Boosting investment is key to supporting the nascent recovery and reviving stagnant productivity.
Growth seems to be slowly picking up. This is good news. But we are still facing a vicious circle of low productivity growth, sluggish demand, stagnant wages and, in many G7 countries, rising or high levels of inequalities.
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This country note from Going for Growth 2017 for Italy identifies and assesses progress made on key reforms to boost long-term growth, improve competitiveness and productivity and create jobs.
Italy is recovering after a deep and long recession. Structural reforms, accommodative monetary and fiscal conditions, and low commodity prices have spearheaded the ongoing economic recovery.
Italy is recovering from a deep and long recession. Structural reforms, accommodative monetary and fiscal conditions, and low commodity prices have helped the economy to turn the corner. The Jobs Act, part of a wide and ambitious structural reform programme, and social security contribution exemptions have improved the labour market and raised employment. Yet, the recovery remains weak and productivity continues to decline. Returning the banking system to health will be crucial to revive growth and private investment. More investment in infrastructure will be essential to raise productivity. The government has made significant progress on tackling structural impediments to growth and productivity. Yet public-administration inefficiencies, slow judicial processes, poorly designed regulation and weak competition still make it difficult to do business in Italy. Labour and capital resources are trapped in low-productivity firms, which hold down wages and well-being. Innovative start-ups and SMEs continue to suffer from difficult access to bank and equity finance. Literacy scores are low and job-skill mismatch is one of the highest among OECD countries, depressing earnings and well-being. Many workers are under-skilled in the jobs they hold, highlighting mismatches between workers skills and those required by employers. Improving the education system and labour market policies are crucial to raising real wages, job satisfaction and living standards. The Jobs Act and the Good School reform go in the right direction and need to be fully implemented.
SPECIAL FEATURES: RAISING INVESTMENT; ENHANCING SKILLS
Italy is recovering after a deep and long recession. Structural reforms, accommodative monetary and fiscal conditions, and low commodity prices have helped the economy to turn the corner.
Italy’s low employment rate is associated with adverse labour market dynamics characterised differently across different categories of people.
A well-functioning labour market is indispensable to promote job creation, increase living standards, and develop a cohesive society. In Italy, the various deficiencies of the labour market have resulted in high unemployment, low labour force participation and job-skill mismatch.
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To improve Italy’s long-term growth prospects, comprehensive structural reforms are needed to boost competitiveness and support job creation. Drawing on the OECD Economic Survey of Italy 2015, this paper provides a snapshot of the government’s reform agenda and assesses the impact on productivity, employment and GDP of the reforms that have been introduced since 2012.
The over-arching message of the 2015 OECD Economic Survey of Italy is straight forward: ‘a lot done, a lot more to do’. OECD Secretary-General shared some of the main findings.