Italy doomed by corruption, bloated bureaucracy and poor productivity
DECADES of turning a blind eye to endemic tax evasion, corruption, and dismal economic growth has sent Italy careering into its present crisis.
The country may be renowned for global brands such as Ferrari, Gucci and Armani but the eurozone’s third largest economy has been hobbled by the chronic failure of successive governments to enact reforms.
On the streets of Rome, Italians may express relief and grim satisfaction that Mr Berlusconi has announced his intention to resign, but many realise that the country’s problems extend far beyond the failings of the scandal-prone prime minister.
Italy’s people know they have been sleepwalking into an economic abyss for years and must now pay the reckoning.
Despite a still healthy manufacturing sector, which produces the kind of high-quality fashion, furniture and cars that are in increasing demand from emerging economies such as China, the country has for years been spending more than it earns, resulting in a staggering €1.9 trillion (£1.6?trillion) public debt – about 120 per cent of its annual economic output.
Last year, Italy’s output was smaller than in 2005, adjusted for inflation. According to the International Monetary Fund, growth this year will amount to a paltry 0.6 per cent, with an even more miserable rate of 0.3 per cent forecast for 2012.
The country’s dismally low growth is a consequence of corruption, a bloated bureaucracy, an overpaid and cosseted political class, stifling bureaucracy, low productivity and a third-rate educational system.
On almost all those indices, the problems in the “Mezzogiorno”, the sun-baked, Mafia-plagued south of Italy, are much more acute than in the wealthy north, highlighting a regional divide that has existed since unification in 1861, threatening to split the nation.
Of the world’s top 200 universities, only one is Italian – Bologna University in the north, one of the oldest in Europe.
Italy also performs poorly in global rankings of transparency and competitiveness.
Italy’s National Statistics Agency has estimated that the “black” economy makes up at least 16 per cent of GDP.
Tax evasion is almost a national sport. Italians resent paying high taxes when they feel they get little in return – streets are potholed, hospitals are overcrowded, playgrounds for children are often smashed up and covered in graffiti and public transport is frequently shabby and outdated.
And they have been set a terrible example – among the plethora of accusations that Mr Berlusconi has faced in his many trials are those of tax fraud and false accounting.
“How do you expect Italians to respect the rules when the law is ignored by our politicians?” said Alessio, 42, who sells T-shirts and souvenirs to tourists from a shop overlooking the Trevi Fountain, one of Rome’s most popular tourist spots. “But the problem is not just Berlusconi. We’ve had these issues for 30 or 40 years and no one has done anything about them. Now the hole is too deep. I see very little hope.”
Getting a well-paid job in Italy often depends not on merit but “raccomandazioni” or connections – in other words, it’s not what, but who you know. While millions of older Italians have jobs for life, their children scramble from one short-term contract to another and often work for nothing.
The unemployment rate for young people between the ages of 15 and 24 is close to 30 per cent.
The youth are locked out of work by a closed-shop system that affects dozens of trades and professions, from pharmacists and notaries to taxi drivers and licensed tourist guides.
Seeing no prospects at home, young Italians are leaving in droves to seek better opportunities in Britain, the US, Australia and the Gulf, in an
accelerating brain drain that will deprive the country of much-needed entrepreneurial talent.
“Many of my friends have left the country in search of a better life,” said Antonio Lardo, 28, a graduate who had dreams of becoming a teacher but instead sells sketches in a cobbled lane. “There’s no decent work here.”
Italy’s fat cat politicians are also a drain on the public purse. The 945 members of the Senate and the Chamber of Deputies earn an average annual salary of €140,000 – almost twice as much as British MPs and more even than MEPs.
They are chauffeured around in expensive Alfa Romeos, Maseratis and Audis with tinted windows.
There are a staggering 30,000 of these executive cars and they cost the Italian taxpayer an estimated €2?billion a year.
“Their salaries need to be cut immediately,” said Luisa Calvanese, 40, who runs a photographic shop a few streets away from parliament.
“Both sides of politics, the Left and the Right, make cuts which affect ordinary people, but never themselves.”
So even with Berlusconi on his way out after 17 years at the heart of Italian politics, the prospects for meaningful change look distant.