Employment, Italy is among EU countries “to watch” for gender gap and family income

Brussels – Flipping through the pages of the report on employment in member countries presented today by the European Commission, the Italian situation is the classic half-empty glass. Behind the record employment rate of 66.3 per cent reached in 2023, old problems resurface: The gender and interregional gap, youth unemployment, and declining household purchasing power. In the midst of a “pressing demographic challenge.”

In the annexe to the fall package of the European Semester presented today by the vice presidents of the EU executive, Stéphane Séjourné and Roxana Mînzatu, and Commissioner Valdis Dombrovskis, the first figure to be debunked is that of Italy’s highest employment rate ever which is still nine percentage points below the European average, downgraded by Brussels as “weak but improving.” The picture of a country split in two remains relevant: the South and the islands are “particularly lagging behind,” with employment rates at 52.5 and 51.5 per cent, respectively.

The 7.7 per cent unemployment rate and its long-term component at 4.2 per cent, although decreasing in 2023, are in the “to watch” and “critical” categories. So is the gender gap, “without significant improvement in the last decade“: in Italy, the gender employment gap is 19.5 percentage points, more than double the EU average. Although Italy registers “one of the best results” in terms of employment of people with disabilities, according to the European Commission, “low labour market participation, particularly of women and young people, remains a challenge in light of the pressing demographic challenge.”

Young people chapter: Despite a slight improvement, Italy still has one of the highest inactive (neither studying nor working) rates in the EU, at 11.2 per cent, “and low basic skills among pupils remain a challenge.” Confirming the findings unveiled in a recent report by the OECD, showing that in Italy, one in three adults is functionally illiterate, Brussels warns Rome not to underestimate “adult learning challenges.” The percentage of Italian adults participating in learning and training programs is 29 per cent, compared to the 39.5 per cent European average. And in 2023, only 45.8 per cent of Italian adults possessed basic digital skills.

In its list of “what the government is not saying” when claiming success on the employment front, the European Commission highlights the “critical situation” of per capita gross disposable income of Italian households. “Further decreased”, reaching 94 per cent compared to the 2008 baseline, against an EU average of 111.1 per cent. More Italians are working but at lower and lower wages. One of the consequences noted by Brussels is that “the share of people affected by severe material and social deprivation has increased, in line with the high and stagnating share of people living in absolute poverty,” amounting to 9.8 per cent in 2023.

On balance, according to Brussels, Italy presents six “critical” or “must-watch” indicators, falling into the not-so-prestigious club of countries “exposed to potential risks to social convergence.” Countries that will be subject—the European Commission still warns—to “further analysis at a second stage.”

Bad news never comes alone, and Italy is also part of the group of countries —along with Cyprus, Germany, Greece, Hungary, the Netherlands, Romania, Slovakia, and Sweden—under the Commission’s magnifying glass for excessive macroeconomic imbalances. Along with the Employment report, EU Economy Commissioner Dombrovskis presented one on the Alert Mechanism, the screening tool by which Brussels identifies potential macroeconomic imbalances that could impact the bloc’s economy. “The selection of member states for in-depth examinations is a first step,” Dombrovskis explained, “we will present our conclusions next spring.”