to the third generation. Nevertheless, pathways differ from country to country according to their economic development and political balances (Alber, 1982). The main features of a generation of social assistance measures do not necessarily refer to fully homogeneous policies everywhere. In particular, the transition towards third-generation social assistance policies provides a wide spectrum of options in different contexts (Lødemel and Trickey, 2001): on the one hand, through empowerment, integration and social cohesion; on the other, through the introduction of conditionality and obligations to accept jobs. This transition is not specific to social assistance, or to Italy or Europe (Barbier, 2008; Sabatinelli, 2010). It shows a paradigmatic shift towards a new institutional setting. In the best case, this shift might be towards social policies as an investment in the well-being of the whole of society (Morel et al, 2010). In the worst case, it is a process of recommodification of labour (Serrano-Pascual and Magnusson, 2007). It is not our task to reconstruct the complexity of the different pathways. It is, however, very important to be aware of the fact that reforms are deeply connected to the historical, geographical and institutional contexts within which these policies are designed, managed, funded and implemented (Bonoli, 2007). The comparative input that I will provide aims at contextualising the Italian case. What I would like to show is that arriving late at the shift towards thirdgeneration measures without consolidating second-generation ones during the post-war period of economic growth created institutional,

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political and economic obstacles in Italy (and also in Greece and, to a lesser extent, in Spain and Portugal), which are difficult to overcome in the current context.

Minimum income measures in Europe At the beginning of the 1990s, most European countries completed their transition towards second-generation social assistance measures, having a final safety net guaranteeing a minimum income for those in economic need. Thresholds and access criteria were, and still are, quite differentiated in Europe. In addition, the role of social assistance was, and still is, different, in particular, in its synergy with other policies. Some countries – in particular, the Nordic ones – had already started to develop social services supporting cash transfers in the 1960s and 1970s. Continental European countries started in the 1990s, and Southern European countries much later (see Pfau-Effinger et al, 2009; Saraceno and Keck, 2010). The shift towards third-generation measures was an attempt to valorise the synergies. The typologies developed to compare social assistance schemes, however, do not consider this synergy systematically (eg Leibfried, 1992; Lødemel, 1992; Gough, 2001). Differently from typologies based on contributory policies, these typologies face greater methodological difficulties given the high heterogeneity of existing institutional options and the higher degree of discretion in their management. Lødemel (1992), for instance, used four criteria to classify social assistance schemes in Europe: a) the existence of a generalised scheme of minimum income maintenance; b) the emphasis on policies targeted at income maintenance rather than promoting social participation; c) the balance between the right to provisions and discretion; and d) the existence of national responsibility in regulation and management. Using these criteria, I identify four main models in the twelve member states which were part of the European Union before 1995 (EU-12): 1) Nordic (redistributive); 2) Anglo-Saxon (liberal); 3) Continental (conservative); and 4) South-European (familialistic). Table 4.1 summarises the main characteristics of the four typologies. Nordic countries focused on contributory-based policies and universal services. Despite being embedded in rather inclusive framework laws, social assistance schemes were always residual, integrating relatively generous monetary benefits with other protection schemes. These foresaw high local discretion and a relevant role for social workers. Beneficiaries were relatively few because the overall – highly redistributive – welfare system covered most social needs and limited

104

105

Generosity

Age limits

Appeal

Entitlement

Name

Model Country Legal framework

High (but variable)

Yes, at each level up to the supreme administrative court No

Nordic (redistributive) Sweden National framework law with high local autonomy Socialbidrag (1980 reform and subsequent amendments) Residence

Continental/central (conservative) France National law(s)

Average (homogeneous)

Average (homogeneous)

Supplementary Benefit Since 1988 Revenue Minimum d’Insertion. (since 1988 Income (further seven Support) categorical minima) Residence Residence (some restrictions for nonUK citizens) Yes, at each level up to Yes, at each level up to the Social Security the Conseil d’Etat Appeal Tribunals No Only people >25 (less if with children)

Anglo-Saxon (liberal) UK National law

Table 4.1: Main characteristics of social assistance schemes in Europe, 1980–90

Not claimable right

Yes, at each level up to the Bundesverwaltungs- Gericht

Average (limited differences)

Formally no, even though different cohorts access different benefits Very low (highly variable) (continued)

Minimo Vitale, Minimo Alimentare (labels vary at municipal and regional level) Residence (with high local variations)

Since 1961 Bundessocialhilfegesetz, (including Hilfe zum Lebensunterhalt and Hilfe in besonderen Lagen)a Residence (immigrants with asylum status access another measure)

No

South-European (familialistic) Italy After DPR 616/77, regulated by regional laws

Continental/federal (conservative) Germany Federal Law with some role of the Länder

Italian social assistance in the European context

106

Low(medium on occasional payments)

Medium–high

Public

Medium

High

Public

Continental/central (conservative) France Local (covered by national transfers based on national fiscal revenues)

Continental/federal (conservative) Germany Local (municipalities and ‘provinces’)

Low on the benefit paid, medium on the accompanying services

Very low on the benefit paid, medium on the insertion contracts Public

Public and third sector

Medium

Medium–high

As long as the condition of need persists and income is not above the threshold

Nordic (redistributive) Anglo-Saxon (liberal) Sweden UK Local (municipality on National local fiscal revenues)

Public and third sector

Very high

Very limited except for people above age 65, who receive the social pension Very low and highly variable

South-European (familialistic) Italy Local (municipalities) on regional block grants

Note: a In 1991, the system was extended to the East German Länder. Source: Adapted and further developed from Leibfried (1992), Eardley et al (1996), Saraceno (2002), Kazepov and Sabatinelli (2001, 2006), Lødemel and Trickey (2001), Gough (2001), De Neubourg et al (2007), Nelson (2008), Kazepov (1996, 2009, 2010) and Van Mechelen et al (2011).

Governance actors

Integration with other policies Discretion

Duration

Model Country Funding

Table 4.1: Main characteristics of social assistance schemes in Europe (1980–90) (continued)

The Italian welfare state in a European perspective

Italian social assistance in the European context

the recourse to final safety nets. It was mainly complex cases that needed specific accompanying measures aimed at addressing multiple problems (Lødemel, 1997). Beveridge (Benassi, 2010) foresaw a similar role in the post-war period for social assistance in the institutional architecture of the British welfare state. Unlike the Nordic model, however, the UK has a less generous contributory system and more limited access; this made social assistance ever-more relevant for larger shares of the population. The increase (see Table 4.2) has been accompanied by relatively high poverty rates and a marked stigmatisation of people in need. The Beveridgean non-categorical system of social assistance and the National Health Service are elements that allow inequalities to be kept above the European average but still at a less extreme level than in other liberal countries (OECD, 2008). In continental European countries – characterised mainly by contributory policies – social assistance schemes established after the Second World War are characterised by relatively inclusive measures with well-defined rights and duties and relatively homogeneous access criteria. This was also true for federal countries like Germany. Many continental countries – like France – first established many social minima covering most parts of the population at risk of poverty with categorical schemes, which were highly differentiated in terms of access criteria and generosity. In recent years, however, they have moved towards general measures like the Revenue Minimum d’Insertion (Paugam, 1993). In these countries, poverty rates are medium–low and reflect relatively effective redistributive mechanisms. Active subsidiarity (Kazepov, 2008) characterises many policies, allocating responsibilities to families and civil society, but also channelling resources to meet them. In this scenario, Southern European countries are in a marginal position. On the one side, they share with continental countries a fragmented but relatively well-developed contributory system. On the other side, they totally lack policies against poverty regulated at the national level (Saraceno, 2002; Ferrera, 2008).1 Those who are in economic need are covered by highly diversified local measures. The only exceptions are measures for the elderly. In Italy, for instance, the social pension (established in 1969 and renamed social cheque in 1995) has been the only measure defining a claimable right for people in economic need for a long time. In short, the model is characterised by policies with a negligible redistributive impact and the allocation of social responsibilities to the family (Ferrera, 1984, 1996, 2008; Fargion, 1997; Andreotti et al, 2001; Saraceno, 2009), which shares the resources of the retired (male) breadwinner with family members to

