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Productivity and long term growth

Going for Growth 2016: Italy

 

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‌After being hard hit by the crisis, the Italian economy has seen a recovery in output and an improvement in its labour market. Nevertheless, unemployment remains very high – especially for the youth and long-term unemployed – undermining long-run growth and inclusiveness through skills erosion and mismatch as well as reduced social mobility.  Mobilising a broad range of policies to improve job opportunities for the unemployed and facilitate their return to work remains a priority reform agenda.

Source: OECD, Labour Force Statistics Database.

Previous Going for Growth recommendations include:

  • Pursuing the rebalancing of protection from jobs to workers’ income by reducing labour market duality with more flexible hiring and firing and more predictable and less costly legal procedures, backed up with a more comprehensive social safety net and development of ALMPs.
  • Improving equity and efficiency in education by pursuing enhanced evaluation at the secondary level, expanding post-secondary vocational education, increasing university tuition fees and introducing a system of income-contingent-repayment.
  • Improving the efficiency of the tax structure by reducing distortions and incentives to evade by lowering high nominal tax rates and abolishing many tax expenditures.
  • Reducing barriers to competition by ensuring that reforms are fully implemented and at all levels of government, by improving incentives for efficiency in the civil courts and streamlining bankruptcy procedures.
  • Enhancing active labour market policies notably by concentrating resources on the long-term unemployed.

 

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Recent policy actions in these areas include:

  • As part of the Jobs Act, Italy has established the Active Labour Market Policies Agency (Agenzia Nazionale per le Politiche Attive del Lavoro or ANLP) that coordinates ALMPs implemented by local authorities and those by the authority of the Ministry of Labour. Measures to ensure more effective monitoring and evaluation of active labour market policies are also in pipeline.
  • A new employment contract with a less costly dismissal procedure and with increasing protection through time, along with universal unemployment insurance with benefits conditional on participation in active labour market programmes.
  • Legislation of relevant decrees aimed at improving the efficiency in the civil courts and at streamlining bankruptcy procedures.

The report also discusses the possible impact of structural reforms on other policy objectives (fiscal consolidation, narrowing current account imbalances and reducing income inequality). In the case of Italy, improving equity and efficiency in education would increase employability among young workers. By facilitating the return to work for long-term unemployed, enhanced active labour market policies would lower risks of poverty and social exclusion, hence reducing inequality.

Economic Policy Reforms 2016 

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