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Italy, unemployment, Women

How the public sector is the answer to Italy’s economic crisis and army of graduate unemployed

What would happen to Italy if you decided to recruit eight hundred thousand to one million young and qualified people into public service, asks Maria Luisa Bianco

An economy cannot function well without a State that functions well. Since the recovery of the country requires a boost in the efficiency of the public administration, the failure of public administration is the most significant obstacle to its development. Moreover, any suggestion of modernization of public administration is unrealistic if it does not simultaneously also contemplate a substantial increase in young and qualified personnel. The proposal here is that in a short period of time, in the essential services for the welfare of the population and growth, eight hundred thousand to one million highly educated new workers, with contracts which take account of the emergency situation in which our economy finds itself. The recruitment would be targetted at where the jobs were most useful for economic development (eg. civil justice, education, health, public policy, and, of course, land-use planning and development of cultural heritage). This policy could be financed  by an increase in public debt (contrary to EU deficit rules) or by money creation [1] (no longer allowed). In which case we are talking about new taxes. These taxes must be such as not to reduce domestic demand and not to increase the cost of labour.

Some supporting data 

Contrary to what you have been led to believe, there are not too many public employees in Italy. In fact there are too few. In 2011 (OECD data) in Italy there were 3.435 million public employees (of which 320,000 temporary workers, including employees and self-employed), compared with 6.217 million in France and 5,785,000 in the United Kingdom, countries with a very similar population Italy, and with not substantially higher GDP [2]. Even in Spain and the United States civil servants per capita are more numerous than in Italy (respectively 65.6 and 71.1 per thousand inhabitants, compared with 56.9 in Italy). If we consider only administrative staff [3], to have in Italy the same number of public employees per capita as Germany we would have to create 417,000 new jobs, to add to the current 1,337,000: an increase of 31%. And to have the same number of administrative employees per capita as the United States, we would have to hire 1,310,000.

We are aware that in the government there are redundancies that must be stopped: the Cottarelli commission has counted 58,000, which still seems to be a small number in the face of extensive and documented deficiencies in many areas.

The under-sizing of government is accompanied by a particularly low level of education of staff: only one million of the employees (30%, according ARAN 2012) data have a degree, while in the UK, there are more than 3 million (54%). If you wanted to adjust our public sector to European standards we would need to completely absorb all the graduate unemployed. In other industrial countries the public sector represents a major proportion of the demand for graduates, thanks both to its size, and the high level of education of the labour force it employs.

How to finance the jobs

In those circumstances, we propose a policy to trigger a virtuous Keynesian circle, through:

  • direct creation of skilled jobs by the State, approximately one million graduates to be included in the services most in need for the country’s development (health, safety, school, civil justice, the protection of the artistic heritage, and the environment, and others)

resulting in

  • a growth of the overall wage share of employees
  • consumption growth
  • production growth
  • induced employment growth
  • growth in tax revenue
  • reducing the ratio of debt to GDP.

The necessary human resources are derived from the mass of unemployed young people and the unemployed with high education. The cost of the project can be estimated at around 20 billion euros a year, to be sought through a limited property tax, ringfenced for this purpose, on financial assets of more than 130 thousand euro, which would cover about half of all Italian households. The tax would be progressive, 2-6 per thousand.

A conservative assumption on the size of the multiplier of this project is that it will generate 28 billion euros of additional GDP over three years and that at the end of the period, the jobs created may be supported by ordinary public resources generated without having to make more use of the imposition initial extraordinary taxation. [4]

Would citizens be willing to pay the taxes?

It is our conviction, founded theoretically [5], that taxpayers would not be too ill-disposed towards this tax, if they are sure that the proceeds really and exclusively go towards creating useful work for the unemployed youth. In Italy there are 3 million NEETs, young people aged 18-29 not in education or work, half of whom lives with their parents. Of these 1.5 million families with young NEET dependents, half should contribute to the tax explicitly intended to create jobs for their children. [6] The crucial problem is how to produce confidence in people that the purpose of the taxes paid would actually and exclusively be used to solve youth unemployment.

Tackling cronyism and gender inequalities

Would this policy of extraordinary job hires would be monopolized by those who can use their position of power or influence in favour of children, grandchildren? Based on good theoretical arguments it can be argued that the simultaneous creation of a high number of skilled jobs in itself would be a way, if not to eradicate the particularistic orientation, at least to weaken it, making it less profitable.