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face emerging needs. This division of labour worked only up until the 1980s because the male breadwinner had a family wage and women were the main carers. The difficulties in entering the labour market that young people are facing, the higher degree of flexibility and precariousness, and the increased participation of women in the labour market without adequate conciliation policies for two-earner families (Saraceno and Keck, 2010) show these limits. This is a clear example of passive subsidiarity (Kazepov, 2008), which indicates a strong delegation of social responsibilities to families without adequate transfers of both cash and in-kind resources. The four models outlined earlier show diversified roles for social assistance schemes in different countries, and also different poverty rates. The latter are the result of the effectiveness, first, of the welfare systems as a whole in impeding social risks translating into conditions of need, but also of social assistance schemes and their ability in limiting the conditions of need and overcoming them. Shifting towards third-generation social assistance/minimum income schemes From the second half of the 1980s, the debate on social assistance changed. New needs and new risks (eg long-term unemployment) increased the share of those exiting insurance-based social protection schemes and becoming social assistance claimants (see Table 4.2). Within one decade, the population ‘on welfare’ doubled, in particular, in those countries where the right to social assistance is claimable (eg Germany and the UK). To address these changes, most welfare systems reacted rather homogeneously, developing a range of activation measures that paved the way towards third-generation social assistance schemes (see Table 4.3), with a transition to active measures. Table 4.2: Working-age population (15–64) covered by social assistance schemes, 1980–99 (%)

1980 1985 1990 1995 1999

Belgium 1.5 1.7 2.1 2.5 2.5

France – –a 1.2 2.3 2.8

Germany 0.9 1.7 2.1 2.2 2.2

Sweden 0.2 0.5 0.5 1.1 1.1

Note: aFrom 1988, France adopted the Revenue Minimum d’Insertion Sources: Adapted from De Neubourg et al (2007: 18)

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UK 3.5 7.8 7.0 10.5 9.2

1998–2002 Reddito Minimo di Inserimento pilot, but since 2001, regional competence From 2009, Social card

Since 2005, Hartz IV which merges unemployment subsidy and social assistance

109

Public and private forprofit (less relevant)

Governance actors

Mainly Public and social Public and third sector partner (active subsidiarity)

Public and third sector (passive subsidiarity)

Very high on benefits and services

Devolution at regional level and weak coordination

Sources: Adapted and further developed from: Eardley et al (1996), Saraceno (2002), Kazepov and Sabatinelli (2001, 2006), Lødemel and Trickey (2001), De Neubourg et al (2007), Serrano-Pascual and Magnusson (2007), Kazepov (2010) and Van Mechelen et al (2011)

Public and private forprofit

Medium, decreasing due Low, but increasing on to national guidelines activation measures

Street-level bureaucrats’ discretion

Low on benefits, medium on services

Centralised with vertical Centralised with vertical Federal and at Länder Local autonomy level with vertical and coordination coordination and centrally framed, increasing Départment horizontal coordination increasingly coordinated autonomy

Territorial organisation

Medium, but increasing on insertion contracts

Promoting social and job participation in a frame of individual and collective responsibility

High fragmentation and limited rights

South-European (familialistic) Italy

Continental/federal (conservative) Germany

Balanced conditionality Balanced conditionality with rights and duties in in a frame of individual and collective a contractual frame responsibility

Since 2009, Revenue Solidarietè Active (RSA) (substitutes for Revenue Minimum d’Insertion)

Continental/central (conservative) France

Activation policies

High conditionality on job insertion and individual responsibilities

Since 1996, Jobseekers Socialbidrag Allowance (since 1982, part of Socialtjänstlagen framework law on social services)

Recent reforms

Anglo-Saxon (liberal) UK

Nordic (redistributive) Sweden

Model Country

Table 4.3: Main changes in social assistance schemes in Europe, 1990–2013

Italian social assistance in the European context

The Italian welfare state in a European perspective

The meaning of the term ‘activation’ varies considerably, ranging from solutions that privilege human resources development and active social inclusion measures to more punitive measures aimed at limiting welfare dependency and containing costs (Lødemel and Trickey, 2001). In the first case, activation policies aim not just at labour insertion, but also at state responsibility for social cohesion. In the second case, measures are targeted directly at labour insertion, with an emphasis on individuals’ responsibilities and conditionality in accessing benefits. Nordic countries – despite the strong work orientation – embrace prominently the first activation approach, while Anglo-Saxon countries embrace the second one. Continental European countries synthesise both approaches, as Southern European countries do. The latter, however, do so within a more fragmented regulatory frame. These transformations implied changes in the territorial scales at which policies were designed, managed, implemented and funded, and in the actors involved. Figure 4.1 presents the trends of the relative importance of the three main scales: the national, the regional and the local. In Figure 4.1, only one scale is going in a similar direction in all four countries, the local, which is gaining relevance almost everywhere. There are multiple reasons for this trend: on the one side, services and individualisation necessarily imply proximity; on the other side is the spread of the relatively successful rhetoric – supported by the EU since the Maastrict Treaty (1992) – of subsidiarity. Moreover, processes of neoliberalisation require high degrees of autonomy in order to implement new public management-oriented reforms. Also, processes of empowerment and participatory planning de facto promote local initiatives. All this – partly contradictory – rhetoric converges in identifying the local level as the ideal scale not only for implementing policies, but also for regulating, managing and financing them (Kazepov, 2010). An example of the complexity of these pathways is the development of replacement rates of income-maintenance schemes. Up to the year 2000, replacement rates (eg of unemployment benefits, pensions, etc) decreased. Afterwards, the picture diversified, with some countries displaying rising replacement rates for social assistance schemes (Marx and Van Mechelen, 2010: 13). Figure 4.2 shows the positive dynamic in Germany, where the implementation of the Hartz IV reform and the merger of social assistance and employment assistance brought about an increase of the benefit (Eichhorst et al, 2010). Increasing and decreasing replacement rates can have different meanings. Decreasing replacement rates can be the result of a lack of

110

Italian social assistance in the European context Figure 4.1: Changing scales in selected policy areas in four European countries, 1989–2006 National state

Regions (NUTS2)

Italy 9 8 7 6 5 4 3 2 1 0

Finland 9 8 7 6 5 4 3 2 1 0

1990

1995

2000

2005

1990

1995

2000

2005

Poland

France 10

8

8

6

6 4

4

2

2

0

Local level (NUTS3)

1990

1995

2000

0

2005

1990

1995

2000

2005

Notes: NUTS = Nomenclature of Units for Territorial Statistics; NUTS2 = NUTS regional level 2; NUTS3 = NUTS provincial/departments level 3. Trends refer to three policy areas: activation policies on the labour market; social assistance policies sensu strictu; and elderly care. For calculations, see Barberis et al (2010: 386–8) Source: Kazepov (2010: 56–60)

indexation so that the benefits lose real purchasing power, or the result of a better dynamic of incomes increasing comparatively more. Figure 4.2 also shows us other aspects, including more generous benefits for families with children (the ‘more deserving’) and the large divide between Italy and other countries. In Italian social assistance schemes, thresholds are mainly used to identify those who are entitled to the measure. However, the amount paid is not defined automatically, but, rather, on the basis of various criteria, including greater discretion and budgetary constraints, which de facto limit the right to a guaranteed minimum income (see Table 4.4). In general, taken all together, social assistance schemes show different degrees of adequacy against processes of impoverishment. Indeed, only a few countries have replacement rates higher than 40% of the equivalent median income (Marx and Van Menchelen, 2010).

