Recalibrating the Italian Welfare State: a Politics

Re c a l i b r at i n g t h e Ita l i a n We l f a r e St a t e : A Politics To o We a k f o r a “Ne c e ssa ry ” Po l i c y ?

Matteo Jessoula

On 24 July 2009, in reaction to a ruling by the European Court of Justice regarding the different retirement ages for men and women in the public employment sector, the Italian government introduced further “subtractive” (or consolidating) reforms to the pension sector (after the series of measures that were adopted starting in 1992), in order to equilibrate the conditions of access to retirement between the two sexes. At the same time, the saving in expenditure obtained through pension reform was directed to the social assistance sector, traditionally atrophied in Italy and even today very undeveloped in comparative perspective. This is of particular interest in light of the noteworthy, and anomalous, imbalance of the Italian welfare state to the benefit of the retirement system for the protection of the elderly and to the detriment of other sectors of welfare and social risks. Taking its cue from such measures, this chapter concentrates on the actions of the center-right executive led by Prime Minister Silvio Berlusconi in the field of social policy, analyzing the policies adopted with specific reference to rebalancing the Italian welfare state. In this particular perspective, there are three questions. First, in 2009, what were the constraints on the process of rebalancing, as well as the challenges and opportunities that presented themselves during the course of the year? Second, is it possible to identify particularly significant

Notes for this chapter begin on page 221. Recalibrating the Italian Welfare State 205 and/or innovative actions in the policy domain that were designed to rebalance protection across sectors? Third, but not least important, what were the political dynamics that favored or impeded these actions. The rest of the chapter is divided into six sections. The first exam- ines the imbalance of the Italian welfare state and then introduces the concept of “recalibration” that will guide the analysis in the subsequent sections. The second explores the ruling of the Court of Jus- tice, which constitutes the background for many of the social policy developments recorded in Italy in 2009. The third section analyzes the subtractive measures adopted in the field of pensions, with particular attention to the interaction across different levels of government (national and supranational) and to the domestic political dynamics that have determined conditions favorable to the reform. The fourth and fifth sections illustrate the policy actions in those sectors that, in order to rebalance the Italian welfare state, should be the object of expansionary measures, among them, family and work-life reconciliation, social assistance, and labor policies. With reference to labor policies, special attention is focused on the strategies put into place to address the recent economic-occupational (or employment) crisis. The sixth section concludes the chapter with some considerations regarding the three questions presented above.

The “Necessary” Recalibration

The Italian welfare state presents two different types of distortions.1 The first is functional and consists of the limited amount of resources (6.5 percent of public social expenditure) allocated to the protection of risks, such as poverty, social exclusion, dependent family members, and unemployment, and needs, such as housing, compared to the contextual fagocitazione (or consumption) of social resources (58.3 percent) allocated to the pension system for the protection of the elderly (see table 9.1). The second distortion is distributive and concerns the rift between the so-called insiders—those who have access to paid work and, through this, to the benefits of welfare—and the outsiders, who are either unemployed or employed in the informal economy and are thus excluded from the system of social protection. In this second category, young, female, and older workers are significantly over- represented. Furthermore, because of the socio-demographic trans- formations that economically advanced societies have experienced in the past two or three decades, other individuals have ended up in the outsiders category as dependents who are only weakly (or not at all) taken care of by the system of social protection. Typically exposed to 206 Matteo Jessoula

TABLE 9.1 Public outlays on social benefits as a share of total public spending (percent)

1990 2000 2006

Italy EU 15 Italy EU 15 Italy EU 15

Social exclusion 0.1 1.2 0.1 1.1 0.2 1.3 Family or child benefits 4.2 7.5 3.7 8.0 4.3 7.7 Housing 0.0 1.8 0.0 2.0 0.1 3.7 Unemployment 2.6 7.2 1.6 6.0 1.9 5.2 Subtotal 6.9 17.7 5.4 17.1 6.5 17.9 Old-age pensions 55.1 43.5 60.8 44.9 58.3 44.4 Disability 7.1 7.8 5.8 7.5 5.7 7.2 Health 26.7 26.8 24.2 26.4 25.9 28.1

Source: Eurostat online database, http://epp.eurostat.ec.europa.eu/portal/page/ portal/statistics/search_database.

