This seminar in the latest ASL series got underway with the observation that the way the current crisis has evolved confirms the necessity of moving beyond ex-post and localized solutions that deal with emergencies country-by-country and as and when they arise. The participants pointed instead to the need for a comprehensive strategy, based on three pillars. The first of these is the adoption of deficit-reduction programs at the national level. The second is the creation of common funds and institutions with more resources and more effective governance. The third is the establishment of a more active role for the European Central Bank. It was felt all of these highlight the need for bold policy solutions at the European level, and in particular, rising to the challenge posed by Germany of making changes to the EU Treaty, which would result in greater political integration and tighter fiscal discipline. At the same time, however, they were also seen as entailing an advancement and strengthening of solidarity among EU member states. It was considered unlikely, even once the crisis is over, that previous levels of development and prosperity would be restored, or that so wealthy a welfare state would be affordable any longer, with a reduction in living standards over the coming decades envisaged as inevitable. As far as Italy is concerned, it was suggested that the crisis has not altered the economic policy priorities, but that the urgency with which decisions need to be taken has changed. Moreover, the crisis has undermined the strengths that are the cornerstones of the country’s economy. The banks are more exposed and are having to contend with serious liquidity issues. There is increased job insecurity and youth unemployment. Public debt has remained high and stagnation has become a reality, and whilst wage-guarantee or redundancy funds may offer some financial protection for workers, they do nothing to further an efficient reallocation of resources.
It was noted that even the scope of Italian industrial policy has been significantly reduced: the public resources available are limited and are spread across a number of minor business support measures (with 91 types of assistance provided at the national level and 1216 at the regional level). The problem as pinpointed by the participants is that public actors do not have the information at their disposal in order to allocate efficiently the albeit few resources still available. Nor does the transition from the state as provider to the state as a promoter of private initiatives and public-private partnerships seem to be meeting with any greater success. It was thus proposed that the focus of industrial policies should accordingly be shifted away from tangible concerns (sectors and businesses) to behaviors, by supporting Italian investment abroad and foreign investment in Italy. As to the still unresolved issue of the limited size of Italian firms, it was suggested that instead of insisting on agglomeration through districts and business network contracts, which replicate the experience of local development agreements, there is a need to overhaul the legislative and regulatory framework that is keeping firms small and to encourage market mobility.
It was further acknowledged that inequalities and disparities in the labor market are at the same time also on the rise, and that both the rate and duration of unemployment are increasing. Long-term unemployment was seen as constituting a particularly serious phenomenon because it results in a loss of human capital and exclusion from the labor market. The forms of protection offered by the state were judged insufficient. It was felt that the provision of unemployment benefits would be preferable, provided that these are accompanied by a requirement for active job-seeking. The problem is, however, compounded by a high level of youth unemployment of 30 percent. In addition, 20 per cent of young people are totally idle, engaging in neither study nor work, which gives rise to negative medium- and long-term consequences. A low level of vocational training reduces job opportunities and wages even twenty years on. It was thus stressed that encouraging young people to continue with their studies in order to gain a qualification for employment purposes is vital. Yet in Italy, on the one hand, the percentage of graduates is significantly lower than in other OECD countries, and on the other, the education system often provides a grounding in skills of a higher order than those sought by employers. In conclusion, it was noted that only 20 percent of students combine study with work, thus contributing to the gap in Italy between education and industry.