Government issues White Paper on welfare state

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In February 2003, the Italian government published a White Paper on the welfare state. The document is not a completed package of proposals, but is intended to provide the basis for discussion of a new model of social policy with trade unions and employers' organisations. The stated aim is to introduce a decentralised system of social protection, with selective and flexible measures tailored to the needs of local communities and managed at the local level. Talks with the social partners should be completed by the end of April 2003.

Italy’s welfare state is centred mainly on the pensions system, which accounts for 64% of overall social spending, compared with an average of 46% in the 15 EU Member States (according to 1999 Eurostat social protection data). The other main items of expenditure are: healthcare/sickness/disability, which accounts for 30% of Italian welfare expenditure, compared with an EU average of 35%; unemployment, which accounts for 2%, compared with an EU average of 7%; family/children, which accounts for 3.8%, compared with an EU average of 8%; and housing/social exclusion, which accounts for 0.2%, compared with an EU average of 4%.

In Italy, social contributions weigh most heavily on employers, which cover 43% of total expenditure (the EU average is 38%), followed by public contributions, which cover 39% (against an EU average of 36%), while individual employees' social contributions amount to 14% (compared with an EU average of 23%). There are other types of contributions, but they are small.

Finally, in Italy as in the rest of EU, the share of financial resources allocated to social policies expressed as a percentage of GDP has decreased in the last seven years by one percentage point, falling from 26% in 1993 to 25% in 1999, though per capita expenditure on welfare policies has increased at a lower rate than in the other EU countries.

The White Paper

The centre-right government issued a [White Paper on the welfare state](http://www.welfare.gov.it/PrimoPiano/libro bianco sul welfare.htm) on 4 February 2003. It was drawn up by the Ministry of Labour and Social Policies, the same ministry that in 2001 issued the controversial white paper on the labour market (IT0110104F). The text divides into two parts, one consisting of analysis and proposals, the other of statistics on social spending in Italy. The analysis concentrates on two particular aspects of the situation in Italy: the demographic situation and the role of the family. Two priority goals are singled out in this regard: increasing the birth rate and improving family policies. The White Paper deals with neither pensions nor health, with the former being already covered by a social security bill under discussion in parliament and the latter falling within the competence of the Ministries of Health and the Regions.

The White Paper is not intended to be a 'closed package' of government proposals. Its purpose is instead to provided a basis for discussion with the social partners. Indeed, talks with the trade unions and employers’ associations were convened for the end of February 2003 and they should be concluded by the end of April, so that the decisions taken can be included in the preparatory document for the 2004 budget law.

The overall intent is to devise a welfare model no longer characterised by strong central control and undifferentiated delivery of benefits and services (ie equal for everyone in every part of the country). The government’s declared objective is to introduce a decentralised system of social protection, with selective and flexible measures tailored to the needs of local communities and managed at the local level. Moreover, the White Paper emphasises for the first time the 'efficiency principle', from which it follows that, as the document puts it, 'competition renders obsolete any egalitarian social and wage policy based on old models'. A declared goal is to 'double the resources allocated to services to people within 10 years'.

The analysis

The analysis conducted by the White Paper starts from the fact that, of the 15 EU Member States, Italy is the one with the most rapidly ageing population (in international classification tables, Italy stands in second place after Japan). The government cites Eurostat figures, according to which in 2000 Italians aged between 60 and 79 represented 18% of the total population (2 percentage points higher than the EU average), whereas, again in 2000, the under-19 age group accounted for 20% of the total (3 percentage points lower than the EU average). Moreover, again according to Eurostat figures, in 2000 the 'old-age index' in Italy (the population aged over 60 as a percentage of the total population aged between 0 and 19) was 121, compared with the EU average of 94.

According to the White Paper, this demographic decline is due less to increased life expectancy (which is in line with that of other countries) than to the fall in the fertility rate during the decade 1975-85 (according to Eurostat figures). Today the fertility rate is 1.25 children per woman (compared with the EU average of 1.53), resulting in a natural decrease in the population which, in 2000, amounted to –0.3% (whereas the EU average is 1%). The government describes this 'demographic gulf' as indicative of an 'alarming situation'.