the so-called new social risks,2 these people include single mothers, the elderly who are not self-sufficient, “atypical” workers, and children of poor families. As much as this is the case in all European countries, the peculiar characteristics of the Italian welfare state severely limit Italy’s capacity to manage these new risks effectively. In the comparative literature on welfare reform, the concept of reca- libration3 has been used to focus on a process of institutional change marked by the presence of subtractive and expansive measures aimed at rebalancing the protection afforded across the various sectors of welfare and among different social groups. It is envisioned that this proce- dure would take place with the participation of new actors and against the background of a revitalized public discourse on the fundamentals of social protection. This analytical/analyzing perspective seems particularly useful for analyzing the development of social policies in Italy, particularly with reference to those measures aimed at halting the functional and distributive distortions mentioned above. More precisely, in the Italian case, the work of functional and distributive recalibration should follow two guidelines. The first guideline, subtractive in nature, anticipates the containment—or rather the reduction—in relation to the gross domestic product (GDP) of the provision of resources for the social security sector and, in particular, for the protection of the elderly. The second guideline aims instead for the expansion of expenditure on labor policies (through the strengthening of both passive protection in the event of unemployment and active measures) and on the welfare sector, especially in the sectors of social exclusion, housing, and family policy. Furthermore, in the sectors of assistance, the recalibration Recalibrating the Italian Welfare State 207 would require the strengthening of social services with respect to monetary benefits in order to counteract another traditional criticism of the Italian system of social protection. As a preliminary measure, in order to analyze and interpret developments in Italian social policy in 2009 according to this perspective, an act of contextualization is required that identifies the constraints, challenges, and opportunities for the recalibration process over the course of the year. Three points are essential. First, with respect to the end of the 1990s, when—substantially through the work of the Onofri Commission4—the idea of rebalancing the Italian welfare state emerged, spending data had not yet revealed particularly significant rebalancing dynamics. In fact, the data for Italy from the years 1990, 2000, and 2006 suggest only modest variations (see table 9.1). Sec- ond, the constraints on public finance are still present and, if possible, have become even more important with respect to the late 1990s. Such constraints represent a prerequisite for recalibration because, by limiting the resources available for expansive interventions, they force resources to move across diverse sectors of the welfare state. In fact, on the one hand, in the period 2000–2007, the ratio of social expenditure to the Italian GDP reached and then surpassed the average of the European Union (EU) of 25 countries (respectively, 26.7 percent and 26.4 percent in 2007).5 This made it even more difficult to imagine a process of rebalancing that would be funded exclusively through the expansion of social spending. On the other hand, the current global economic and financial crisis has further reduced the resources available. Third, the same economic crisis, as well as the unprecedented attention to the question of female employment, laid bare the short- comings of the Italian social protection system, which in turn required the adoption of firm measures and structural reform. In this regard, it is necessary to observe that—as suggested by the stream of studies that go under the label “historical institutionalism”— grave “exogenous shocks,” such as the current recession, are capable of unhinging the “environmental” conditions that underlie institutions and (sometimes) the cultural foundations (cognitive and normative) on which they are based, opening up unprecedented “windows of opportunity” for institutional change. For that matter, when examin- ing the evolution of the Italian social protection system, one notes that the “critical junctures,” during which the most robust, expansionary dynamics were initiated, coincided with crises—economic, social, and sometimes political-institutional—that were particularly acute, beginning with the period following the two world wars. Compared to a decade ago, therefore, the policy strategy of recalibration seems to be emerging as increasingly “necessary,” in relation to 208 Matteo Jessoula both the constraints of expenditure and the growing need for protection with regard to traditionally under-secured risks. Is it possible to identify, in the course of 2009, significant developments concerning both the subtractive and expansive components of this process of rebalancing? Let us begin with the background.

Background and the New “Boundaries” of Welfare

In July 2005, the European Commission (EC) submitted to the Euro- pean Court of Justice a complaint against Italy concerning the different legal retirement ages for men (65) and women (60) in public sector employment. This complaint had its foundations, besides those found in the European treaties, in Directive 79/7/EEC on the progres- sive implementation of the principle of equal treatment for men and women in matters of social security. This directive was then modified by Directive 96/97Ce, which pursued equality of treatment in the so- called professional regimes of social security, these regimes being con- sidered as such when they apply to a particular category of employees, such as, in the case discussed here, civil servants. On 13 November 2008, the Court—rejecting the objection from Italy that the norm in question is not typical of a particular professional regime but instead has a general validity, as it is applied to workers in the private sector as well—issued a ruling (Case C-46/07) that the conditions of access to retirement in the regime of civil servants man- aged by Italy’s National Institute of Welfare for Public Sector Employ- ees (INPDAP) are discriminatory. Violation of Article 141 of the Treaty Establishing the European Community and the aforementioned direc- tives carries a consequent obligation for Italy to eliminate the sources of discrimination by equalizing the conditions of access to old-age pensions. Since mediation failed, we must therefore address the problem. And it is precisely this ruling of supranational jurisdiction—indi- cating once again that, for the EU countries, the “boundaries” of the welfare state are now far more extensive than those of the state—that became the point of departure for the policy-making that will lead to the first action of “direct and formal recalibration”6 in Italy.

