There is a moment when Mario Draghi yesterday in the Senate summed up the challenge facing the Italians. The growth of a country does not arise only from economic factors – observed the premier -. It depends on the institutions and citizens’ trust in them.
It probably meant recovery and reforms are not mechanical cogs, which are triggered by a law or an expense. They also depend on the psychological conditions. Individual voters and interest groups will give up something from their rent positions – for a common benefit – only if they are convinced that others will not take advantage of it to their detriment. Everyone take a step back when they trust that they won’t just pay for everyone. If this is the spark, Draghi will be called to ignite it from next week because he has inherited an increasingly precarious situation. Italy is the only European country that still blocks all layoffs; one of the very few to offer layoffs for all fully paid by the public debt, but very little aid so that those who lose a job can find another; with Spain, Italy is also the country that has activated the largest mass of subsidies to businesses, including bank guarantees, suspended tax deadlines and moratoriums on loan repayments (for over 6% of gross product). Meanwhile, corporate cash accounts have grown by € 96 billion – an unprecedented explosion – while 440,000 jobs have been lost and well over half a million layoffs have accumulated.
It can’t go on like this for too long. And the Draghi government from next week has an opportunity, perhaps unrepeatable, to trace a slow return to normalcy: it must pass the decree that generates a deficit of another 32 billion during the year to pay refreshments to the companies that remained closed in the pandemic and extend layoffs from Covid. It will be a test of the ability of the technical ministers to manage the pressure of politicians demanding compensation – now for the world of skiing, to which something will be recognized – and of the unions who want to block all layoffs at least until the summer. But it will also be a test of the country’s ability to quickly launch a functioning system for taking care of the unemployed that Italy has never had.
As written on the Courier service on 6 November, Draghi plans to make aid to businesses increasingly selective. It remains to be seen what yesterday the premier called the sequence of interventions on labor, credit and capital. The freeze on redundancies for all expires on March 31 and an option undoubtedly being studied is to extend it by a month, and then start withdrawing it from some sectors that have returned to a certain normalcy: advanced tertiary sector, agriculture, construction, network services , parts of industry and manufacturing show sustainable levels of activity, for example. In a short time, the sectors that have their own ordinary layoffs co-financed by companies – with a duration of one year – can return to activate it. But the 32 billion government decree, probably coming next week, could take a more wait-and-see stance at least until the end of June for the most suffering sectors and those without ordinary cash (for example, commerce).
At the same time, we are moving towards the – extended – reactivation of the labor policies already launched by Matteo Renzi’s government in 2015: even private agencies will be able to be remunerated with public money if they relocate the unemployed or offer them training. In the 2021 budget, half a billion is already earmarked for this, but the sum can rise by partly anticipating what is already foreseen for the Recovery. It means challenging the tabs of the majority – starting with M5S – but the wave of unemployed people arriving and the paralysis of many public employment centers give no choice.
The bank moratoriums now expiring in June and finally the state credit guarantees remain to be withdrawn in the autumn. All this provided, of course, that the pandemic does not have a new upsurge: but even in that case at least a map of the return to normal will have to be drawn anyway.