ROME — Italy, which boasts rich culture, art, history and architecture, food and wine, the Alps, Venice, Tuscany, Milan, Rome and the Vatican, ranks fifth in the world in tourism. With so much going for it, including an ideal location on the Mediterranean Sea, why is the Italian poverty rate so high?
By the end of 2016, Italy was the central entry point for refugees in Europe. More than 175,000 registered as asylum seekers, which overwhelmed the 3,000 asylum centers. The refugees are not helping Italy’s economy, but neither are they responsible for the economic decline and corresponding rise in the Italian poverty rate. That began with the global economic crisis in 2008, which resulted in a 10 percent drop in the Italian living standard.
The tremendous amount of public debt Italy carries — $2.5 trillion — forced the government to enact austerity measures in 2011 designed to strengthen the economy in the long run even as the short-term impact on citizens stung. Productivity, a long-standing issue, slumped further, tax evasion continued and the effect of unemployment on the Italian poverty rate made a bad situation worse.
The unemployment rate rose from 6.8 percent to its current level of 11.3 percent. Even worse, Italy’s long-time youth unemployment problem worsened. As of 2016, the unemployment rate for those aged 15 to 24 stood at 37.2 percent. Among major EU countries, Italy has the lowest percentage of college graduates with a job. The variance is substantial with just 64.6 percent of college graduates in Italy have a job as compared to 86 percent in France and 89.1 percent in Germany.
How does this impact the Italian poverty rate? Before the global economic crisis, the absolute individual poverty rate was 3.1 percent. It more than doubled by 2015, to 7.6 percent, and the rate of those at risk of poverty in 2015 was 28.7 percent. At its highest, in 2012, 29.9 percent of Italy’s population was at risk of poverty with children suffering the most. According to the Secretary General of the Organization for Economic Cooperation and Development, “In 2015, 11 percent of Italian residents under the age of 17 were living in what we consider absolute poverty. In 2006 it was only three percent.”
Absolute poverty is substantially worse in southern Italy and island areas, 8.6 percent and 21.1 percent, than in northern Italy, where it stands at less than five percent. A divide between more and less urban areas also exists, but in reverse depending on your geographical location. In northern Italy, the poverty rate is almost twice is high in larger cities as it is in less populated areas, but in the south of Italy, almost two-thirds more people live below the poverty line in larger as opposed to smaller cities. And, when comparing immigrant households with those Italian-born, the differences — 23.4 percent to 4.3 percent — are even more staggering.
Reducing the Italian poverty rate remains a struggle, but there is some good news. More families than not are satisfied with their economic situation, and that hasn’t happened since 2006. Also, Italy is cracking down on tax frauds, recovering nearly $21.7 billion in what would have otherwise been lost revenue. A measure passed in 2016 should eliminate more than 1.1 tons of food, or one percent of the gross domestic product, annually, and three months earlier, Italy’s highest court ruled that it was not a crime to steal small amounts of food to stave off hunger.
– Laurie Gold