Toward a Direct and Formal Recalibration: Finding the Resources in Pensions

The decision-making process that started as a consequence of the Court’s ruling took place between 11 December 2008—when a technical Recalibrating the Italian Welfare State 209 board was convened to identify strategies and policy solutions to avoid the opening of infringement hearings and the resulting financial penalties—and the beginning of August 2009. Already in the early stages, however, interesting elements emerged and, in essence, defined the positions in the field of play. First, there was a peculiar “construction of the problem” behind the policy. The minister of public administration and innovation, Renato Brunetta, in fact, proposed to take the opportunity provided by the ruling to harmonize the legal retirement age for men and women, not only in the INPDAP regime—as requested by the Court—but also for private sector workers. According to Brunetta, this measure would be justified by the fact that it would produce savings and would also reduce discrimination against women, who are still underprivileged in Italy, both during their professional careers and in the post-employment phase. By going into retirement before men, women receive inferior pensions, and the situation is destined to be aggravated with the application of the contributive method. In Brunetta’s proposal, the emphasis is therefore placed on discrimination against women—completely reversing the meaning of the Court’s sentence, which had identified in the norm a discriminatory treatment to the damage, not of women, but of men, who were not allowed to go into retirement at age 60. Second, two coalitions of actors were rapidly delineated, one favorable to the equalization of the retirement age in both the public and private sectors, the other opposed to such a measure. It is interesting to note the unusual coalitions formed as a result of the dynamics of consensus (and, conversely, of conflict) that cross the institutional demarcations between ministers, between those in the majority and those in the opposition, and, finally, between political actors and social actors. Taking a stand against the intervention was the Ministry of Labor, Health, and Social Policy (MLSPS) and its minister, Maurizio Sacconi, who branded the proposed general increase of the retirement age as “unjust and paradoxical.” Sacconi emphasized that, in fact, the situation is much less unbalanced than suggested by the norms, because men tend to retire through seniority pensions—and therefore at an age lower than that of legal retirement—while women generally access old-age pensions.7 The Northern League (LN) expressed its agreement with this position through Roberto Calderoli, the minister of regulatory simplification, who stated that the preferential treatment for women is justified as a form of compensation, considering what “it means for a woman to take charge of a house and a family.”8 This was a restating, in substance, of the vision of women as “angels of the hearth,” who must in some way be rewarded at the end of a life of toil with early access to retirement. Finally, among the social parties, 210 Matteo Jessoula opposition was expressed by the Italian General Confederation of Labor (CGIL), which feared above all the proposed extension of the measure to the private sector. The coalition in favor of the intervention included, in addition to the Ministry of Public Administration and Innovation (MPAI), the general state accounting office, the Ministry of Equal Opportuni- ties, and, crossing institutional boundaries and political groupings, the Democratic Party (PD) and the Radical Party (PR). A crucial point, furthermore, is that within this coalition a proposal emerged to connect directly and in a formal manner (i.e., through laws) the measures on the retirement age of women with measures aimed at supporting women’s employment—through work-life reconciliation policies in the broad sense—thus diverting the savings derived from the retirement policies in favor of employment policies. The basic idea is to compensate women not ex post but rather by guaranteeing effective equality of treatment hic et nunc—that is, during the phase when women are in the job market—with positive measures that favor female employment and the reconciliation of family and work time (in the first place through the strengthening of family services). We are dealing, therefore, with a proposal of “direct and formal recalibration,” advanced in the first instance by the inter-party initiative of some radical and democratic senators, led by Emma Bonino (PR) and Pietro Ichino (PD). Anticipating the ruling of the Court, in late October the senators had already sent to Minister Sacconi an open letter that proposed a bipartisan work program designed to achieve (among other things) such an agreement: equilibration of the retirement age between men and women (with contextual relaxation of the age threshold) in exchange for the strengthening of social services, especially child care. The idea rapidly won converts in the Ministry of Equal Opportunities and among the unions, with the General Union of Labor (UGL) openly supporting such a proposal and the Italian Confederation of Workers’ Unions (CISL) showing a certain openness on the point. The Italian Union of Labor (UIL) was more cautious and willing to accept a delayed access to retirement for women on a voluntary basis, an option that is already possible in the public sector. By contrast, the People of Liberty (PdL) was less visible on the policy scene, being overshadowed by the opposing positions taken by ministries that had been entrusted to prominent leaders of the party itself. The exceptions were a few voices such as that of economist and PdL deputy Giuliano Cazzola, a member of the commission of inquiry on the reform, who was in favor of a gradual and general process of equalization of the retirement age. In the following months, the idea of Recalibrating the Italian Welfare State 211 a direct and formal recalibration received the support of the commission of inquiry instituted by Minister Brunetta to identify and evaluate the proposed policy alternatives.9 The direct link between subtractive and expansive intervention soon became a cornerstone of the reform, accompanied by the equilibration of retirement ages in the public sector alone (in a gradual manner, reaching 65 years of age for women in 2018), which represents a compromise between the position of the MPAI and that of the MLSPS. On this basis, the government decided in July 2009 to place the measure on the retirement age in an amendment to the bill con- verting the “anti-crisis” decree (Decree No. 78) of 1 July 2009. This was achieved despite the opposition of the MLSPS to the legislative instrument and of CGIL to the content of the legislation. Once the amendment was approved by a vote of confidence, the conversion law (Law No. 102/2009) confirmed the two actions upon which an agreement had already been reached, joined by a structural measure designed automatically to link the age requirements for access to retirement to increasing life expectancy. Moreover, the law speci- fies that the savings will become part of the Strategic Fund for the Country in Support of the Real Economy and must be utilized for interventions in favor of families, with particular attention to the non-self-sufficient sector. Furthermore, the same fund was increased by 120 million euros and 242 million euros for the years 2010 and 2011, respectively. In the next section, we will evaluate the contribution of this action to the expansive component of the process of recalibration, but here it is useful to provide an answer to the following question. In light of past experiences of conflict with the unions of the center-right gov- ernments led by Berlusconi in the field of pension reforms (1994 and 2001–2005), how was it possible to arrive at the adoption of further subtractive reform regarding the protection of the elderly in such a short time and with relatively little antagonism? By mobilizing the analytical apparatus used in various works to interpret the Italian pension reforms of the period 1999–2007,10 and by highlighting that which is common and that which distinguishes the 2009 intervention compared to the previous measures, one can identify the reasons that the reform was approved with relative ease. In this case, the conditions that brought about the adoption of the reform were the pressures and constraints coming from the supranational level, together with the ability of the executive to shape “distributive packages” acceptable to the principal “veto actors” in the pension sector, that is, the unions. Nonetheless, it is necessary to point out that this time we are not in the presence of a hard and 212 Matteo Jessoula indirect “external constraint,” such as that of the European Union over public finance, since this constraint does not predetermine the sectors in which the expenditure must be effectively contained. Nor are we dealing with an attempt to use this constraint strategically so as to justify and legitimize the reform, as occurred in 2003 when Berlusconi appeared on live television to convince the country that a reform of the pensions was necessary because it was requested by Brussels. Here we are instead in the presence of a more binding constraint, hard and direct, on a specific pension rule. Room for maneuver was therefore greatly reduced for two basic reasons: first, because non-compliance with the Court’s ruling would risk leading to infringement proceedings, with formal notice for Italy and huge financial penalties; second, because a male public servant could refer to a national judge to obtain a pension at the age of 60 (previously applicable only to women), with obvious consequences for public finances. For these reasons, in substance and beyond the skirmishes in the press, the conflict at this point centered on the content of the reform and, as previously, on its appropriateness, while at the same time being limited by a series of factors that operated as facilitating conditions. First, the divisions that quickly emerged within the governmen- tal structures—and also within the PdL—did not allow the executive to adopt an adversarial approach with respect to the trade unions, as was the case in the past with the subsequent reaction of the workers’ organizations and the escalation of conflict. Therefore, in this case, government-labor relations did not become inflamed. Second, the emergence of a cross-party consensus on the reform, which included the opposition, the MPAI and the Ministry of Equal Opportunities, and some unions, facilitated the definition of the “exchange” between subtractive and expansive components that would then be crucial for the approval of the measures. Third, the breakdown of unity among the trade unions (a notable exception in the pension policy-making of the last 20 years), with CISL, UGL, and (in part) UIL in the ranks of supporters of the reform and CGIL on the opposing side, was a significant contributing factor. This disagreement fractured the front of the traditional veto players, consequently weakening the coalition opposed to the reform. Finally, the subtractive measure was grounded in the equilibration of the retirement age for men and women, and, as amply shown by the pension reforms of the past decade, resistance to the operations of regulatory harmonization is generally weak. This is so because opposition in this case it is easily delegitimized in the public discourse with references to fairness, understood as homogeneity of the rules for all of the insured. Recalibrating the Italian Welfare State 213

