Federalism, privatisation and an individualist philosophy

Alessandro Messina; Martino Mazzonis
Sbilanciamoci; Lunaria

Currently Italy is experiencing several radical institutional changes that are causing traumatic transformations in the life of its citizens. As a result of an ongoing debate, an institutional reform to decentralise the organisation of the State was implemented. This is a dangerous mechanism that occurs in a general framework where impulses towards privatisation are multiplying. The government is using it instrumentally in order to reduce the State’s role as guarantor of individual rights.

Thisreform, which was hastily approved by Parliament and lacks an appropriateinstitutional structure, has resulted in an unprecedented shift of jurisdictionover the delivery of important services, such as health and education.Specifically, certain responsibilities were transferred to the regions withoutenough transfer of resources with which to deliver essential services.There was no decentralisation of taxation,and with the last budget law for 2003 Berlusconi has cut the transfers to localauthorities. Moreover, there were no instruments envisaged to create a balancebetween poorer and richer regions (per capita GDP in Lombardy is more thandouble that of Calabria).

TheEuropean Union in its latest Councils meetings of Prime Ministers is stillsuggesting to all members that public services should be privatised. At the sametime, Italy’s internal stability pact (signed by the regions and the centralgovernment), which proposes the obligations agreed upon between national statesand the European Union at a national level, imposes fiscal restraints on thecountry’s twenty regions and forces them to cut local welfare. This is thecontext in which the change of government (Berlusconi’s takeover) took place,as well as the neo-liberal choice of the new cabinet inviting the localauthorities to privatisemunicipalised companies (transports, waterworks, etc.). Article 35 of the budgetlaw for 2002 asked local authorities to privatise public services such astransport or water distribution, echoing the decisions of the European Union.All in all, the outcome produced by federalism, the European Union and thegovernment threatens to become a potpourri where services are privatised,consumer prices grow and the differences between regions increase.[1]The enormous gap already existing in terms of the quality of services andstructure of the labour market is in danger of widening if the decentralisationreform of the State fails to include instruments with which to balance resourcesat a central level.

U-turnon rights

Italyis the European country with the fewest instruments of income protection(unemployment benefits). Flexible employment results in very few part-timecontracts, which are prevalent in Europe. On the other hand, temporaryemployment in Italy is very widespread – Italian companies choose to lower thecost of labour and to have low levels of social protection in order to becompetitive in international markets. The number of persons who are defined asself-employed by Eurostat is almost double the European average and equals 26.2%of the total work force (only Portugal and Greece have higher percentages). Sucha high percentage of self-employed citizens certainly does not refer toprofessionals, but rather to those who have collaboration contracts,[2]although the tasks they carry out are typical of full employment. According toISTAT, the National Institute of Statistics, 20% of the labour force, workin these conditions and this is the segment of labour where poverty ismore frequent.

Accordingto ISTAT, in 2001 12% of the population lived in relative poverty (7.83 millionpersons; 2.63 million families), 66% in the South, while those who lived inabsolute poverty were 3.28 million, 4.2% of the population, 75% in the South.Between 2000 and 2001 countrywide poverty decreased 0.3%, but it increased inthe South where long-term, female and youth unemployment rates, and the spreadof irregular labour still reach very high levels.

The impact of monetisation ofwelfare

Italy’spoor ranking in gender empowerment is due in part to the trend towards themonetisation of the welfare system. Many regions tend to substitute theassignment of money (detaxation, vouchers, allowances) for assistance and caresystems (of the elderly, children, handicapped). In practice, however, poorfamilies tend to prefer using these assignments as general income supportconsequently increasing the burden of women, who must now also perform the jobsof care and assistance. These additional household responsibilities make theparticipation of women in the labour market more difficult, or subsidiary tomen’s (part-time, alternation between outside employment and domestic care,etc.).

Inaddition, monetisation of welfare can be socially regressive. In certain cases,as with school vouchers that are intended to grant a right to education,traditional welfare instruments have been transformed into a veritableinstrument of redistribution towards the upper classes: in some regions 90% ofthe school vouchers have been bestowed on private school students, children ofthe upper class, who comprise no more than 5-7% of the student population.

Plummeting public expenditure

Insuch a difficult social framework, political debate on welfare is constantlytied to the debate on resources: proponents of privatisation maintain that  Italy’spublic sector is too expensive. However, is a private system really cheaper?And, is it true that Italians spend too much on rights?