The power of organized crime, clientelism, familismo is stronger the more resources are scarce. The Mafia is fiercely opposed to the development of communities that it controls precisely to prevent the growth of resources available to transform the contexts of the choices made by people, promoting alternatives. Our plan would create a sort of sociological extreme opposite, in which the demand for qualified labour by the state becomes so high as to offer good opportunities for everyone, even those who cannot or will refrain from using the help of the powerful. The hypothesis (robust from the point of view of action theory) is that the actors, if they are able to choose, prefer to rely on their own merits rather than resort to a recommendation (raccomandazione). And even if this assumption on the anthropological nature of the actors were too optimistic, it is realistic to think that, in the presence of such great availability of jobs, patronage may not irreparably damage the ‘unarmed’ able workers.

Utilise graduate women

And now we come to gender inequalities. In all industrial countries and gradually also in developing countries, there is a paradox, which in Italy is almost ignored. In the last century women have increased their levels of education faster than men; in the 70s and 80s they matched them; and now they have surpassed them. The gap has continued to grow and today, every year, of 100 new graduates 60 are wome (Ministry of Education data). In addition, exam results at every level up to university are systematically higher for women (ISTAT). In research I conducted in the Liceo Classico of Alexandria [7] in the marks for the graduation examination, there were amazing results for their absolute stability: on average the female students graduated younger in each of the one hundred years analyzed and have achieved higher grades in all subjects, including mathematics, physics and sciences.

But when the ex-model students drop out of school, which typically applies logic of the ‘variable amount’ (marks and passes not allocated according to a fixed number) and they enter the world of work, where notoriously instead the logic of  ‘zero sum’ conquers, they are immediately disadvantaged by discriminatory mechanisms of various kinds: they take longer in search of their first job, are more affected by precariousness, are unemployed more easily and for longer periods and ultimately have lower incomes. Alma Laurea* estimates that by the end of the first five years there is an average wage disadvantage of 30%, which is then expected to grow, due to the serious inequalities in the subsequent career progression.

In this framework, the availability, in a short time, of a massive number of highly skilled jobs can set in motion mechanisms that attenuate [8] inequality. For among the graduates, women are the vast majority (60 for every 40 men), most of the new jobs will inevitably be right for them and, in analogy to the case of cronyism, the relative balance that will be created between supply and labour supply will reduce the incentive to discriminate positively in favour of men, even for the simple fact that [labour shortages mean] you do not find enough men to who are seeking a helping hand.

* a link organisation between graduatesuniversities and the business world

NOTES

1] For the alternative proposal, fully compatible with ours, to create a large amount of cash without contravening the European Treaties, see: http://www.monetafiscale.it.

[2] You might think that the lower number of public employees does not imply less employment in the production of services, but only that part of it is provided by the private sector. Not so. If we consider the total employment, public and private, in the typical public sector, ie government, healthcare, education and social care we find that in France there were (in 2012) 7,770,000 employees, 1 in every 8.2 inhabitants, in the UK 8,741,000, one every 7.3, in Germany 8.78 million, one in every eight, and in Italy only 3.745 million, even one in every 13. The comparison becomes worse than the one that takes into account only public employees.

[3] OECD data. For their meaning, see Employment in Government in the Perspective of the Production Costs of Goods and Services in the Public Domain, p.33: “Public administration here has a restricted sense, and primarily means general regulatory tasks. Indeed, teachers or doctors It is for instance not included here. ” The figure for France was in 2010. These data are important for comparison because they are not affected by privatization (even if the data of the United Kingdom and the United States suggest that this work if anything counts against Italy).

[4] For the necessary information please refer to the aforementioned site http://www.propostaneokeynesiana.it.

[5] In philosophy and sociology, see Jon Elster (1979), Ulysses and the Sirens. Sudies on Rationality and Irrationality, Cambridge University Press, and for a review of the economic literature, Guido Ortona (2010), Punishment and Cooperation: The “Old” Theory, Polis WP, 173.

[6] We are conducting some exploratory research on citizens’ attitudes towards these issues, through CATI sample surveys and focus groups.

[7] The survey was conducted as part of a master’s thesis.

[8] A similar case from a theoretical point of view is represented by the first application of the university recruitment reforms, the end of the ’90s: the large initial availability of posts allowed women to reduce the gap in the percentage of associate professors and above all ordinary professors.

Source: http://www.ingenere.it/articoli/uscire-dalla-crisi-partendo-dalla-pa

Translation by Revolting Europe

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope

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