Tomorrow Italy’s streets are expected to swell with protests at the Italian Government’s austerity measures. The general strike, called by the CGIL, the country’s largest trade union central, comes amid growing political instability in Rome. The Governing coalition is badly split over plans to cut the budget deficit and premier Silvio Berlusconi himself is mired ever deeper in scandal.
Initial proposals to slash spending were rushed out early August, just weeks after the Italian parliament had passed a tough budget. But this was deemed too weak by foreign investors who shunned Italian government debt (treasury bonds) and set off a new wave of panic about Europe’s sovereign debt crisis. The supplementary budget, or manovra, was apparently dictated by the European Central Bank in return for promises to buy Italian government bonds. But the new measures have since been changed several times: billionaire Berlusconi, his own MPs and those of his ally the Northern League, all fear the political backlash.
The latest version of the manovra includes proposals to cut central government spending, including on infrastructure, and R&D, plus a reduction of transfers to regional and local government, which will lead to heavy cuts to schools, hospitals and other local public services. There are also measures to cut pensions, reduction in the pay to civil servants whose departments don’t meet efficiency targets, a delay in the pay out of the lump sum public sector workers receive when they retire and changes that will encourage more local pay bargaining. Then there’s a string of “liberalisation” measures directed at public services and professions like farmacists and lawyers that are supposed to boost growth, although the evidence for this is flimsy. Proposals to raise revenue through a tax on the wealthy have been axed, as, it seems, has a one-off tax on energy companies that have been raking it in. Moves to axe some of Italy’s smallest provincial administrations have also bit the dust.
The Government has also made a vague commitment to boosting Treasury revenues launching a fight against tax evasion. But clamping down on tax dodging is not a credible initiative for Berlusconi and allies, who have consistently encouraged it. In the three governments he’s led since 1994, he has twice introduced a tax amnesty, or condono fiscale, whereby money salted away abroad tax-free was permitted back into the country for a derisory penalty. The prime minister has also publicly justified non-payment of taxes on the basis that taxes were too high, and he personally faces an ongoing trial for tax fraud.
Indeed, the biggest credibility problem is Berlusconi himself. Last week magistrates ordered the arrest of a businessman Giampaolo Tarantini linked to a 2009 prostitution scandal on suspicion of trying to extort at least Euros 500,000 cash (£438,000) from Berlusconi. The premier claims the payment was a “gift”. His biggest blow though was in July, when a court ordered the company at the centre of his business empire to pay Euros 560 million to his bitter business rival as compensation for bribing a judge in order to win control of Mondadori, Italy’s biggest major publisher.
Tomorrow the Senate will debate the Euros 45 billion manovra with the measures expected to be finally signed off by parliament by September 20. But European officials are now deeply skeptical about Berlusconi’s ability to meet side of the bargain it struck with them last month. European Central Bank President Jean-Claude Trichet issued new warnings fiscal rectitude on Sunday. The spectre of a sovereign debt default in Italy, Europe’s fourth largest economy with the largest debt mountain (euros 1.2 trillion), and so the future of the Euro single currency, looms large.
The lack of measures to stimulate a decade of anaemic growth, coupled with a focus on making “the same old people pay”, as critics put it, promise to make things even harder on the ground for ordinary people. With the manufacturing sector shrinking at its fastest rate in two years, according to new figures out last week, the CGIL estimates that there are quarter of a million jobs at risk in industry. 500,000 workers are temporarily laid off, or in ‘cassa integrazione’. Poverty is spreading and incomes badly squeezed. That tough times were already hitting home was evident in the empty accommodation in seaside towns up and down the peninsula in August as Italian families took a shorter than usual summer break. New high street spending figures released in recent days confirm this gloomy picture.
The CGIL, which is leading the 8 hour stoppage on Tuesday, has described the manovra as social butchery, or macelleria sociale. It accuses the government of “refusing to face up to and tackle the problems of growth, jobs, productivity and development.” Vinzenco Scudiere, confederal secretary of the CGIL, says Rome has a “total absence of industrial policy.” Government plans will only increase the jobless queues and the precarious conditions of those in work, he says.
The trade union confederation recently published its own proposals to put Italy’s economy and public finances in order: these include a “growth and innovation” fund to promote “green” economic development and alternative energy, boost research and development, underpin local regeneration and launch an industrial strategy for the South which has been hit hardest by the economic crisis and a decade in which the state has taken a back seat. It also calls for a strategy to cut 30% youth unemployment.
The CGIL is also clear that there should be no quarter with the army of self employed, small businesses, bankers, property dealers and corporations, who seek to cheat the Treasury. It argues that this needs to be part of a broader campaign against corruption and other forms of illegality, including organised crime: mobsters, aided all too often by businessmen and politicians, continue to make billions from public contracts, exploiting migrant workers, recycling illicit funds and dodging taxes to maintain a colossal black market that has been bleeding the state coffers dry.
In contrast to the career politicians and former businessmen like Berlusconi who are in government today, trade unionists have long been fighting for Italian capitalism to clean up its act– what the defunct Italian Community Party used to call the Moral Question. This work, just part of their daily defence of working people, has brought a great cost – the mafia has assassinated dozens of trade unionists over the last 50 odd years. But no strategy for economic development and strong public finances would be complete in Italy without this fight.