Utilizing the Resources: Family, Work-Life Reconciliation, and Non-Self-Sufficiency

The package of measures adopted in early August 2009 therefore con- stituted a case of functional and distributive recalibration, instituting a direct and formal link between the subtractive measures undertaken in a hypertrophied sector, such as that of pensions, and the redistribution of the recovered resources to protect a new social risk—non-self- sufficiency—and to benefit groups that are today generally protected only by informal family networks and by the use of welfare services that are often confined to the underground economy (e.g., caregivers). Estimates of the savings or resources that are available for the intervention, as drawn up by the government and by some commentators, vary significantly between a minimum of 1 billion euros and a maximum of 2.4 billion euros, cumulative over the period 2010–2018. The value of the measure, however, goes beyond that amount, by virtue of the direct connection between the subtractive and expansive components of the reform. If this outcome has contributed decisively to the positioning of the MPAI and he Ministry of Equal Opportunities, in addition to the political competition generated by the proposals of the PD and the PR, the stance of the MLSPS during the negotiations can be seen, in contrast, as particularly conservative. This seems inconsistent with the idea of “the good life in an active society” that had been advocated in a white paper, “The Future of the Social Model,” published in May 2009 by the MLSPS. The point is important because the ministry entrusted to Sacconi is charged with the responsibility of developing policies that would contribute to the recalibration of the Italian system of social protection (policies of conciliation, of family aid, of social assistance, etc.). In this respect, can other interventions or significant steps adopted in 2009 with regard to social policies be traced? Without a doubt one should mention the introduction, with Decree Law No. 185/2008,11 of the family bonus. This one-off loan—with an amount varying between 200 and 1,000 euros based on a series of requirements—would be paid at the beginning of the year to families that only have retirement income and dependent work (with the inclusion, however, of subcontracted work or what is known under Italian legislation as lavoro parasubordinato). While appreciable due to the low level of earnings in Italy, the measure presents a series of limits in its technical design, is of a small amount, and, above all, has a distributive effect analogous to that of the distribution of checks to the nuclear family.12 Therefore, we are faced here with a case of recalibration that is purely functional in that it expands the amount of 214 Matteo Jessoula