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The Italian welfare state in a European perspective

Figure 4.2: Net social assistance as a percentage of median equivalent income, 2001–09 2001

2009

Single working-age person (25–55) 80 64

60

52

50

45

40

37 31

30 24

22 19

20

0

41

DE

IT-1

IT-2

PL

SE

19

UK

Couple with two children (7 and 14 years old) 80 69 60

60 43

46

56 48

46 39

40

32 32 20 19

20

0

DE

IT-1

IT-2

PL

SE

UK

Notes: Data for Italy is presented for two options: 1) the first (IT-1) refers to the nominal threshold of the Minimo vitale in Milano and does not correspond to the benefit actually paid. The second (IT-2) estimates a proxy of a monthly amount considering the total amount actually paid for six months (maximum period) and dividing it by 12. Source: Van Menchelen et al (2011)

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Italian social assistance in the European context Table 4.4: Social assistance cash benefits in PPS (€) in selected countries, 2008–09 Country Single adult (2008) Social assistance Housing allowance Single mother with twoyear-old child (2009) Social assistance Family allowance Housing allowance Regional variation Duration

Sweden 756 365 391

United Kingdom France Germany 494 na 494 na n.a.

Italy 389 146 243

Poland 190 190 na na

1,054

1,204

924

1,327

499

482 93 479

321 368 515

423 154 347

660 288 379

252 38 209

Low

Very high

Relatively low

Very low

As long as the condition of need persists

Average

Limited

Note: PPS = Purchasing Power Standards Source: Own calculation based on Kazepov (2010), Barberis et al (2010: 202) and Van Mechelen et al (2011)

Minimum income and social assistance policies in Italy Within the comparative frame we outlined in the previous sections, Italy performs badly. The Italian welfare state has a series of critical issues, as already discussed in the introduction of this volume: categoriality and fragmentation; the unbalanced distribution of public expenditure; clientelism; and familism. These criticalities also apply to social assistance and the aim of this part of the chapter is to understand how they persisted relatively stably despite the many reform attempts and the pilot implementation of the Reddito Minimo di Inserimento (Minimum Income for Insertion; RMI). The 1980s: economic crisis and the desynchronisation of reforms The features outlined earlier established a highly unequal protection system in the 1960s and 1970s. This system granted some form of support to families, at least until the 1980s, by guaranteeing the income of at least one family member: usually the male breadwinner. Within this frame, a ‘guaranteed family income’ made the need for social assistance ‘residual’ while the role of the family became crucial as it acquired a resource-pooling function with a strong gender division of labour. However, the family – if not adequately supported – is just a micro-redistributive unit that tends to reproduce socio-economic

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The Italian welfare state in a European perspective

inequalities rather than contrasting them (Saraceno and Naldini, 2007). This fragile and unequal equilibrium could only work given certain conditions, which the growth of unemployment and changing demographic trends undermined at the very basis. Parallel to these dynamics, processes of desynchronisation of reforms also took place, that is, processes in which reforms in different policy areas took place at different speeds, ignoring their synergic effect. A good example is the complex intersection between labour-market policies and social assistance. If the male breadwinner position of single-earner families weakens and he loses his job and is not able to access contributory income-maintenance schemes, social assistance measures become more relevant. In the 1980s, the measures used to combat emerging unemployment were quite traditional and passive: the Cassa Integrazione (a shortterm redundancy payment scheme) and early retirement (introduced in 1981). The Cassa Integrazione was for a long time a functional equivalent of inadequate unemployment benefits (see also Chapter Three). One of the main problems was that not all workers could access the Cassa Integrazione, but only workers from the industrial (firms with more than 15 employees) or retail (firms with more than 200 employees) sectors. From the second half of the 1980s, reforms addressed this unequal and segmented policy field, trying to reorganise measures and recalibrate expenditure (Sestito, 2002). Big changes, however, had to wait for Law LN 223/91, which widened rights (eg more generous unemployment benefits covering more categories) and limited the improper use of measures like the Cassa Integrazione. These changes modified the system of social protection, substantially shortened the duration of the period that the Cassa Integrazione was used and had an impact on all who were forced to exit the insurance-based measures to access social assistance schemes – the number of which, while still a minority, was growing. Unfortunately, social assistance schemes were not well-equipped to face these changes. At that time, they presented a complex picture in which first- and second-generation schemes coexisted. The allocation of public responsibility for charity and social policies to regions and municipalities in the second half of the 1970s vis-a-vis a lacking national framework law (DPR 616/77) brought about a process of territorial differentiation from the early 1980s (Negri and Saraceno, 1996; Fargion, 1997; Sabatinelli, 2009; Madama, 2010). Many regions (but not all) approved a regional framework law without coordinating with one another. Similarly, using their degrees of freedom, municipalities

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Italian social assistance in the European context

approved internal procedures autonomously from regional regulation, defining access criteria, amounts and durations on their own. This situation consolidated the already-ongoing process of differentiation of rights and – due to the lacking synchronisation of the two policy domains – produced a coverage gap. Despite the lacking national framework law, some important measures have been approved that affect individuals and families in a condition of economic need. Among them were: a) the revision of means-tested pension supplements (LN 638/83); and b) the introduction of the assegno al nucleo familiare (a sort of family allowance) (LN 153/88). The first case was a hybrid measure, mixing contributory and mean-tested criteria.2 A similar ambiguity characterised the assegno al nucleo familiare. In that case, however, funding is totally based on contributory records, with the means test only used to identify potential beneficiaries. Both measures, in their contradictory institutional design, privilege categories with an attachment to the labour market, perpetuating and reinforcing the insider–outsider divide. These trends are paralleled by changes in the actors’ constellations and their specific relations (Sabatinelli, 2009: 157). Social spending retrenchment gradually brought local authorities to externalise services, substantially involving third-sector actors not only in the implementation, but also in the management, of the different measures. All these parallel trends reinforce the decoupling of labour-market and social assistance measures and their desynchronisation. These emerging coverage gaps and the spread of areas of social vulnerability not covered by any institutional support would consolidate over the 1990s. This implied that in Italy, and in Southern Europe more generally, families took over the burden of economic need (Garcia and Kazepov, 2004; Saraceno, 2009). The 1990s: European pressures and hope for change The 1990s is the decade during which the desynchronisation between labour-market and social assistance policies further increased. However, the 1990s was also the decade during which ambitious reforms – aimed at integrating cash benefits and in-kind services – were undertaken. An important role in this process has been played by the EU: on the one hand, through the Maastricht Treaty (1992) and the pressure for meeting the European Monetary Union criteria (eg public deficit constraints); and, on the other, through discourses legitimising political reform processes (Graziano, 2011). Its role provided a window of opportunity (Kingdon, 1984) for countries to revisit their welfare

