Chapter 8: Italy: Limited Policy Responses and Industrial Relations in Flux, Leading to Aggravated Inequalities
Niall O’Higgins* 1. INTRODUCTION Italy was hit hard by the global financial and economic crisis and there is little sign that the situation in the country is likely to improve significantly in the immediate future. As elsewhere, young people as a whole and prime-age adult men were particularly severely affected and, surprisingly, since the effects of the crisis were largely concentrated in industry, the impact was felt much more strongly in the less industrialized Southern part of the country, thereby further exacerbating territorial differences in employment and income which were already very marked. In contrast to many other countries in Europe which reacted through the introduction and/or expansion of substantial macro- and microeconomic measures to counter the effects of the crisis, the response in Italy has been very limited. Discretionary fiscal stabilization has been almost entirely absent, which, given the relative lack of automatic stabilizers – such as unemployment benefits and, above all, social security benefits – has undoubtedly contributed to the relatively poor recovery. The main labour market programme was the temporary short-time working/layoff scheme, the Cassa Integrazione Guadagni. This income support scheme was mainly available to regular employees in industrial firms and although this undoubtedly relieved some of the worst effects of the crisis on incomes of workers, particularly in Northern Italy, and despite the fact that CIG was broadened in 2009 to apply to other sectors and forms of employment, the relatively limited application of the programme undoubtedly contributed to the territorial imbalance in the effects of the crisis....
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