resources available to families. It is not distributive because the audience of beneficiaries identified excludes those categories that do not have access to grants to the nuclear family (such as the self-employed and the inactive non-retired). In terms of work-life reconciliation policies, the steps taken have been very limited. The issue, however, is the subject of discussion in the above-mentioned white paper of the MLSPS, which, not wanting to propose programs of action or to identify specific policy solutions, focuses on values, keywords, and the “vision” that must inform the future social model, centered no longer on the welfare state but on the welfare society. The document expresses an awareness of not only the serious Italian delay on the front of female employment but also the economic benefits of this delay. However, the conceptualiza- tion of the relationship between female employment and work-life reconciliation policies, with particular reference to the strengthening of social services, does not appear to be based on an adequate comprehension of the factual reality. The white paper starts with the consideration that, observing the birth rates in Italian regions, there do not appear to be significant ties between the availability and qual- ity of child care and women’s employment: “In some regions of the North, the percentage of women who work are at the European level without impacting clearly on births.”13 The strategic document of the MLSPS does not seem to show (or to reflect the desire to acquire) an awareness of the recent actual revolution in the relationship between demographics, employment, and social services. As far as Italy is concerned, this is clearly illustrated by Daniela Del Boca and Ales- sandro Rosina:14 the fertility rate increases where female employment is highest and services for young children are most available, as dem- onstrated by increases in birth rates in the regions of northern Italy since 1995 (the lowest year for the Italian fertility rate), even without the contribution of immigrants. On this basis, even the few (and poorly sketched) solutions proposed in the white paper seem ambiguous. If, on the one hand, there seems to be a resolve emerging to promote women’s employment through tax concessions and through the use of part-time employment, which must be accompanied by the development of child-care services, on the other hand, there seems to be a desire to perpetuate the “family” nature of Italian welfare. This seems evident, not just due to the reiterated reference to the principle of subsidiarity, but especially through the promotion of that “generational pact [according to which] the elderly, living together or not, offer their help in the accompaniment and care of children—thus ensuring women the possibility to participate in the labor market … and at the same time they Recalibrating the Italian Welfare State 215 find in these families the answer to their needs and their fears.”15 The situation is therefore marked by ambiguity and above all distance from the “Lego model” focusing on early childhood services that Maurizio Ferrera has promoted, not only for the possibility of work-life reconciliation, but also for the development of the individual capabilities of children, starting with the earliest phase of life.16 Some progress has been made with the publication in December 2009 of “Program of Actions for the Inclusion of Women in the Labor Market,” prepared by Sacconi and Mara Carfagna, the minister of equal opportunities. This document—which even repeats some of the criticisms mentioned above with reference to the white paper, and, more importantly, does not identify either best practices or quantita- tive targets for political conciliation—presents several clear lines of action that the government seems intent on developing in order to support the growth of female employment.

Economic Crisis and Term Challenges: Occasions to “Recalibrate”?

Illustrating the development of social policies with a view to recalibration requires, finally, a look at the measures put in place by the government to counter the employment effects of the economic recession that began in late 2008. The reason for this is the fact that the protection of unemployment is one of the undeveloped areas of the Italian welfare system that should be the subject of measures designed first to increase the resources available and then to change the institutional architecture in order to reduce the large disparity in protection for the different professional categories. In particular, many sides in the public policy debate expressed the urgency of direct intervention to expand the scope of beneficiaries receiving subsidies for unemployment (in 2006, 69 percent of the unemployed did not receive any income assistance), with the extension of the protection above all to atypical workers (project collaborators, subcontracted workers, those working for a fixed or partial period of time) and the introduction of instruments to combat poverty for the real outsiders, that is, the long-term unemployed, the inactive, or those employed in the informal economy.17 Moreover, as was mentioned previously, situ- ations of grave economic crisis like the present, while reducing the resources available, open new opportunities for policy-makers to initi- ate reforms, even radical ones. In Italy, the economic and employment picture began to deteriorate in the second half of 2008. At the end of the year, the GDP was declining 216 Matteo Jessoula