Finally, in Italy around 12% of families and 14% of individuals still suffer from conditions of relative poverty. This concerns a total of almost 8 million people and more than 2.5 million families, more than two-thirds of which are concentrated in the South, according to the National Institute of Statistics (Istituto Nazionale di Statistica, Istat)

The proposals

The White Paper provides a preliminary outline of the government’s commitments with regard to social policy. The objectives to pursue are projected over the medium- to long term. Five areas of intervention are singled out, with the operational framework and priorities defined for each of them. These areas of intervention are as follows.

Support for families

• The family is recognised as constituting the core of the welfare system. In this regard, the White Paper recommends a tax system which takes account of expenditure on the care and upbringing of children (scaling taxes according to the size of the household, low-income ones in particular), the purpose being to improve the demographic balance and to revive the birth rate.

• Work re-entry after interruption for childbirth should be promoted, by means of measures intended to reconcile child-rearing and work by offering training or re-training courses to women on maternity leave.

• Access to credit should be facilitated for a first-home purchase by young couples who are either married or about to marry (as also provided for by the 2003 budget law).

Children and young people

• The public and private supply of day nurseries should be expanded and their opening hours made more flexible. The 2003 budget law has set aside the funds necessary to open day nurseries in workplaces (company crèches). In the future, the amount of funds allocated for this purpose will be decided by the Ministry of Labour and Social Policies jointly with the Ministry of the Economy.

• In 2003, a programme should be introduced to promote the fostering in families of minors at present housed in institutions.

Social inclusion

• In 2003, the minimum integration income (reddito minimo d’inserimento) – a scheme which the government judges not to have been a success – should be replaced with a new form of income support: the so-called 'income of last resort' (reddito di ultima istanza) managed and co-financed by a regional and local system through programmes able to distinguish between forms of income shortfall (due to unemployment or to social vulnerability or marginalisation).

Disabled people

• People with disabilities who are not self-sufficient should be encouraged to live with their families by developing new forms of financial support.

Social cohesion and voluntary work

• A law on non-profit organisations, which protects enterprises working in sectors of social utility and whose purpose is not profit maximisation, should be adopted in 2003

• A computerised social service information system (sistema informativo dei servizi sociali , SIS) should be set up to plan, manage and assess social policies. In order to develop its potential, the SIS will be linked to the health information system and the Eurostat European system.

Reactions

On the employers' side, the Italian Confederation of Small and Medium-sized Industry (Confederazione italiana della piccola e media industria, Confapi) has reacted positively to the White Paper, welcoming the fact that it places the family at the core of the social protection system.

However, the reaction of the trade union confederations has been varied. For the Italian Confederation of Workers' Unions (Confederazione Italiana Sindacato Lavoratori, Cisl) and the Union of Italian Workers (Unione Italiana del Lavoro, Uil), the White Paper is a good point of departure, although a definitive opinion will be possible only when the talks with the government have been concluded. However, the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil) has strongly criticised the White Paper, stating that it ignores the elderly, who are at the greatest risk of poverty.

Commentary

The White Paper is a coherent and statistically documented analysis of the Italian situation, particularly as regards the population structure and demographic indicators, the labour market and social protection.

The government’s intention to involve the trade unions and the employers’ associations in its project to redefine social policies as a whole should be judged positively. The social partners, in fact, can make a major contribution in terms of proposals and advice.

Unconvincing, by contrast, is the White Paper’s notion of a new welfare model entirely centred on the family and married couples, to the exclusion of de facto couples. Furthermore, the scaling down of public services should be counter-balanced by a progressive increase in private welfare delivery. The danger is that, as the state withdraws, excessive responsibility will be placed on the family, which will receive greater economic support but will also be burdened with greater care commitments (to disabled family members).

Finally, the White Paper does not make clear what financial resources will be available in the future. The setting of priorities without specifying the sums to invest severely jeopardises the feasibility of both the individual objectives fixed and the entire project for welfare reform presented by the government. (Livio Muratore, Ires Lombardia)