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The Italian welfare state in a European perspective

systems, and, in Italy, to specifically address the fragmentation of rights (and duties) that had consolidated in the post-war decades. The hope for change was also fed, on the one hand, by deep changes in the Italian political system after the tangentopoli – bribery scandal (Barbagallo, 2009) – and, on the other, by important labour-market (see Chapter Three) and pension (see Chapter Two) reforms. Also, important policy innovation processes, like Law 285/97 on the promotion of rights and opportunities for children and adolescents, played a relevant role. Disregarding the fact that this law did not address poverty explicitly, it designed a new organisational model fostering multilevel governance arrangements that later became the basis for the national framework law on social policies and social assistance approved in November 2000 (LN 328/00). The law was the first attempt to experiment with the integration of cash and in-kind benefits and at resynchronising the existing, but fragmented, policies targeted at children. The ambition was to find a dynamic equilibrium between vertical and horizontal subsidiarity (Sabatinelli, 2009), that is, between scales and actors, and to see their complementary roles. In 1997, the Onofri Commission established by the Prodi government, aimed at analysing social expenditure and at proposing reforms within the realm of social policies (Commissione Onofri, 1997), identified a critical juncture not so much in the level of social expenditure, but rather in its unequal distribution. The proposed solution was to rebalance budgetary items by addressing uncovered needs and categories. In particular, a major reform of social assistance was envisaged. In order to address these concerns, in 1999, the Prodi government started a pilot, testing the RMI. Testing the Reddito Minimo di Inserimento At the beginning of the pilot of the RMI, Italian social assistance schemes were extremely fragmented. Not only were access criteria different, but also provisions in terms of generosity, duration, the actors involved and the funding available. As Table 4.5 shows, the income thresholds existing in some municipalities and the respective equivalence scales were extremely diversified, without any evidence legitimising this differentiation. Usually, the amount was defined at the discretion of the social worker in a frame of lacking certainties and rights, that is, of the impossibility of claiming rights in front of a court. Severe budgetary constraints further restrict access. This influenced the duration of ‘being on benefits’, reducing it to 3–6 months within one year.

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Italian social assistance in the European context Table 4.5: Minimum income and equivalence scales in some municipalities before the Reddito Minimo di Inserimento pilot (1998)

Municipality Nichelino Limbiate Cologno M.se Rovigo Genova Massa C. Castellana Caserta Napoli Leonforte Catenanuova Catania Sassari RMI

Geographical area North

Centre South

Italy

Monthly base (Euro) 353.77 240.15 265.46 360.49 232.41 309.87 149.77 103.29 258.23 204.03 360.49 274.84 274.24 258.23

1 100 100 100 100 100 100 100 100 100 100  75 100 100 100

2° 70 35 72 50 75 30 – 25 57 – – 33 43 57

3° 40 39 72 30 45 20 – 25 47 – – 46 43 47

4° 10 34 72 30 20 20 – 25 42 – – 21 43 42

5°  10  34  71  30  10  20 314  25  39 – – –  35  39

Note: The social cheque was of ITL507,200 (€261.95) in 1998 Source: IRS, Cles and Fondazione Zancan (2001)

The RMI pilot, aimed at testing a third-generation measure, taking inspiration from the Revenue Minimum d’Insertion francese, and trying to overcome fragmentation. The pilot started in January 1999, lasted for two years and involved 39 municipalities, mainly located in the southern regions where poverty is highest (CIES, 2008). At the end of the pilot, rather than generalising the measure, the government prolonged the pilot by two more years, covering 267 municipalities. The RMI aimed at granting homogeneous access criteria and benefits at the national level, while retaining some degree of flexibility at the local level. Indeed, planning and managing were municipalities’ responsibilities, allowing them to adapt to local specificities and to involve contextually relevant actors in the job and social insertion schemes. Local insertion schemes, however, displayed important differences: in the central/northern regions, they were mainly work-related, while in southern regions, they were targeted mainly at social activation (eg care activity, educational achievements, etc). These differences were due to a complex mix of factors, ranging from socio-economic differences to existing (or lacking) local networks of actors. A relevant role was played by the different municipalities’ organisational capacities and the existence (or not) of social services.

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The Italian welfare state in a European perspective

Considering the specificities of the Italian case and the existing contextual differences within which the RMI pilot was tested, it is no surprise that several critical issues emerged,3 the main ones being: 1. Lacking support throughout the pilot. No clear guidelines on how to manage the pilot were provided and municipalities were left alone in the interpretation of the criteria provided. 2. The feeble institutional coordination within the pilot. Collaboration was limited among actors involved in different policy areas (eg labour and family policies, etc). 3. Moonlighting. The magnitude of this issue – in particular, in southern regions – brought several municipalities to estimate a revenue in case of ‘0’ income. 4. Untrained personnel. Social workers were trained only at the end of the pilot and no support was provided. 5. The difficulties in creating virtuous circles of social and work insertion for RMI beneficiaries. The deeply rooted socio-economic differences undermined the insertion capacities precisely in those contexts where the conditions of need were more relevant. 6. The variability of local actors. The pilot allowed the institutionalisation of already-existing relations and practices but was not able to create new networks. This was particularly true for socially disadvantaged areas, like the municipalities in southern regions. 7. Distorted vertical subsidiarity. The exclusion of regions and provinces from any decisions about social assistance and the identification of municipalities as the key players, despite their weak organisational capacity (no critical mass to develop adequate services), provided a distorted view of subsidiarity. These critical aspects show that the institutional preconditions were not particularly favourable and undermined the potential success of the pilot from the very beginning. The right-wing government in power after the 2001 elections used them to justify the cancellation of the RMI. As an alternative measure, the government proposed the Reddito di Ultima Istanza (RUI; a last resort income), which was to be organised at the regional level and foresaw lower benefits and national co-funding. No region implemented the RUI, however, as the constitutional court ruled against the possibility of national co-funding in matters of exclusive competence of regions since the constitutional reform in 2001 (Sabatinelli, 2009; for details, see also the next section).

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Italian social assistance in the European context

Within this frame, only three regions started similar pilots at the regional level: Campania (2004–06; citizenship income), Basilicata (up to 2010; a programme for the promotion of a system of solidarity) and – for a short period (2006–08) – Friuli Venezia Giulia.4 Other regions adopted more limited options. In 2009, Latium approved a Guaranteed Minimum Income (Reddito minimo garantito) targeted at unemployed and precarious people with an income below €7,500. These pilots displayed a growing awareness of the need to adopt active, coherent and coordinated measures against poverty. At the same time, they reproduced all the critical aspects identified earlier, from categorical targeting, to differentiated access criteria and generosity, to the divide between cash and in-kind benefits. It is true that from 1999 onwards, a special family allowance for low-income families with at least three underage children was also established and fiscal credits were increased. However, the benefits foreseen (around €130/month) for families with an income below €24,000 were only able to address poverty intensity rather than reducing poverty tout court (Saraceno, 2002; Sabatinelli, 2009). This implied reducing the distance between low-income families’ expenditure and the poverty threshold, without being able to lift them above that threshold. The 2000s and the LN 328/00 revolution: unmet expectations 10 years later Institutionalising the RMI would have involved a major change of the Italian welfare system as it would have not only reorganised the fragmented landscape of social assistance measures, avoiding overlapping targets, but also fostered the integration of cash benefits and in-kind services. This integration was also foreseen by the national framework law (LN 328/00) aimed at establishing an integrated system of social benefits and services and finally approved in the year 2000 after decades of fierce debate (Commissione Onofri, 1997; Guerzoni, 2008). This integration foresees the complementarity of vertical and horizontal subsidiarity, valorising the role of the third sector in planning and implementing social policies. Within this frame, the state has the responsibility not only to define the general principles and objectives informing social policies, but also to identify the minimum standards that social policy measures have to guarantee in a homogeneous way throughout the whole country. Regions have planning and coordination responsibilities and also monitor the outcomes of policy implementation. Finally, municipalities are

