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Belpaese in More Trouble

The new poverty

Never in recent years have Italians been unhappier than now. According to a poll conducted by Doxa in May 2004, only 24 percent of Italians expect the current year to be better than 2003. Some 46 percent thought 2004 would be worse, by far the largest share of pessimists since 1997. All indicators of satisfaction with the way of life, the work, and the city of domicile decreased by 3 to 9 percent compared with the results of a similar poll conducted in 1992.

The daily “La Repubblica” (May 27) commented: “The real problem, however, remains the loss of purchasing power; the perception that over the last two years a real breakdown happened which is spreading all over.” About 65 percent of Italians said it has become more difficult to buy the items they like, and 60 percent confess that they are looking for less expensive substitutes and sources of supply.

A whopping 84 percent of the sample of 1,500 interviewees stated that they are now buying “only indispensable things.” For 76 percent of Italians the nightmare of the postwar decades has returned when strict familiar cash management was necessary to make sure that the income lasts to the end of the month.

In those years, circulation was often halved during the last days of the month because many people could not afford to buy gas anymore. Stranded vehicles littered roads and highways, and police kindly ignored them. They knew the problem themselves. The new affluence

At the same time, Italy is experiencing a boom of luxury spending. In 2002, about 35 percent more yachts and boats were registered than a year earlier. Sales of second homes rose by 18 percent, and Bulgari's sales of expensive jewelry increased by 13 percent. Highly visible is the 2003 sales record of luxury cars: 82,000 were sold in Italy. The Alfas and Lancias which in past years dominated the autostrade (interstate highways) have largely been replaced by Mercedes, Audis, BMWs and Volvos. One more reason why Fiat is in trouble and lost its position as Italy's largest private employer to the Mafia, the former Number Two.

The ladies of the affluent gentlemen are also benefiting from the automotive shopping spree. According to a current joke, the girlfriend should be given a fancy Lancia Ypsilon whereas for the wife a modest Fiat Panda is considered adequate. Remember, Italy is still the country with the highest number of cars per thousand population after the United States. Secret wealth

How come that while the majority is losing its purchasing power, a minority is celebrating a boom? The answer has been provided by the Agenzia delle Entrate, the internal revenue service. Nearly a quarter of all taxable income is not declared, the agency leaked on May 30, 2004. Of every 100 taxable euros. a full 23 percent are whisked away, corresponding to a total of 200 billion euros of undeclared income. The loss in terms of unpaid taxes is estimated at 100 billion euros.

Only half a million Italians, less than 1 percent of the population, are declaring more than 70,000 euros of annual income. While it is obvious that tax evasion is largely a privilege of the affluent, on a more popular level paying taxes is also considered a poor sport. Try to get a craftsman who did a domestic repair job to write a fattura fiscale, an official invoice. You'll be taught that you should have told him in advance, and then the bill would have been considerably higher. You might end up without a fattura, and without the reliable craftsman when you need him next time.

The share of undeclared income in the domestic services sector is estimated at 56 percent. In commercial services it is still 44 percent, and in sales it is 38 percent. The most honest sector is the industry with only 4.2 percent of undeclared income. But is it true?

Nonsense, said the Craftsmen of Mestre, a trade guild of a rich industrial city near Venice. The 200 billion billion euros allegedly hidden correspond to 15 percent of Italy's gross domestic product, they said in a response to the Agenzia delle Entrate (June 1, 2004) If you add these 15 percent to the official GDP, the Italians would all of a sudden be richer than the French, Germans and Brits, according to the Craftsmen.

What the Craftsmen of Mestre failed to add is the fact that other countries also sport shadow economies whose incomes are not declared. In Germany, for instance, the “black” economy is among the very few booming sectors and an important engine of an otherwise stagnating economy.

With a total tax pressure of 31 percent of income, Italy is actively encouraging tax evasion and should not not be surprised if those in a position to evade do so enthusiastically. Pity that the others who cannot evade are forced to foot the national bill.

While there is nothing new in all that — in Italy taxes have always been evaded on a large scale — it is the deterioration recorded since the introduction of the euro which is making the majority of Italians so unhappy.

The Berlusconi government is fast in blaming “Brussels” and the introduction of the euro for the current misery. “Brussels” in the person of the head of the Commission, Romano Prodi, threw the ball back into the Italian court by saying that the government failed to manage prices and thereby permitted an inflation which is eating away at the purchasing power of lower and middle incomes. “Do it yourself “— employment

With most indicators of its position in the global economy in decline, Italy is indeed in poor shape. This is also reflected in the employment sector. Although official unemployment figures are surprisingly low — Italy has for once a lower rate of unemployed than Germany — the data are deceiving.

At the upper end of the work age, people are deferring their retirement because of income problems and pension insecurity, thus inflating the employment figures. At the lower end, some 71 percent of all new jobs created during the last ten years were “do it yourself” jobs, says the the statistical institute Censis which in May 2004 published a report “Leaders without people; people without leaders.”

In 2001, according to Censis, some 59 percent of all companies in Italy had only one worker or employee: the owner. Medical information agents, realtors, financial agents, insurance brokers and marriage institutes are among the fastest growing sectors of employment.

There are two ways of looking a this phenomenon: on the one hand it shows a remarkable level of initiative and courage to face risk; on the other hand it is the lack of acceptable employment which forces millions of Italians to choose self-employment over what could be a lifetime of chronic unemployment.

Although dating services probably contribute to boost popular happiness and demographic dynamics, it is doubtful whether the talent employed by them has found its optimum economic use.

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—— Giorgio Ascoltone