Rebuilding trust to, address social divides and gender and generational inequality
“Rebuilding trust”, is the watchword launched by the World Economic Forum, the conference of 2,800 leading players in the global economy that has assembled, as it does every year, in Davos among the snow-capped mountains of Switzerland. That means the trust of businesses, consumers, financial markets and institutions, to avert the risks of a major weakening of world economies.
How? First of all, by attempting to build credible, long-term responses to the many hotbeds of crisis around the world (Ukraine, the Middle East, the Pacific area) and their economic consequences (the partial blockade of the Red Sea, due to the conflict triggered by Yemeni Houthi Islamists, could lead to a major slowdown in European industry and recession).
Reassuring international policy prospects are therefore needed, even if at the moment authoritative and far-sighted actors who are capable of building widely acceptable diplomatic solutions remain to be seen. But precisely in the name of trust, it is also necessary to reflect on political choices able to provide concrete answers not only to faltering economic growth (the recession in Germany, the EU’s main economic player, heavily involves other European countries, starting with Italy), but also to the widespread social malaise stemming from increasing divides and inequalities (social, indeed, but also territorial, between the Global North and South, gender and generation, economic and cultural conditions, knowledge and access to primary goods, like health and education).
Dramatic and growing divides (the Oxfam Report released in Davos reveals that the five richest men in the world have more than doubled their fortunes since 2020, from $405 to 869 billion, while the condition of the five billion poorest people is unchanged). These divides are increasingly unacceptable. They profoundly weaken the future prospects for the coming generations and radically undermine not only the economic order, but also the political stability of several countries and, from the USA to Europe, the very resilience of our democracies (against the perverse drive of populism, sovereignism, and exclusionary localism).
The issue of trust, in the future, in institutions, in political and trade union representation and in the authoritative planning of intellectual elites also affects Italy deeply. And for some time now, in the mainstream media itself, the topic has been consistently brought to the attention of a public sensitive to increasing general and personal fragilities and imbalances in daily life and future opportunities. A breach of trust, in fact.
Here are some figures, to flesh out “the winter of our discontent”, a context of growing concern. Bank of Italy (Il Sole24Ore, 9 January) figures indicate that the wealthiest 5% of Italian households have 46% of the total net wealth (wealth as the sum of all the household’s property and financial assets, net of debt). The poorest half of the country has just 7.6%, largely tied to the ownership of the family’s first home: a significant asset, of course, but of little use in facing increasing life needs and essential expenses and investments (health, educating the coming generation). In short: despite owning the house they live in, the middle class is getting poorer and their children risk still more deterioration.
It’s true that wealth inequality in Italy is less pronounced than in other countries, such as Germany or the USA (Italy rose from 0.67 to 0.7 on the Gini Index, which measures wealth distribution on a scale of 0 to 1). But whereas in Germany and France, to consider another figure, wages have grown by 33% in the last 20 years, together with productivity, here they have essentially remained static (+0.36%, to be exact). Measures to lower the tax wedge, which must become structural, and linking wage growth to productivity growth are paths that must be pursued decisively.
A few more figures, for reflection: ISTAT has recorded that there are 1.3 million contracts below the minimum wage threshold (jobs at an hourly rate of less than €7.79, a genuine “working poor”, with a negative impact on fixed-term workers, the under-30s, women and apprentices; la Repubblica, 11 January). The Inclusion Allowance, which has replaced the controversial Citizens’ Income, reaches only 450,000 families. Conditions of poverty (average monthly income of below €640) also affect 2.18 million households, 8.3% of the total (it was 7.7% in 2021) or, to look at it another way, 5.6 million people (9.7% of Italians, an increase from the 9.1% of previous years).
“One in six Italians is going hungry,” summarises Chiara Saraceno in La Stampa (11 January), analysing household spending in discount supermarkets and documenting the substantial cuts in food quantity and quality, with health repercussions, including for children (junk food supports the spread of obesity). Again, La Stampa (15 January) reports that “one Italian in six is poorer” in terms of “medicines and waiting lists”. According to the Asvis Report on territories for 2023, “inequality is increasing in Italy: growing poverty, worsening environmental risks, decreasing graduate numbers” (la Repubblica, 13 December 2023).
Major political choices are therefore required to tackle the crisis and rebuild trust, as we were saying, not only from the perspective of emergency, but above all to lend Italy prospects in a European context. They are also required to finally set in motion a social mobility elevator that has been stalled for 30 years, restoring prospects for young people of both sexes and preventing them from feeling increasingly compelled to leave Italy and seek better job and life prospects elsewhere.
Reform policies are needed, for tax first and foremost (it is intolerable that 42% of Italians pay personal income tax for all, with wide areas of tax evasion, especially among the self-employed, as documented by Ferruccio de Bortoli in Corriere della Sera, 15 January). Then there’s the labour market to reform; training, improving quality and diffusion of knowledge; and industrial development. The resources of the PNRR, which should be spent soon and well, are an indispensable lever, as is the judicious use of other EU funds.
This is the pivotal point: policies that favour business and not profit from position, stimulate innovation, productivity and competitiveness, and enable Italy to keep playing its role as the second largest manufacturer in the EU, after Germany. We should remember that it is precisely manufacturing (we wrote about this in last week’s blog) that has been the main force behind our economic growth in recent years, thanks to the strength of its exports. In short: industrial policy and not clientelistic protection of corporations.
Our outlook must remain European, with Europe’s values of sustainable development and social inclusion, and we should reassess the cultural and moral heritage of a continent that has succeeded in maintaining a combination of liberal democracy, the market and welfare. It’s a heritage to which we have long been accustomed, but one that the friction of new historical processes and the growth in inequality that we have discussed is undermining.
So we need to rebuild trust, without resigning ourselves to decline.