at an annual rate of about 1.0 percent, and it was expected to contract by 4.7 percent in 2009, with the consequent impact on the labor market becoming evident in the decrease in the level of employment (from 59.2 percent in 2008 to 57.6 percent in October 2009) and in the increase in the rate of unemployment (from 6.7 percent in June 2008 to 8.0 percent in October 2009). Against this backdrop, what are the labor policy measures that have been adopted by the government? Has the center-right Cabinet exploited the crisis to make the system of income maintenance for the unemployed more robust, less patchy, and less inequitable? Government action was certainly timely, with the adoption, toward the end of November 2008, of Decree Law No. 185, which provided for a series of measures to buffer the emergency. The government therefore gave evidence of being aware of the risks—not only with regard to the economy, but also in terms of social cohesion—arising from the employment crisis as it unfolded. However, the center-right executive has repeatedly and explicitly expressed opposition to a structural reform of social safety nets. The government’s strategy has in fact primarily targeted the containment of redundancies through measures that allow companies to reduce activity for limited periods of time by temporarily suspending workers. These measures have made use of the extension (a provisional one for 2009–2011, which is at variance with earlier legislation) of policy instruments already existing in those areas to companies or groups of workers who were previously excluded. In particular, there have been two “exceptions” introduced. The first concerns the extension of unemployment benefits (ordinary and subject to less stringent requirements) for the periods of suspension from work for employees of firms not subject to redundancy pay requirements up to a maximum of 90 days per calendar year. The second extends the treatment of wage and mobility to companies that, because of size or sector, are normally excluded from redundancy pay schemes. This strategy, in line with EU recommendations on measures to combat the crisis,18 has a certain efficacy in the short term, in that it tends to keep alive the employment relationship, thus limiting the use of dismissal. However, it has some serious limitations. First, this strategy is temporary, with a time horizon of two to three years. Second, the extension of redundancy payments does not constitute, as noted, real and true rights, since it subordinates the delivery of these payments to negotiations between the regions and the social partners (or represen- tatives of industry and labor). Third, these measures are co-financed, for a total value of 8 billion euros, by the state and the regions through the use of the EU’s European Social Fund. This implies that a propor- tion of the resources devoted to activation measures and training is used to finance passive policies. Recalibrating the Italian Welfare State 217

The main problem resides in the fact that, by using this strategy of already existing policy instruments and, above all, by not addressing the purely insurance nature of the system of protection of unemployment (which is the root cause of atypical workers having limited access to protection), this policy does not attack the structural weak- ness of the system itself. In particular, this approach seems to be inef- fective in ensuring protection for various types of atypical workers; in fact, the data show that these workers were the first victims of the employment crisis.19 The fall in the level of employment has been due primarily to a reduction in the number of employees at the end of their contracts (down by 229,000) and of coordinated, continuative, and occasional collaborators (down by 65,000), as well as a substantial drop in part-time workers (down by 113,000). The strategy of main- taining jobs therefore does not seem very effective in the case of these workers, and the majority of them continue to find it very difficult to access benefits in the event of unemployment.20 Truth be told, in order to respond to the deficiencies just described, at least in part, the government had initially planned a new one-off allowance for project workers without a job. This was to be on an experimental basis and was recently strengthened by the financial law of 2010. The benefit corresponds to 30 percent of the previous year’s income for a maximum of 4,000 euros. Even in this instance, however, the measure has restrictions that affect the amount of the payment and limit the number of employees who can actually access the benefit, due to rather stringent requirements.21 Economic protection in the case of unemployment has also been one of the few arenas of actual political competitiveness between the current majority and the opposition in the sphere of social policy. In fact, referring to the Protocol on Welfare, signed by Romano Prodi’s government and the social partners in July 2007, and to the draft laws presented by members of the PD on 3 March 2009, the PD’s acting sec- retary, Dario Franceschini, challenged the government with a motion focused on two main proposals: (1) the introduction of an unemployment benefit equal to 60 percent of the salary for each month worked of the previous year for all those workers who do not qualify for any subsidies; (2) a convocation of the social partners in order to carry out an organic reform of the social safety net—defined by Franceschini as the “real emergency of this year”—according to the guidelines already identified in the Protocol on Welfare. The economists Tito Boeri and Pietro Garibaldi have estimated that the net cost under the existing regime of a one-time unemployment subsidy with an initial replace- ment rate of 65 percent (and then decreasing) would be around 8 billion euros,22 a figure similar to that allocated by the government 218 Matteo Jessoula

