BUDGET LAW: INVESTING ON FAMILY, SCHOOL AND BUSINESS
"The situation of the former ILVA is dramatic, we must all try to find a solution together. The recovery of the economy also depends on the resolution of this crisis. If we continue to be divided as a country, this can only go wrong. Italy cannot afford to be without the steel industry".
CNEL President Tiziano Treu, during the hearing of the Senate and Chamber Budget Commissions on the budget bill, uses the metaphor of the ex-Ilva, today Arcelor-Mittal, to represent the position of the National Council of Economy and Labor on the 2020 Budget Law.
“The package appears to be full of positive and commendable provisions on the whole but does not seem capable of representing that discontinuity in favor of the relaunch of the country desired by the social players and the productive world. We need to act on the industrial sector, which must support investments, and on the confidence of economic operators and families, which does not appear to have turned the tide at the moment. In order to exit stagnation, targets of some decimal of growth, close to the zero, are not enough. We need strategic development that lasts over the years and is pursued with determination and constant monitoring".
"The CNEL – as stated in the document - has long believed that a large European plan for investment, infrastructure and growth, with repercussions on the individual Member States, within which to restart, even with extraordinary modalities, is indispensable, as it happened in the reconstruction of the Genoa bridge, with the public investment machine and that of the European structural funds".
"Italy needs to bring about a decisive and courageous change to the country's potential growth rate, to reconstruct the premises for growth permanently above the average of the last 20 years, to counter the decline inherent in its long-term demographic variables. The risk of a recession therefore remains in the background".
“The issue of development is at the center of Italian emergencies and calls into question the controversial productivity dynamics, a stagnant indicator in Italy for 25 years and decreasing in comparison with competing countries. Certainly, Italy pays for the consequences of the delay accumulated in the introduction of digital technologies by families, businesses and the public administration – as stated in the document presented at a hearing by the CNEL - It is necessary to brighten the expectations of families and businesses as soon as possible. The climate of confidence towards the prospects of the economy must be increased with concrete actions and coherent behavior. At the moment, it does not seem that a qualitative leap in favor of family policies can be identified, even though the provisions of article 41 of AS 1586, "universal allowance fund and services for the family", could prove to be useful.
"The sterilization of the VAT and excise duties safeguard clauses (article 2 AS 1586) total for 2020 and partial for 2021 and 2022 is positively evaluated by the Council, for the considerable recession potential that they would have had on an income dynamics close to recession and for the persistent stagnation of household consumption”.
"CNEL has long been calling for courageous action to reduce the so-called "tax wedge". The action envisaged with the establishment of the fund for the reduction of the tax burden on employees, referred to in article 5 of AS1586 (with a budget of 3 billion for 2020 and 5 for each of the years 2021 and 2022 ) is modest but positive. It will have greater effects if you can exert confidence on the continuation and strengthening of the measure over time".
On the labor front "If we find in the low dynamics of aggregate demand the origin of the disappointing 2019 result in terms of growth, there is no doubt that the renewal of expiring national employment contracts represents an important opportunity to support aggregate demand. It is up to the Government and Parliament to assess whether it is not possible to imagine a further reduction in the tax wedge, at least on the incremental share of salary.
At this time there are about 10 million workers with expired or expiring contracts (3.2 in the public sector and 6.5 in the private sector). In the public sector, 20 NCLAs are in force, all expired on 30 September 2019 while in the private sector, on 25 October 2019, 822 NCLAs were deposited and in force, of which 200 expiring between 1 October 2019 and 31 December 2020 and relating to a number of approximately 6.5 million employees. Italy maintains the negative primacy in Europe over female participation in the labor market.
As regards social security, the CNEL believes it is inadequate to continue addressing the difficult balance between generations and the problems of keeping the system as a whole through cash-based spot measures; instead, it looks favorably at organic measures aimed at restoring resources to workers and pensioners. A "generational sustainability" strategy can no longer be postponed, in order to bring more "older" workers and more young workers under 35 to the labor market.
“The Budget foresees a deficit of public administrations which in 2020 rises from the tendential 1.4% to the programmatic 2.2% of GDP. Parliament must be aware that a 2.2% deficit in Europe is very high, and is sustainable only in the presence of an unfavorable output gap context and because the precipitation of the Italian economy in the recession would be fatal for the whole of Europe, also causing an increase in public debt. This policy deficit must therefore be transitory and functional to an effective strengthening of investments and structural corrections of the functioning of the Italian economy itself.
According to the CNEL "Italian public debt is the greatest macroeconomic problem facing the country, and represents a mortgage and a brake on any expansionary policy. The temporary postponement of the mandatory nature of debt reduction commitments in the direction of the parameter envisaged by the Treaties is certainly desirable and shared by the National Council, but it will not lessen the need to accelerate its decreasing dynamics ".
"In the short term, it seems essential to strengthen the investments of local bodies and regions, which in 2019 made a decisive contribution to growth, also thanks to the availability of administrative surpluses. Article 8 of Act S.1586, which introduces a "small investment contribution for municipalities" appears to be a fruitful way to reap immediate results".
Keeping Italian GDP above zero was only possible thanks to a higher than expected export trend, a modest recovery in the construction sector, a strong boost from public investment by local authorities. The growing territorial divergence that occurred in 2019 between the South and the Center-North interrupted the phase of moderate convergence trend achieved in the previous two-year period.
In this regard, “the provision referred to in paragraph 16 of the financing for planning expenses with a simplified mechanism within the circuit between Municipalities and the Ministry of the Interior with the three priorities set (hydrogeological risk, Roads, viaducts, bridges, energy efficiency of school buildings and others) is to be welcomed.
Download the document presented in a hearing at the CNEL