(Photo Getty Images)
“Rebuilding trust”, is the watchword launched by the World Economic Forum, the conference of 2,800 leading players in the global economy that has assembled, as it does every year, in Davos among the snow-capped mountains of Switzerland. That means the trust of businesses, consumers, financial markets and institutions, to avert the risks of a major weakening of world economies.
How? First of all, by attempting to build credible, long-term responses to the many hotbeds of crisis around the world (Ukraine, the Middle East, the Pacific area) and their economic consequences (the partial blockade of the Red Sea, due to the conflict triggered by Yemeni Houthi Islamists, could lead to a major slowdown in European industry and recession).
Reassuring international policy prospects are therefore needed, even if at the moment authoritative and far-sighted actors who are capable of building widely acceptable diplomatic solutions remain to be seen. But precisely in the name of trust, it is also necessary to reflect on political choices able to provide concrete answers not only to faltering economic growth (the recession in Germany, the EU’s main economic player, heavily involves other European countries, starting with Italy), but also to the widespread social malaise stemming from increasing divides and inequalities (social, indeed, but also territorial, between the Global North and South, gender and generation, economic and cultural conditions, knowledge and access to primary goods, like health and education).
Dramatic and growing divides (the Oxfam Report released in Davos reveals that the five richest men in the world have more than doubled their fortunes since 2020, from $405 to 869 billion, while the condition of the five billion poorest people is unchanged). These divides are increasingly unacceptable. They profoundly weaken the future prospects for the coming generations and radically undermine not only the economic order, but also the political stability of several countries and, from the USA to Europe, the very resilience of our democracies (against the perverse drive of populism, sovereignism, and exclusionary localism).
The issue of trust, in the future, in institutions, in political and trade union representation and in the authoritative planning of intellectual elites also affects Italy deeply. And for some time now, in the mainstream media itself, the topic has been consistently brought to the attention of a public sensitive to increasing general and personal fragilities and imbalances in daily life and future opportunities. A breach of trust, in fact.
Here are some figures, to flesh out “the winter of our discontent”, a context of growing concern. Bank of Italy (Il Sole24Ore, 9 January) figures indicate that the wealthiest 5% of Italian households have 46% of the total net wealth (wealth as the sum of all the household’s property and financial assets, net of debt). The poorest half of the country has just 7.6%, largely tied to the ownership of the family’s first home: a significant asset, of course, but of little use in facing increasing life needs and essential expenses and investments (health, educating the coming generation). In short: despite owning the house they live in, the middle class is getting poorer and their children risk still more deterioration.
It’s true that wealth inequality in Italy is less pronounced than in other countries, such as Germany or the USA (Italy rose from 0.67 to 0.7 on the Gini Index, which measures wealth distribution on a scale of 0 to 1). But whereas in Germany and France, to consider another figure, wages have grown by 33% in the last 20 years, together with productivity, here they have essentially remained static (+0.36%, to be exact). Measures to lower the tax wedge, which must become structural, and linking wage growth to productivity growth are paths that must be pursued decisively.
A few more figures, for reflection: ISTAT has recorded that there are 1.3 million contracts below the minimum wage threshold (jobs at an hourly rate of less than €7.79, a genuine “working poor”, with a negative impact on fixed-term workers, the under-30s, women and apprentices; la Repubblica, 11 January). The Inclusion Allowance, which has replaced the controversial Citizens’ Income, reaches only 450,000 families. Conditions of poverty (average monthly income of below €640) also affect 2.18 million households, 8.3% of the total (it was 7.7% in 2021) or, to look at it another way, 5.6 million people (9.7% of Italians, an increase from the 9.1% of previous years).
“One in six Italians is going hungry,” summarises Chiara Saraceno in La Stampa (11 January), analysing household spending in discount supermarkets and documenting the substantial cuts in food quantity and quality, with health repercussions, including for children (junk food supports the spread of obesity). Again, La Stampa (15 January) reports that “one Italian in six is poorer” in terms of “medicines and waiting lists”. According to the Asvis Report on territories for 2023, “inequality is increasing in Italy: growing poverty, worsening environmental risks, decreasing graduate numbers” (la Repubblica, 13 December 2023).
Major political choices are therefore required to tackle the crisis and rebuild trust, as we were saying, not only from the perspective of emergency, but above all to lend Italy prospects in a European context. They are also required to finally set in motion a social mobility elevator that has been stalled for 30 years, restoring prospects for young people of both sexes and preventing them from feeling increasingly compelled to leave Italy and seek better job and life prospects elsewhere.
Reform policies are needed, for tax first and foremost (it is intolerable that 42% of Italians pay personal income tax for all, with wide areas of tax evasion, especially among the self-employed, as documented by Ferruccio de Bortoli in Corriere della Sera, 15 January). Then there’s the labour market to reform; training, improving quality and diffusion of knowledge; and industrial development. The resources of the PNRR, which should be spent soon and well, are an indispensable lever, as is the judicious use of other EU funds.
This is the pivotal point: policies that favour business and not profit from position, stimulate innovation, productivity and competitiveness, and enable Italy to keep playing its role as the second largest manufacturer in the EU, after Germany. We should remember that it is precisely manufacturing (we wrote about this in last week’s blog) that has been the main force behind our economic growth in recent years, thanks to the strength of its exports. In short: industrial policy and not clientelistic protection of corporations.
Our outlook must remain European, with Europe’s values of sustainable development and social inclusion, and we should reassess the cultural and moral heritage of a continent that has succeeded in maintaining a combination of liberal democracy, the market and welfare. It’s a heritage to which we have long been accustomed, but one that the friction of new historical processes and the growth in inequality that we have discussed is undermining.
So we need to rebuild trust, without resigning ourselves to decline.
(Photo Getty Images)