for the exceptional measures noted above. At the present time, Ber- lusconi’s Cabinet does not appear to have picked up the challenge. Despite the inertia of the executive, the PD’s proposal has, however, carried into the political arena the vexed question of the reform of social safety nets and, in particular, the issue of protection for atypical workers in the event of unemployment. In recent years, these prob- lems have been the subject of an increasing number of studies that have highlighted the necessity of institutionalizing schemes in order to maintain the income of the “second pillar,” aimed at those workers who do not have the requirements to access the insurance benefits of the “first pillar” or who have exhausted the period of enjoyment of those benefits. The political and policy debate on the possible estab- lishment of a “third pillar” of welfare (as advocated by the Four Pillars research program set up in 1987 by the Geneva Association) was less vigorous. As is well-known, this shortcoming is one of the most evident limitations of the Italian welfare system. In fact, while in other European countries (with the exception of Greece and Hungary) there exist universalist and selective patterns of variable generosity, in Italy the only recent innovation was the introduction of the social card (provided for by Decree Law No. 112/2008 and activated at the end of 2008), which consists of a monetary outflow of 40 euros per month, usable as a contribution to food expenditure and for the payment of household utilities and pharmaceutical products. This is presented as a selective measure, conceded under specific conditions and after passing a means test, as well as a categorical measure, in that only the elderly who are at least 65 years of age and children who are younger than 3 may benefit. As this instrument appears destined to become a structural element of the welfare sector,23 numerous commentators have highlighted the critical issues that are involved, in addition to the limited virtues.24 If among these virtues there is the actual ability to alleviate the situation of absolute poverty in which the beneficiaries find themselves— for whom the 40 euros a month represents an 8 percent increase in income—the particular characteristics of the measure make it at best a partially effective tool in the fight against poverty. With its application limited only to the elderly and to nuclear families with children under 3, the result is a rather constricted audience of recipients (estimated at about 3 to 4 percent of Italian families), with the majority of poor families being denied the benefits. Some estimates suggest that 74 percent of nuclear families with an adjusted disposable household income of less than 6,000 euros would be excluded. Furthermore, the amount of the fixed monthly sum permits only a few families (13 percent), who are already close to that threshold, to overcome the poverty line.25 Recalibrating the Italian Welfare State 219

Conclusion

This analysis of the developments of social policy in 2009 seems to confirm, with a significant exception, that which has been already discussed elsewhere26 for the period 2000–2008—namely, that although the subtractive component of the rebalancing of the Italian welfare state was effectively pursued through repeated interventions in the pension sector, the expansive component was much less dynamic. This recalibration, in fact, risks being “choked” by the constraints of public finance, since it is characterized by a weak politics that (often) does not allow for seizing and making the most of opportunities that present themselves. This is particularly true in reference to the modest ability of the policy to influence potential beneficiary groups and to the fact that (unlike the restrictive measures) it benefits only to a limited extent from the impetus given by European Community norms, which in the sectors in question are generally soft—that is, they rely on voluntary cooperation (the “open method of coordination”). The exception, naturally, was the strengthening of the fund for non-self-sufficiency through the transfer of resources that were made available as a result of the equalization of the retirement age in the public sector. This clear example of both functional and distributive calibration was made possible by the interplay between constraints imposed on the supranational level and domestic politics, in which, moreover, the cogency of the European Union constraint allowed for the adoption of measures with a short- to medium-term impact. This was unlike most of the interventions in the pension system in the past two decades, which have been characterized by long periods of transition. Beyond this intervention, however, the strengthening of still underdeveloped policy sectors (functional recalibration) was limited. In the unemployment protection sector, only temporary measures were adopted despite the economic-employment crisis, which did not provide sufficient stimulus for the government to pursue an organic reform of the social safety net. Interventions to support families and measures in favor of work-life reconciliation have been modest, and the same can be said for the measures of assistance to combat poverty. These, however, did not increase the resources destined to that segment of welfare, since in the meantime the government had reduced the budget of the national social policy fund (down 271 million euros) and the transfers to the municipalities (down 450 million euros). Also, in all of these sectors there are signs of alarm that mark a reversal with respect to the direction of 220 Matteo Jessoula development inaugurated in the second half of the 1990s. This is true in reference to the fact that, in the sphere of employment, the policy measures widened the gap between the resources allocated for passive policies and those available for activation measures, contributing to a weakening of active employment policies, which since 2003 have received ever-decreasing resources. Similarly, in those policies focused on poverty, family support, and work-life reconciliation, the measures introduced have been solely monetary. The social card, being made available only for children and the elderly, naturally lacks the activation component that characterized the experiment (although problematic in certain respects) of attempts to introduce a minimum household income, and the steps forward in the area of services to young children were too timid. With reference to distributive recalibration, the measures adopted have only partly allowed for the extension of social protection to mar- ginal groups. The interventions in employment policy have left over 1.5 million dependent or subcontracted workers without any instrument for the maintenance of income in the event of unemployment. The social card has reinforced protection primarily for the elderly (who represent the principal beneficiaries)—a category that already receives significant transfers through the pension system (however unevenly distributed). The family bonus, as we have seen, has not broadened the pool of recipients of monetary interventions for families. Even from this angle, therefore, the only really innovative action undertaken in 2009 was the direct transfer of funds from the pension sector to protect the non-self-sufficient. The results suggest a final consideration as to whether the political dynamics relative to the expansive dimension of the process of recalibration of the Italian welfare state are sufficiently “robust” to render profitable the pursuit of this strategy by political actors. In fact, as illustrated also in the international literature,27 the potential beneficiaries of these measures usually have weak political repre- sentation, in that they participate less (outsiders), have dispersed interests (women), “count” little in the electoral arena (the young and the non-self-sufficient elderly), and, above all, have less capacity to exercise political pressure through action groups and organizations. If “pressure from below” is not forthcoming, and if the European Union incentives are too soft with regard to the policy sectors that should be strengthened, it seems that the destiny of the expansive component of the recalibration is tied to the will of certain political actors to act as “policy entrepreneurs,” as indeed happened at the end of the last decade. The reference to entrepreneurs is not casual, considering that the interventions in the sphere of conciliation, for example, represent Recalibrating the Italian Welfare State 221 real investment even in the economic (and not just political) sense, as they are able to generate positive circles of growth, distribution, and redistribution. In this perspective, direct and formal recalibration operations, such as those pursued in 2009, appear to capable of resulting in coalitions that, by cutting across political spectrums, are able to promote the expansive component of the process of rebalancing the Italian welfare state.