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responsible for the management and implementation of the local system of social services. As the institution closest to citizens, they have to guarantee the widest possible participation of civil society organisations and for-profit actors. Less than one year after the national framework had been approved, the Parliament approved a constitutional reform (LC 3/2001) allocating exclusive competence over social policies to regions, undermining the implementation of the LN 328/00. The state retained three major tasks: a) financing the equalisation fund; b) coordinating the constitutional reform implementation; and c) introducing the minimum standards throughout the whole country. Financing the equalisation fund On the basis of the constitutional reform, regions should finance the integrated system of social assistance benefits and services with their own taxes and the state should intervene only in financing the equalisation fund, which is aimed at compensating the weaker fiscal capacity of some regions. This reform, however, has not yet been implemented, leaving all traditional mechanisms still in place. In the last decade, the financing of social policies followed ambivalent trends in terms of both amount and structure. Over the years, governments tried to rationalise the different budgetary items, pooling them into the so-called Fondo Nazionale per le Politiche Sociali (FNPS), the national fund for social policies, established in 1998. Since then, the amount has been going down (see Table 4.6). This is particularly true for those resources targeted at services and allocated to regions. The latter witnessed a substantial reduction of their share of resources: from €1 billion in 2004 to €300 million in 2013. Decreasing resources, however, is not the only problem. The yearly definition of the amount provides an overly short-term perspective and impedes adequate planning. Until 2010,5 the regional share of the FNPS was defined only after covering rights-based payments due by Istituto Nazionale per la Previdenza Sociale (INPS) (eg family allowances for families with three underage children and maternity allowance granted through municipalities). This has not only increased the uncertainty about the amount of state transfers, but overloaded sub-national bodies with increasing management and implementation responsibilities vis-a-vis less regional transfers. The compensatory role that social assistance should play – for instance, stabilising consumption – fades away and overloads families with the primary responsibility to find solutions to their situation of need.

120

121

Other

25.4

1,623.2

64.6

1,591.0

1,716.9

10.4

69.0

52.3

906.9

678.3

2003

1,884.5

14.0

17.3

44.5

1,000.0

808.7

2004

1,308.2

–

39.0

44.5

518.0

706.7

2005

1,625.1

–

50.1

44.5

775.0

755.5

2006

1,776.3

–

43.5

44.5

956.3

732.0

2007

1,464.5

–

41.4

–

656.5

766.6

2008

1,420.6

–

60.4

–

518.2

842.0

2009

2011

2012

2013

–

218.1

–

39.5

–

178.6

–

43.0

–

32.1

–

10.9

–

343.8

–

43.8

–

300.0

(1,290.3) (1,253.1) (1,098.4) (1,424.7)

435.3

–

55.0

–

380.3

–

(855.0) (1,035.0) (1,055.4) (1,080.9)

2010

Note: Absolute values are rounded up. Source: Calculations by Arlotti on Decreti Ministeriali di riparto del FNPS from 2001 to 2013 (see also Di Felice and Menghi, 2005; Arlotti, 2009:141), available at www.lavoro.gov.it/AreaSociale/FondoNazionale/Riparto/Pages/default.aspx

Total FNPS plus INPS

Total FNPS

55.6

282.1

771.5

488.6

2002

67.6

225.3

Municipalities

Ministries/ other admin.

475.7

757.8

INPS

2001

Regions

INPS (not part of the FNPS)

Table 4.6: Annual funding allocated to the national fund for social policies 2001–13 (million euros) Italian social assistance in the European context

The Italian welfare state in a European perspective

Besides the FNPS, there are many other public budgetary items that are included in overall social assistance expenditure. Table 4.7 shows the prominent role of cash transfers, in particular, pensions, and the changes that have taken place over the last three decades. The move towards a contribution-based pension system influenced the decrease of means-tested pension supplements (integrazioni al minimo). There is an increase of expenditure for in-kind measures (from 5.4% in 1985 to 14.1% in 2012) and for disability pensions, which include the attendance allowance aimed at supporting caring activities. An important role has been played by disability pensions, which confirms its income-maintenance function. For a long period of time, social assistance measures were financially covered by contributions paid to INPS: probably a unique case in Europe as these measures were not covered by fiscal revenues. At the end of the 1980s (LN 88/89), the establishment of the Gestione Interventi Assistenziali (GIAS; a special fund aimed at the management of social assistance and support measures) partly solved this problem, foreseeing an ad hoc transfer from the state within the yearly approved budget law. However, the GIAS does not cover the means-tested pension supplement, which is still – despite its substantial decrease – one of the main budgetary items of social assistance expenditure: it was 62.2% in 1985 and 24.1% in 2012. The legal complexity that regulates the financial fluxes and, especially, the interests attached to single budgetary items make the financial conundrum one of the most difficult to solve. Indeed, it impedes the development of systematic Table 4.7: Social assistance expenditure by budgetary item (%)

Means-tested pension supplement Family allowances Social pensions/ social cheques Disability pensions Survivor pensions Pensions for the blind and the deaf In-kind benefits Other cash benefits Total

1985– 2006– 2012 2012

1985

1990

1995

1997

2006

2012

62.2

49.3

46.4

46.2

25.8

24.1

–38.1

–1.8

12.0

13.6

8.7

11.7

13.1

13.0

1.0

–0.1

4.8

5.6

5.5

5.1

8.1

8.4

3.7

0.4

8.5 4.2

17.2 4.4

23.0 4.3

20.3 3.7

26.7 2.4

30.1 2.7

21.6 –1.5

3.4 0.3

1.6

2.2

2.7

2.5

2.7

3.2

1.7

0.6

5.4 6.6 7.9 8.8 14.8 14.1 1.4 1.1 1.4 1.7 6.4 4.5 100.0 100.0 100.0 100.0 100.0 100.0

8.6 3.0

–0.7 –1.9

Source: Calculations by Arlotti on Commissione Onofri (1997), Bosi (2008) and Bosi and Ranci-Ortigosa (2013)

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synergies between income-maintenance measures and in-kind provisions that characterise the transition to third-generation social assistance measures. Coordination and national equalisation measures The 2001 constitutional reform foresaw a profound change in the inter-institutional governance relations among the state, regions and municipalities, also significantly modifying the LN 328/00 reform approved just a few months earlier (Righettini and Arlotti, 2009; Barberis, 2010). However, foreseen national minimum standards have never been defined, and neither have local autonomies been reorganised or equalisation measures implemented. Existing consultation bodies are inadequate to manage the transition. Besides having a low institutional profile, the so-called ‘conferenze’ (in particular, the ‘conferenza- statoregioni’) played a minor role in avoiding inter-institutional conflicts among the territorial levels of government. These conflicts increased exponentially after 2001 and became highly politicised (see Arlotti, 2009; Barberis, 2010). A lack of coordination – in a context of lacking regulation – hindered the homogenisation of the different welfare arrangements and reinforced the existing territorial fragmentation from an institutional point of view (Kazepov, 2009). This reinforced the emergence of different regional models (Madama, 2010), providing them with institutional legitimacy. However, de facto, sub-national autonomy translated into diverging trends, wild municipalism (Saraceno, 2005) and weakening national responsibility. One positive consequence of implementing LN 328/2000 – at least in some regions – was the establishment of social area plans (piani sociali di zona), which became one of the most successful instruments of horizontal governance (Ranci-Ortigosa, 2010), involving most stakeholders in an innovative way. The minimum standards for social provisions (i livelli essenziali delle prestazioni sociali) Foreseen by LN 328/00 (art 22), the i livelli essenziali delle prestazioni sociali (LEPS) were defined in a rather vague way, listing both cash and in-kind measures to be covered by the FNPS, ranging from income support schemes against poverty to accompanying measures targeted at the homeless or elderly home care. The 2001 constitutional reform changed their role substantially by including them in the constitution

