By Tom Gill
WHILE most of the Bolognesi were crowding into the shops, piazzas and narrow medieval streets of this northern Italian city making final preparations for Christmas, not all the locals were sharing in the festive spirit.
Romano Prodi, a former economics professor at Bologna’s 11th century university and long-time resident, was not his usual jovial self. Striding away from the central Piazza Maggiore surrounded by a group of trusted advisers, Italy’s prime minister looked decidely grim and preoccupied.
It is not difficult to imagine why. The former president of the European Commission is just eight months into his term of office and already his popularity is plummeting.
A deregulatory package passed during the summer and designed to open up protected professions to competition led to a strike by taxi drivers and provoked the ire of chemists and notaries.
The budget approved by parliament on the eve of Christmas after three months of bruising negotiations between the nine government parties and senators in the upper house provoked more strikes and added to the government’s enemies.
Tax rises and public spending and welfare cuts, all designed to slash public debt and deficit in line with the requirements of Europe’s single currency, have angered business and unions, rich and poor.
‘The former president of the European Commission is just eight months into his term of office and his popularity is plummeting.’
An additional measure, which apparently slipped unnoticed into the 2007 budget, would have left tens of thousands of officials unpunished for taking backhanders. Charges laid against public officials would be “timed out” more quickly by a statute of limitations – a device used by the Berlusconi government to water down legislation against corrupt business practices.
In response, a leading anti-corruption judge announced that he was going to resign. The offending clause was removed after an emergency cabinet meeting on December 27.
But Prodi’s image as a “clean” alternative to former leader Silvio Berlusconi has already been damaged. Many Italians now believe that Prodi may fail even to provide an alternative on the economic front to the billionaire businessman’s five-year reign, when a promised miracle turned out to be a catastrophe.
The coming year will be a crucial test for Prodi. Further reforms are planned for pensions, with the possibility of a further increase in the pension age, a step opposed by the unions.
Then there’s the labour market. Here, there should be some good news, with a reversal of some of the more odious changes made by the Berlusconi administration that have led to an explosion in the casual workforce, known as the precari locally. But the government will need to stand up to the powerful Confindustria, the Italian CBI.
The issue of the precari, who now number around three million workers, passed few Italians by this Christmas.
Journalists across the country held a three-day strike over the increasing use of reporters on short-term contracts with appalling rates of pay and conditions, as well as a cut in nationally agreed pay rates.
Turnout was reportedly as high as 90 per cent, with all the main newspapers shut down and a drastically reduced service on TV.
The government, which has tried to broker talks, has criticised employers for refusing point blank to meet the unions. But, with national broadcaster RAI now indicating that it is ready to talk, there are signs that there may finally be a breakthrough.
The casualisation of the workforce is part of a picture of increasing impoverishment of Italians. National statistics published recently show that purchasing power has fallen among blue collar workers and pensioners by 13 per cent and among white collar workers by 9 per cent since 1992-3.
While some point to an anti-inflationary collective pay deal with the country’s main trade union confederations unions dating back to the early 1990s, more recently, the entry into the eurozone has also been an important contributor.
Between 2002-5, employees have been 1,646 euros (Â£1,100) out of pocket a year on average, in large part due to shops and businesses rounding up their prices. Today, half the population is close to the poverty line, a measure defined as an income below 860 euros (Â£580) a month. Meanwhile, i borghesi are doing very well, grazie.
While the average wage is 2,400 euros a month net, top managers such as the president and CEO of state-owned Alitalia Giancarlo Cimoli are earning as much as 190,000 euros each month. That’s nothing compared to private-sector fat cats.
Just 10 per cent of families now account for 45 per cent of the nation’s wealth. Prodi himself admitted recently: “The difference between rich and poor has increased too much and we have become the most unjust country among the large European nations.”
The rich aren’t getting richer on the back of developments in the real economy though. Industrial production has stagnated at 2001 levels. Nevertheless, profits of the top 36 industrial groups increased by 70 per cent in the last year. And, over the past five years – a period of unprecedented financial speculation – shares on the Milan stock exchange increased 38 per cent, with a rise of 18 per cent in the last year alone.
The response to the current situation will depend on the radical left forces in the government which are led by Communist Refoundation.
They can claim some victories. They strongly supported the government’s attack on the privileges of the chemists and notaries, who have been solid supporters of the right in the post-war period and, before then, were loyal to the fascist regime of Benito Mussolini, and the prospect that this held out for lower prices for working families. Taxes on middle and high-income earners are to rise, while they will fall on low incomes.
But such changes may well be outweighed by other measures, such as fees for the public health system, including accident and emergency services. Moreover, belt-tightening is the general thrust of economic policy, with deflationary tax rises and job-cutting privatisation the key elements.
In this respect, this Prodi government is not that different from his 1996-8 administration. Nor, for that matter, does it differ from the technocratic administrations immediately after Bribesville scandals, which caused the collapse of the traditional parties, when Prodi played a key role in flogging off state enterprises for a song.
Each time, the left provided support either from within government or in parliament. The benefits for the Italian people were questionable at best. Unsurprisingly, none of these governments lasted a full five-year term.
Many Italian commentators argue that the biggest challenge for the ruling coalition of Blairites, Christian democrats, communists, greens and socialists will be to survive. Perhaps this is what Prodi was thinking about that day in Bologna.