Government approves economic and financial planning document

In April 1998, after a long period of consultation, the Italian Government and social partners approved the economic and financial planning document for 1999- 2001.

Italy's "economic and financial planning document" (documento di programmazione economica e finanziaria, Dpef) for the three-year period from 1999 to 2001 was approved by the Government and the social partners on 10 April 1998. The document has two important functions: it aims to reassure Italy's European partners that budgetary policies and policies on the reduction of the public deficit and public debt will still be carried out; and it seeks to use part of the Budget to tackle the unemployment problem in the South and to foster economic recovery.

For 1999-2001, the Dpef predicts an average annual inflation rate of 1.5%, a budget surplus of 5.5% and the reduction of the public deficit to 1% of GDP. The public debt is projected to decrease by 3% a year and public investment to grow by 10% a year. If the document's predictions are correct, the Italian economy will grow by 2.7% in 1999 and by 2.9% in the following years. The tax burden will decrease by 0.3% during 1998 and by 2.9% by 2001. Employment, it is forecast, should grow by 0.7% in 1999, 0.9% in 2000 and 1% in 2001 - involving the creation of at least 670,000 new jobs.

The document contains a specific section on active labour policies. The Government and the local authorities of the Italian South, or Mezzogiorno, will be responsible for carrying out the strategy defined in this section. This strategy aims at intervening in five different areas: public security (with projects to protect enterprises), competitiveness, "social capital", infrastructure; and quality of the public administration.

On "social capital", the aim is to improve services in the Mezzogiorno and to reform the welfare system, through the following actions: improving income support for unemployed workers and first-time job-seekers; increasing complementary social security; fostering equal opportunities; improving interventions aimed at supporting families; and increasing investment in vocational training to increase the number of skilled workers.

The protection of the environment, the enhancement of artistic heritage and the development of infrastructures will also contribute to the development of the Mezzogiorno. In particular, logistics, railway, port and airport structures and the water system will be improved in those parts of the country with "area pacts" or "area agreements" (IT9704203F). Investments worth a total of ITL 2,000 billion are forecast to implement these initiatives over 1999-2001.

The Dpef also mentions the issue of the forthcoming statutory 35-hour working week (IT9803159N), but leaves any kind of decision to the parliamentary debate.

The objective of reducing unemployment by 10% and of increasing the number of employed workers by 670,000 by the end of the three-year period caused some controversy among the social partners The trade union confederations have given a positive assessment of the Government's proposal. By contrast, the Confindustria employers' confederation, while appreciating the general approach, believes that the reduction of the tax burden is modest, and criticises the absence of cuts in public expenditure.