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(art 117) and framing them as civil and social rights that have to be guaranteed throughout Italy. The interpretation of this article started an intense scientific and political debate, without, however, bringing about their final definition and implementation, which is still to come (Da Roit, 2008). The lack of definition stems from many factors, not least the fragmentation of the Italian welfare system. Indeed, implementing the LEPS would imply an overall redesign of benefits and services, involving many actors with vested interests attached to single measures and retaining differentiated veto power. This is one of the last windows of opportunity to reform social assistance measures to overcome particularism and sector bias. Other recent social assistance measures against poverty: social card and family bonus At the end of the first decade of the new millennium, a set of new measures aimed at fighting poverty and the 2007/08 crisis have been introduced: the carta acquisti (social card), the family bonus, the electricity bonus and so on. For reasons of space, it is not possible to review them all.6 However, I will review the social card in the following because it is a paradigmatic case of current developments in Italy. Launched in 2008 (DL 112/08), the social card is a debit card targeted at Italian citizens over 65 and families with underage children (at least one below the age of three). Eligibility criteria were tight (an income below €6,000/year) and benefits were very limited (€40/month for a total of €480/year). No accompanying measure or in-kind provision and a rather limited coverage: 815,000 actual claimants accessed the measure vis-à-vis the expected 1.3 million. Given those access criteria, only 17% of those in absolute poverty were entitled to the measure, while large families with children above the age of three or without cohabiting elderly people are excluded, despite being groups at high risk of poverty (CIES, 2009). Given the inability of the social card to combat absolute poverty (CIES, 2009) and the wide critique it got, in 2012, the government approved – after quite some debate – a pilot for a ‘new social card’, aimed at partly overcoming the limitations of the first one. In particular, it increased the amount of the benefit from €40 per person to €231 for a couple. The pilot was implemented in the 12 largest Italian cities and the ‘new’ social card actually coexists with the ‘old’ one. Municipalities and third-sector associations play a key role in managing and implementing the measure, and more potential claimants are covered. Besides cash transfers, the measure also introduced ad hoc

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Italian social assistance in the European context

in-kind measures. It is only through this synergy that social assistance can shift towards third-generation policies. Obviously, this will not be sufficient. All deficits in the implementation of the ‘old’ social card should be avoided: training for those who will manage the measure; adequate resources; claimable rights; and the reduction of discretion.

Uncertain futures In 2000, the Council of Europe held in Lisbon defined the year 2010 as the European year for fighting poverty and social exclusion: an opportunity to reflect on what has been done in the last decade(s). For most European countries, this period represented a consolidation phase of third-generation social assistance schemes and the spread of local experimentation. It is a crucial shift that coincided with the spread of activation measures across most social policy areas. The intersection between cash benefits and services, as banal as it is, provided a wide area of experimentation for innovative solutions to old and new needs. However, the context within which innovative solutions and practices were developed in Europe is very different from the Italian context. Second-generation social assistance schemes, whose claimable rights consolidated after the Second World War, widened in most countries the array of policy tools in the transition towards third-generation measures. The Italian case – vis-à-vis the many reforms in similar directions – presents a high degree of resilience and it seems that every ‘window of opportunity’ turned into a ‘lost opportunity’ to change those aspects of the Italian system that produce among the highest levels of income inequality and poverty in Europe. How did this situation come about and how did it consolidate? There are several explanations that intersect and reinforce one another. On the one hand, first-generation social assistance was managed in Italy through a widespread network of charities and parishes, which freed the state from functional pressures to address poverty through public social assistance schemes (Gozzini, 2000). On the other hand, the fragmented landscape of actors with differentiated power produced a fragmented institutional architecture, leaving out those without a voice. The post-war political polarisation between Christian Democrats and the Communist Party during the golden age of the welfare state further reproduced, instead of overcoming, this divide. Indeed, policies only protected workers in the key sectors of the industrial economy and left the interests of charities untouched until the LN 328/00 framework law. This window of opportunity has not been taken up due to shifting political priorities, economic standstill and

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new discourses legitimising flexibility rather than income guarantees. Indeed, it makes a big difference whether a reform is debated and approved during an expanding economic cycle characterised by increasing available resources or during a recessive economic cycle characterised by recalibration strategies and real cuts in available resources. In the first case, the degree of political manoeuvre and the options for compromise among actors with different views are surely higher than in the second case. Unstable and decreasing funding and (still) lacking minimum standards and equalisation funds make it difficult to take up any new window of opportunity. Within social expenditure, social assistance is the only budgetary item that has decreased over the last 20 years: from 5.4% in 1985 to 3% in 2006 (Bosi, 2008). A lack of homogeneous policies also produces an information deficit that makes it difficult to define minimum (common) standards. Together with missing strong inter-institutional coordination, this brings about conflicts between the different territorial levels of government. The crucial point is that subsidiarity – the rhetorical driver of all these changes – should not translate into a delegation of social responsibility. The risk is real: substantial cuts brought about the reduction or closure of services; benefit provision is not based on claimable rights; and worsening services are targeted at disadvantaged people. Given this context, will the new social card be able to start a process of ‘possible and pragmatic change’? Is it the right way towards Europe? No, Europe is still too far away. Acknowledgements Many thanks go to Tatiana Saruis for her help in the literature update. Marco Arlotti should be thanked for his support in updating the data and his insights on the structure of social expenditure. A special thanks goes to Eduardo Barberis for his substantial comments on previous versions of this chapter. The usual disclaimers apply.

Notes Spain (Cataloña in 1988 and then the other Comunidad Autonomas) and Portugal (in 1997) have introduced minimum income schemes. These, however, suffer from severe limitations: high differentiation at the national level in Spain and lacking generosity in Portugal. 1

At the end of the 1980s, nearly 30% of the pensions paid by INPS received a means-tested supplement to a ‘minimum’ threshold (Artoni and RanciOrtigosa, 1989). 2

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For an overview, see Irs, Cles and Fondazione Zancan (2001), Saraceno (2002), Sabatinelli (2009), Ministero della Solidarietà Sociale (2007) and Ranci-Ortigosa and Mesini (2011). 3

For an overview, see Centro Studi dell’Assemblea Legislativa della Regione Emilia Romagna (2010). 4

From 2010 onwards, subjective rights-based social assistance benefits were no longer included in the FNPS but have shifted to a specific budgetary item. The aim of this shift was to guarantee the FNPS share to sub-national bodies. 5

The Governmental Commission on Social Exclusion assessed the impact of all instruments (CIES, 2009) and found that their impact was, and still is, residual, highlighting how they reproduce the fragmentation of provision and the prominent role of cash transfers (Mesini, 2011). 6

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FIVE

Care policies in Italy between a national frozen landscape and local dynamism Marco Albertini and Emmanuele Pavolini

Introduction In recent decades, the transformations in the labour market and in the composition of households, as well as socio-demographical changes (in particular ageing), have put that part of the welfare state that deals with care policies under increasing pressure, in particular, child and elderly care. The traditional male breadwinner model has become less and less feasible and public support for families attempting to reconcile care and work has become one of the main goals of social policies in order to cover ‘new social risks’ and recalibrate the welfare state. The so-called ‘Social Investment Paradigm’ places a fair amount of focus on care policies, especially childcare (Morel et al, 2012). Italy has traditionally been characterised by a strong familistic approach, which has been a great barrier to the expansion of care policies. At the same time, the increasing pressure from a social demand that is increasingly unable to cope with care difficulties has been a good opportunity for policy innovation in this field. This chapter describes and interprets what has happened and why Italy has so far missed the occasion to strengthen its public social care, while other countries from continental and Southern Europe have tried to do so.

