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Welfare reform: Moccia government steps up the pace

Strengthened social pensions, guaranteed income for the unemployed and precarious workers and support for low-income and large families. The opposition calls it "out of control spending", while the government defends its decisions as "an investment in the country's human capital"

Minister of Healh and Social Security Elisabetta Mattioli
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February 5664

ROMULA - Less than a year after taking office, the coalition of Democratic Socialists (PSD), Greens, and Communists has made a clear impact on the country's economic policy, aiming for a radical welfare reform that was approved yesterday afternoon by Congress. The goal is ambitious: to reduce inequality and ensure economic security for the most vulnerable segments of the population.

The first chapter of the reform is the strengthening of social pensions. The minimum benefit for those who have not paid sufficient contributions has been increased by more than 20%, with an automatic inflation-linked mechanism. At the same time, funds for higher-income pension programs have been redistributed degressively, favoring less-skilled workers with lower incomes.

The Minister of Health and Social Security, Elisabetta Mattioli (PSD), stated at a press conference:

We cannot afford to leave our elderly in precarious conditions after a lifetime of work, or even casual and unprotected jobs. This is not a non-repayable expense: it is an investment in social cohesion and dignity.

The other major innovation is the introduction of a guaranteed basic income for the unemployed, temporary workers, involuntary part-time workers, and self-employed workers with incomes below a certain threshold, who do not fall within the categories of workers affected by the recent introduction of the minimum wage. This support is not conditional on active job seeking, but includes periodic assessments and incentives for those who accept vocational training programs.

Minister of Labor and the Empire, Giordano Calantiani (PNC), commented on the reform as follows:

We want to break the vicious cycle of job insecurity and give people the freedom to choose decent jobs, not to accept any conditions just to survive. With this measure, as promised, the government is leaving no one behind.

In the area of family support, the government has approved the creation of the National Fund for Study Support, dedicated to supporting families with low or large incomes in purchasing school supplies and IT equipment for their children, sports and training courses, and student transportation. The Fund will operate as an investment fund, investing resources wisely and in a broadly diversified manner to ensure stable, long-term returns to be dedicated to its objective. As a significant initial endowment, it will also allocate a significant portion of the revenues from ongoing privatizations, a legacy of the liberal era of the previous government.

Indeed, despite months of deliberation and internal discussions within the majority, the government ultimately opted not to apply the brakes on privatizations. This was partly because, as internal sources reported, more than one member of the new government was pleasantly surprised by the resources currently flowing in and expected to flow until the program is completed.

The strongest resistance, of course, came from the New Communists and the left-wing wing of the PSD, who were pushing for a decisive change of direction instead. Ultimately, however, the line of the Social Democratic majority of the PSD and most of the Greens prevailed, intending to not block the operations but instead channel the proceeds into new social programs. The New Communists were ultimately won over by the promise, actually extracted from the left-wing of the PSD, to launch a major national roundtable discussion on a structural reform aimed at promoting the involvement of workers, communities, and unions, with a view to participatory decision-making in companies' industrial policies.

Minister of Finance and Treasury, Federico Almassida (Greens), stated:

It's a smart use of extraordinary resources. We're selling assets that aren't strategic sectors, and investing those funds in social infrastructure that will generate benefits for decades.

The opposition, however, isn't having it. Center-right parties are calling it "electoral giveaways" and accusing the majority of ballooning public debt without a sustainable long-term plan.

Congress PNL Group Leader, Claudia Pannofino, told the press:

These measures are designed to gain consensus in the short term. Future generations will pay the price for this binge of public spending, with higher taxes and charges. The government is dismantling with one hand what it is building with the other.

Some economists close to the opposition have calculated that, if maintained unchanged for more than five years, the reforms could increase the debt-to-GDP ratio by more than 7 percentage points.

The government, however, rejects the accusations, and the Minister Secretary himself responded to the journalists leaving Palace of the Res Public (seat of the National Congress):

We have a medium-term plan that envisions revenue growth thanks to increased employment and, above all, a significant recovery in tax revenue, and we are already working on income and tax reform, a reform centered on fairness, solidarity, and shared responsibility. Because true irresponsibility would be to ignore the structural problems of our society out of fear of investing and harming big business.

And he concluded with a jab:

Those who criticize us today yesterday cut taxes, rights, and services in the name of efficiency and freedom, but only favored the "freedom" of large fortunes and financial groups. We prefer to measure efficiency in terms of improved lives.