Three years after coming to power in October 2022, Giorgia Meloni has stabilized Italy’s budget situation. At the head of a coalition that combines the extreme right and the liberal right, the president of the Council continued the austerity policies applied since the 2011 debt crisis to reduce the public deficit. His government has cut social and health spending and sold its shares in airline Ita and energy company Eni.
Ultimately, the deficit has been halved since 2023 and should reach the 3% target this year provided for by the European Stability Pact. This should allow Italy to escape the European Commission’s surveillance measures for excessive public deficit, unlike France. Despite a higher debt in proportion to its GDP (134% compared to 114%), Rome now borrows in the same rate zone as Paris.
Giorgia Meloni can also highlight the fall in unemployment, from 7.8% in 2022 to 6% last August, and the trade surplus of 55 billion euros generated last year. “The results are there, even in an objectively very difficult context (…) We are considered and respected on the world stage,” the president of the Council greeted her activists in Florence on October 10.
In fact, the good indicators hide a much bleaker picture. Italy is being emptied of its population. Young people are leaving the country en masse, while 75% of the national wealth is in the hands of those over 50 years of age. 156,000 people emigrated in 2024, they were an average of 33 years old. The number of births continues to fall (-36% in 16 years). And the fertility rate has fallen to 1.18 children per woman, so the population is irreversibly declining in some regions.
Fall in real wages
In fact, Italians are becoming poorer and have been for a long time. Between 1990 and 2020, real wages decreased while increasing by 30% in France and Germany. This is partly explained by the stagnation of growth in recent decades. The situation has deteriorated further due to the inflation that affected European countries following the Covid-19 pandemic. Italians lost almost 7.5% of their real salary between 2021 and 2024, almost the equivalent of a month’s salary, once again the largest drop, according to an OECD study. Inequalities have increased. Although nominal wages rise, they still do not offset past price increases, so one in ten workers is considered poor.
How to explain it? Some analyzes point to a poor distribution of income. A recent report by the investment bank Mediobanca concludes that many companies could have increased salaries by an average of 4,000 euros between 2021 and 2024, “without compromising the remuneration of stakeholders and the shareholder themselves.” “The inflationary increase of 2022-2023 has caused a marked fall in the purchasing power of employees and a fall in the proportion of salaries in the global added value of the economy. On the contrary, the proportion of profits and incomes has increased,” confirms a note from the Observatory of Italian Public Accounts, a research center attached to the University of the Sacred Heart of Milan.
Very low productivity increases
And Italy also suffers the weight of a deeper evil. In the long term, the deterioration of real wages is linked to weak increases in productivity, more marked in La Bota than in the rest of the European countries. Since 1995, labor productivity has increased half as fast as in France and three times slower than in other EU countries, according to official data, according to the Italian National Statistics Institute (Istat). The situation has deteriorated especially in 2023 (-2.5%).
Specifically, the drop in unemployment is largely related to the increase in the retirement age, which has caused a jump in the employment rate of older people. But at the same time, the Italian economy has mainly created jobs linked to the tourism sector, booming since the pandemic, that is, in “sectors with low salaries and little added value,” continues the Observatory. The latter considers that “the Italian economy seems incapable of generating productivity gains that, in the long term, are the only ones capable of generating improvements in the standard of living and in the sustainability of the social protection system.”
In this context, the government of Giorgia Meloni, which refuses to apply a minimum wage, is trying to support the population’s income through tax reduction programs. But it failed to maintain the rebound seen just after the pandemic (8.9% in 2021, then 4.8% in 2022, compared to 6.9% and 2.7% in France). According to INSEE, this improvement is explained “almost entirely” by the strong increase in investment in construction thanks to the “superbonus” created by the previous government, headed by Mario Draghi. The negative effects of its disappearance on the building have since been masked by European aid, adds INSEE, which warns that next year there could be a decline as this aid evaporates.
Source: BFM TV
