Saturday, March 1, 2014

Giant Steps?

It's no surprise that the Italian economy is in extremely bad shape. One in three Italians under 35 is unemployed, and some 20 percent of Italians aged 21 do not have a secondary school diploma. These figures are more extreme in Sicily. It was recently reported by the Italian education journal Orizzonte Scuola that around 25 percent of Sicilians quit school by the age of 16. (The European average is about 15 percent of young adults lacking a high school diploma.)

Recent suggestions by the new government include expanding unemployment benefits to people (such as those outsourced as external consultants) who were not actually employed. Small steps, not giant ones. Italy still has no minimum wage, and only 50 percent of Italian women are wage earners.

Will Italy bounce back? Not completely, at least not like it did after past recessions.

Why not?

This time is different. Companies are leaving in droves, with FIAT leading the herd. They won't be coming back. And there are new players now, in a truly global economy that barely existed 20 years ago. Within Europe, there are new members of the EU like Romania, where Unicredit, Italy's largest bank, has one of its main computer centers. China, of course, is more significant than it was back in 1980, and so is India.

Instead of creating incentives for business, Italy is taxing its citizens like never before.

Italy is still a great place to visit, but as a permanent residence it presents certain challenges.

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