The main policy changes over time Probably the best description of changes in care policies in Italy during the 2000s was offered some years ago in an article by Naldini and Saraceno (2008): ‘Social and family policies in Italy: not totally frozen but far from structural reforms’. Since the beginning of the new century, no new social rights related to care issues have been established in Italy, nor have any relevant national plans to increase coverage rates

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been put forward. Although some legislative initiatives were produced, they usually fell short of what was required; quite often, reforms lacked the adequate financial resources both for implementation and to have any potentially significant impact on the coverage of needs (Da Roit and Sabatinelli, 2013; see also Chapter Four). The second part of the 1990s and early 2000s was the last period in which any reforms were attempted. The centre-left government passed three such reforms, but all three had shortcomings. In 1997, a law on children’s welfare (Bill No 285) promoted, among other things, care services both through the strengthening of traditional kindergartens and nurseries and through the development of new ‘integrative services’ (daycare centres with the co-presence of parents and professional staff, services with a reduced opening time, etc). The idea behind the law was to promote a differentiation in public care supply in order to reach a broader target population of children and families. However, only limited financial resources were provided to implement it. As a consequence, a variety of initiatives were established, but neither their stability over time nor their capacity to seriously tackle care needs were ensured (Da Roit and Sabatinelli, 2013). The result has been a weak increase in the coverage level. Data from the National Institute of Statistics (Istat, 2013) offer a picture of what has happened over the last two decades: in 1992, public services were covering, directly or indirectly (paying fees in private contracted-out facilities), 7% of children under three years old; this percentage had reached 11.4% in 2003 (of which 9.0% went to nurseries and 2.4% to ‘integrative services’) and 13.5% in 2012. In two decades, public services were only able to increase coverage in a limited way and a good part of this higher coverage was reached in the 1990s and early 2000s. In 2000, a law on parental leave was passed, introducing an important innovation (the possibility to fraction the leave period flexibly and an incentive for fathers’ uptake). However, there were also limitations in this case in terms of relevance and coverage of care needs offered by this legislation, in particular, in relation to duration and replacement rates (Naldini and Saraceno, 2008). The most promising reform passed in those years was Law 328 in 2000. This legislation was quite ambitious in terms of its general aims. In particular, it included the idea that national ‘basic levels of social intervention’ (LEAs) would be guaranteed everywhere in different policy areas and for several types of intervention, among which were child and elderly care: universalism was supposed to become the leading principle. However, the LEAs had two major shortcomings:

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they were vaguely defined and thus ended up not having any practical impact; and insufficient resources were dedicated to implementing them (notably, no new mechanism was created to guarantee adequate funding to ensure that social care and services would become less residual). Moreover, the 2001 constitutional reform transferred more power (but not more autonomous funding tools) to regions and local authorities, thus leaving the state with more limited tasks. In sum, the 1990s and early 2000s saw policy innovation that fell short once implemented, while the rest of the last decade witnessed even less legislation and the development of only a limited debate about how to reform social care policies. Centre-right governments were in power for most of the 10 years (a centre-left government was in charge for around one-and-a-half years between 2006 and 2008). Particularly during its first five years in office (2001–06), the Berlusconi government intervened in care policies in two ways in 2002–03. First, it lowered the threshold for entering kindergarten with Bill No 53/2003: this legislation allowed parents to send their children to kindergartens as soon as they reached two-and-a-half years old (instead of three years old, as prescribed by the previous legislation). The idea was to offer more statutory coverage in the three and younger age range without investing in early childcare facilities, but by simply allowing children to participate in classes where the teacher–pupil ratio is higher than in crèches. Second, at the end of 2002, the National Budget Planning Law for 2003 introduced the possibility of financing crèches attached to firms and similar childcare services. During its short term in office, the centre-left government sought to develop more traditional childcare facilities, investing around €800 million (with partial co-financing by regional authorities) in a National Extraordinary Nurseries Plan, with the aim of improving coverage by 4% of children under age three (Sabatinelli, 2010). In the first years of the crisis before austerity (2008–09), the last centre-right government announced some innovations, such as the financing of telework, more support for parental leave and small family-style care services, but it did not carry them through (Sabatinelli, 2010). In the last two decades, there has been some limited innovation and new financing in the case of childcare; however, even less has taken place in elderly care. In the mid-1990s, a national commission for the reform of the whole of Italian welfare, the so-called ‘Commissione Onofri’ (after the name of its president), proposed an in-depth review of the system of disability support and the introduction of a new longterm care (LTC) scheme. The idea was to go beyond an LTC system

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based mainly on cash benefits (the Companion Allowance; CA) and to develop a more integrated approach, mixing services and economic transfers. However, in the following years, the proposal was never taken seriously into consideration and was largely ignored. The structure of the Italian public LTC system has been traditionally characterised by the presence of two parallel models of intervention. The first and most important consists of a cash allowance scheme, the CA. The second, more residual, is based on local welfare schemes, which include the provision of residential and domiciliary services. CA is a universalistic measure established on a national basis and accessible to all citizens certified as totally dependent. The right to this allowance, independent of age, is guaranteed to those who are unable to walk and to perform everyday tasks and who require continuous care. While this measure was introduced in the 1980s primarily to provide disabled adults with benefits, over the past 20 years, there has been an unforeseen exponential growth of its use by the dependent elderly (Ranci, 2008): the coverage level among the elderly was less than 3% in 1984 but had risen to 10% in 2011 (Jessoula and Pavolini, 2013). CA does not involve any form of ex ante definition (or ex post control) on how the cash granted is actually used: once the right of a citizen to the benefit is recognised, it is given without any restriction placed on its use. Consequently, CA can be used to purchase services on the private market without restrictions and may indirectly encourage the growth of a grey care market, as will be described later. The second pillar of public LTC consists of local welfare programmes, including the provision of residential and domiciliary services. The very fragmented provision of such LTC services is the result of the considerable division of responsibilities among local and health authorities. Intervention is limited to a very small number of people compared with other Western European countries (Ranci and Pavolini, 2012). At the beginning of the 2010s, around 5% of the elderly population in Italy benefited from public home care programmes and 2.5% had access to residential care (Ranci and Pavolini, 2012). The only real LTC policy that Italian governments have been able to foster over the last two decades has been indirect support to the care labour market through a mix of the recognition of the role of migrant work in this field (both in terms of the regularisation of illegal foreign care workers, in 2002 and 2009, and of the setting of yearly quotas for migrant flows for care work) and the substantial acceptance of irregular work done by migrants in many households (the checking of the regularity of working contracts when families hire migrant carers has been quite limited over time) (Costa, 2013). The result is that at