Acknowledgments

I am grateful to David Natali for his valuable comments on the first draft of the chapter. — Translated by Stephanie Locatelli

Notes

1. M. Ferrera, Le politiche sociali (Bologna, 2006). 2. The international literature on new social risks is ample. See, among others, P. Taylor-Gooby, ed., New Risks, New Welfare: The Transformation of the Euro- pean Welfare State (Oxford, 2005). 3. M. Ferrera, A. Hemerijck, and M. Rhodes, The Future of Social Europe: Recast- ing Work and Welfare in the New Economy (Oeiras, 2000). 4. Commission for the Analysis of the Macro-economic Compatibility of Social Spending, Relazione Finale, 28 February 1997, http://www.astrid-online.it/ Amministra/-Commissio/Comm-Onofri-Rel-Fin_28_02_1997.pdf. 5. See the Eurostat online database, http://epp.eurostat.ec.europa.eu/portal/page/ portal/statistics/search_database. 6. M. Ferrera, Corriere della Sera, 23 July 2009. 7. Old-age pensions are paid out beyond an age threshold, while for the seniority pensions, the completion of a period of contribution is sufficient. Today this period is equal to 40 years in Italy. 8. La Repubblica, 14 December 2008. 9. Ministry of Public Administration and Innovation, Relazione della Commis- sione di studio sulla parificazione dell’età pensionabile (Rome, 2009). The members of the commission of inquiry included the economists Maria Coz- zolino of the Institute for Economic Analysis and Research (ISAE), Fiorella Kostoris Padoa Schioppa, and Cazzola. The other commission members were Riccardo Rosetti (MPAI) and Leonello Tronti (economic adviser to the MPAI). 10. In particular, refer to M. Jessoula, La politica pensionistica (Bologna, 2009); D. Natali, Vincitori e perdenti: Come cambiano le pensioni in Italia e in Europa (Bologna, 2007). 222 Matteo Jessoula

11. This decree law was converted to Law No. 2 on 28 January 2009. 12. M. Baldini and S. Pellegrino, “Si fa presto a dire bonus,” http://www.lavoce. info, 10 December 2008. 13. Ministry of Labor, Health, and Social Policy, Libro bianco sul futuro del modello sociale: La vita buona nella società attiva (Rome, 2009), 36. 14. D. Del Boca and A. Rosina, Famiglie sole (Bologna, 2009). 15. Ibid., 52. 16. M. Ferrera, Il fattore D (Milano, 2008). 17. On the opportunity to keep the atypical workers distinct from the outsiders, see I. Madama, M. Jessoula, and P. Graziano, “Flessibilità e sicurezza, per chi? Sviluppi di policy e conseguenze nel mercato del lavoro italiano,” Stato e mercato, no. 3 (2009): 423–453. 18. See, for example, the conclusions of the EU Employment Summit held on 7 May 2009 in Prague, http://europa.eu/geninfo/query/resultaction.jsp?page=1. 19. ISTAT, Rilevazione sulle forze di lavoro—II trimestre 2009 (Rome, 2009). 20. On this point, see F. Berton, M. Richiardi, and S. Sacchi, Flex-insecurity (Bolo- gna, 2009). 21. Ibid. 22. T. Boeri and P. Garibaldi, “Ma quanto costa il sussidio unico di disoccupazi- one?” http://www.lavoce.info, 10 March 2009. 23. Ministry of Labor, Health, and Social Policy, Libro bianco sul futuro del modello sociale. 24. On the virtues and vices of the social card, see Baldini and Pellegrino, Si fa presto a dire bonus. See also P. Monti, “L’età rende iniqua la card,” http:// www.lavoce.info, 10 December 2008; C. Gori, Il Sole 24 Ore, 3 March 2009. The data presented are from these publications. 25. C. Gori, Il Sole 24 Ore, 3 March 2009. 26. See the argument in M. Jessoula and T. Alti, “Italy: An Uncompleted Depar- ture from Bismarck,” in A Long Goodbye to Bismarck? ed. B. Palier (Amster- dam, 2010), 157–181. 27. K. Armingeon and G. Bonoli, eds., The Politics of Post-industrial Welfare States (Abingdon, 2007).