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the beginning of the 2010s, Italy still showed a relatively low level of public coverage of needs through services in the main social care fields, namely, child and elderly care (Ascoli and Pavolini, 2012). Although almost nothing relevant has taken place at the national level, other actors and levels of government have been more dynamic and have tried to ‘modernise care policies from below’. In particular, a set of players including local governments, companies and trade unions, families, and the third sector have been trying to innovate. First, as a result of the decentralisation process that evolved in Italy, over more recent decades, local authorities and regions have developed more and more new ways to tackle care policy issues (Andreotti et al, 2012). The result has been an increase in local child and elderly care coverage, partly as a consequence of partnerships with the third sector and other private providers. Frequently, this increase in coverage rates has taken place as a result of funds coming directly from local authorities and not the national state. In 2010, for instance, around 63% of local authorities’ social expenditure came directly from their own sources (direct taxation), and this figure increased over the last decade (Istat, 2013). Second, enterprises and trade unions have been other important players in this attempt to ‘modernise Italian care policies from below’. ‘Occupational welfare’ – defined by Titmuss as benefits and services provided by employers to employees as a result of an employment contract – is increasingly becoming important in the Italian welfare system and is playing a new role in care policies (Pavolini et al, 2013). In comparison with the 1990s, there has been a strong increase in more recent years in industry- and company-level care policies, often discussed between firms, trade unions and local authorities. The request for flexibility required by companies is increasingly matched by the needs of many workers to better reconcile work with personal and family issues. Company-owned or company-funded kindergartens or crèches, other forms of professional help for childcare or for elderly care for workers’ parents, extra-statutory parental leave, and extrastatutory sickness leave when children or other close relatives are sick or have disabilities are all becoming more often associated with collective bargaining at the enterprise or industrial sector levels. In 2005, around 45% of female workers, who also had reconciliation needs, were able to obtain flexible working times. In 2010, this percentage rose to 58%, quite often as a result of some form of enterprise or industrial sector agreement (Pavolini et al, 2013). A 2012 survey showed that around 10% of large enterprises (with at least 500 employees) offered long-term care provision to their employees, 19% offered childcare

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services (in 2004, it was only 8%) and 28% offered extra-statutory care leave (Pavolini et al, 2013). Often, occupational welfare provision is developed jointly with local authorities. Third, the last players that have tried to cope with the ‘national frozen landscape’ are the families directly in need of help with care. In the absence of any real support from the state, households have discovered the market. In childcare, a significant part of the increase in coverage since the 1990s can be attributed to private providers not connected to local public provision. EU on Income and Living Conditions (EU-Silc) data for 2011 estimate a coverage rate for Italy of around 26% of children under age three receiving formal childcare. For the same year, Istat calculated a 14% public coverage rate. The difference between these two values provides an estimation of how extensive private provision is, almost as much as that funded publicly. Although the private market covers a considerable part of the demand for childcare, the situation is even more pronounced for elderly and long-term care. In the latter case, since the second part of the 1990s, migrant care work has become a central feature (Costa, 2013). Recent studies estimate the presence of at least 700,000 foreign care workers in Italy. This figure equals 81.5% of the overall labour force in the field (Costa, 2013). The effect that the financial crisis and austerity plans have had, and are still having, on Southern Europe, and Italy in particular, has already attracted considerable attention (De la Porte and Natali, 2014; Pavolini et al, 2015). Especially since 2010, the degree of European Union (EU) ‘intrusiveness’, meaning strong pressure exercised by EU institutions on national governments with high deficit problems, as is the case in Italy, led to sweeping, across-the-board cuts in public spending (De la Porte and Natali, 2014; Pavolini et al, 2015). Recent budget planning laws (2010–11) deliberated quite draconian expenditure cuts. For example, the central state financing of social care and social assistance between 2008 and 2012 was cut by 91% (from €2.5 billion in 2008 to €0.2 billion in 2012) (Basile, 2011). Furthermore, between 2009 and 2012, social care expenditure dropped by 3.5%; part of this expenditure consisted in state transfers to regional and local authorities, which found themselves in considerably more desperate straits in coping with the crisis (Istat, 2013). Overall, Tables 5.1 and 5.2 help to frame the Italian situation over time. In 1995, Italian public expenditure was less than half of that of the 15 pre-1995 member states of the EU (EU-15) (around 43%). In 2011, it reached 56%, narrowing down the gap. However, a good part of this dynamic took place in the second part of the 1990s: in 2001,

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Care policies in Italy between a national frozen landscape and local dynamism Table 5.1: Italian public expenditure for family and children as a percentage of average Western European expenditure over time 1995 43.3

2001 49.1

2009 56.2

2011 55.8

Note: EU-15 per capita purchasing power parity expenditure =100 Source: Eurostat (2014)

Table 5.2: Yearly average variation in family and children expenditure in euros per capita (at constant 2005 prices): Italy and Western Europe

EU-15 Italy

1995–2011 1.9 3.5

1995–2001 2.4 5.0

2001–09 2.2 3.4

2009–11 –1.5 –2.7

Source: Eurostat (2014)

Italian expenditure was practically half that of the EU-15. Moreover, the crisis and the ensuing austerity plans seem to have put a stop to this slow convergence trend: public expenditure for family and children contracted between 2009 and 2011 by a yearly average of 2.7%. In general, public expenditure in Italy grew at a stronger pace between 1995 and 2011 than in the EU-15 (see Table 5.2): +3.5% on a yearly basis (+1.9% in Western Europe). In particular, in the 1990s, this positive variation was especially strong (+5%), whereas in the 2000s, the growth pace was still more robust than in the EU-15, but already lower than previously (+3.4%). Therefore, the more recent years, after the crisis and austerity had set in, have simply witnessed a continuation of what had happened previously, with only one main change: the institutional inertia at the national level has turned into retrenchment and been matched by a weakening of the ‘modernisation from below’ process. Such cuts have put even more pressure on local players at a time when the weaknesses of the financial basis of their actions have clearly come to the surface. Facing a central government that was cutting down transfers and a crisis in their own revenues, many local authorities have had to reduce or to reconsider their capacity to deliver care services. Often, the answer has not been to cut services, but to raise co-payments and fees. At the same time, many households are facing a deep labour-market crisis, with rising unemployment rates, which makes it difficult even for many middle-class families to have enough private resources to access the private care market. Furthermore, enterprises are increasingly often in dire straits, and so, for many, offering care services is becoming a ‘luxury’ that they cannot afford.

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At the roots of the ‘frozen landscape’ in national care policies How can this almost ‘frozen landscape’ trajectory be explained? The explanation put forward here takes into account those proposed by Da Roit and Sabatinelli (2013) and Maino and Neri (2011). In a recent article, León and Pavolini (2014) suggested an explanation by comparing the Italian case with that of Spain. This comparison can help us to understand some of the factors underlying the frozen landscape. In this section, we extend this comparison to include not only Spain, but also Germany. These countries traditionally have a familistic approach to care policies, with that of Spain being quite similar to that of Italy1; however, both countries have been more active in innovating over the last two decades (León and Pavolini, 2014). In the last decade, Spain, in particular, introduced significant reforms both in childcare and elderly care in order to strengthen public coverage and service provision (León, 2011). Germany started its reforms of LTC in the 1990s (Theobald and Hampel, 2012) and, more recently, of childcare in the mid-2000s (Schober, 2014). Table 5.3 records some of these changes over time, both in elderly care and childcare. What is peculiar about the Italian situation is that improvements have been limited (LTC) or the situation has deteriorated (childcare) in comparison with Spain and Germany. In relation to childcare, however, it should be taken into consideration that the Italian coverage for 2011 was practically in line with that of 2005, although there was a dramatic drop in 2012, probably due to austerity and the crisis. In order to understand this Italian specificity when compared to the dynamics registered in Spain and Germany, a set of cultural, structural and institutional dimensions, as well as the players’ choices, can be taken into consideration. First, in Spain and Germany, changes in attitudes and behaviour have accelerated the need for a less traditional and more egalitarian Table 5.3: Changes in care coverage over time: Italy in a comparative perspective

EU-15 Germany Spain Italy

Expenditure on elderly care as a percentage of GDP 1994 2008 0.42 0.53 0.07 0.15 0.17 0.45 0.12 0.14

Source: Eurostat (2014)

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Childcare coverage (percentage of