Ifwe compare Italian public expenditure with that of other European countries,Italy tends to be below average.[3]Its relatively low level of public expenditure is largely the result of lowerspending on welfare assistance and,to a certain extent, health care. In 1999 Italy spent 5.8% of its GDP on healthcare, against France’s 8.1%, Germany’s 8%, Great Britain’s 6.4% and an EUaverage of 7.1%. In 1998 the United States, whose system is almost totallyprivate, spent 5.7% of GDP on public health care. Besides, we should take intoconsideration that per capita GDP figures for all these countries are higherthan Italy’s. Therefore, in absolute terms, per capita expenditure is alsohigher: according to the UNDP, Italy is third from the bottom in per capitaexpenditure among the twenty largest economies and spends, on the whole (privateplus public expenditure), 61% less than the United States, while deliveringhealth care that is nevertheless judged much superior.

Ifwe go on to analyse the health care system, one of the notable successes ofItalian welfare (the second highest quality in the world according to WHOclassification), we may observe that, within the regional management of healthcare, the regions spending more are those that redirect resources towards aprivate health system. While the public system is bound to efficiency criteriarather than profit, the private system tends to hospitalise people who have noneed of it, to prolong hospitalisation, and to prescribe more expensivetreatments in order to receive higher refunds from the regions’ coffers. Thedeficit of Lombardy, leader in the privatisation process, and the country’srichest region, grew tenfold in five years, and it grew more thanthe average of other regions in the public health sector.

Immigrants:between xenophobia and exploitation

Thenew laws passed by the government amount to a form of semi-slavery forforeigners who come to work in Italy. These laws seriously undermineimmigrants’ social conditions and rights, because they directly link thepermit to enter the country to the existence of a contract, which gives theemployer great power. If the contract is broken, the immigrant, no matter howlong he/she has been living in the country, has to leave.Foreigners are employed by families to take care of children and theelderly, particularly in big cities. This is often irregular and badly paidlabour, with few rights and a subservient relationship to the employer. Many ofthese people live with the family that employs them and depend on that familyfor a home. This is one of the factors leading to the placement of this labourforce in vulnerable segments of the labour market, while at the same time thereis a lack of corresponding public services (where foreign citizens could beactually employed with the same rights as other workers).[4]

Thesituation of asylum-seekers is even worse, as procedures have become moreselective and available financial resources to process asylum requests constantly diminish. Asylum is notregulated by a law although it is guaranteed by the fact that Italy has signedthe Geneva Treaty.

Anindividualist philosophy

Attentiontowards individual rights, the well being of the community, and the valorisationof a common heritage, apparently do not seem to be a prevailing trait of theBerlusconi administration. Many ofits proposed or already approved regulations relieve public institutions oftheir social responsibilities and leave the individual halfway between themarket and charity, to the exclusive advantage of big companies, especiallylarge ones that can avoid competition, or to those colluding with politicalpower.

Itis certainly not due to chance that one of the Berlusconi administration’sfirst acts was to render non-punishable the crime of fraudulent accountingpractices. In other words, accounting fraud committed by a companyadministration was decriminalised. This measure, along with many others taken inthe realm of judicial administration, besides partially undermining theadministration of justice itself, is a clear result of Prime Minister andForeign Secretary Berlusconi’s judiciary problems[5]as well as those of some of his party’s Parliament members.[6]

Itis noteworthy that no measures are being taken to improve the quality of justiceitself (e.g., legal processes take an extremely long time). Rather, they are allintended to protect the president’s allies. As a matter of fact,Berlusconi’s lawyers’ strategy for his trials is centred on deferring thehearing until the offence for which the Prime Minister is judged becomes barredby limitation resulting from new legislation that he proposed, rather thandemonstrating that no offence has been committed in the first place. In thiscase the government’s strategy goes beyond an individualist philosophy andgoes so far as to transform the ruling classes’ private interests intonational legislation.

Fromdevelopment aid to voluntary corporate charity

Fromthis class perspective the suggestion of de-taxation made by the Italiangovernment at the 2002 World Summit in Johannesburg is also emblematic:companies are granted tax relief and thus invited to dispense charity, replacingthe states’ contribution to development. The present government may transformthe whole structure of development aid (ODA), depending on the will ofcorporations to spend on ODA to get tax benefits from the government. Worst yetis Berlusconi’s and José María Aznar’sproposal to tie development aid (in ItalianAPS - Aiuto per lo Sviluppo) to the repression of underground emigration(‘We will help you if you keep your citizens from emigrating’). Fortunately,the proposal did not pass at the European level. On the issue of development,the government’s search for good publicity and the growing absence of thestate go hand in hand, giving a clear picture of the government’s tendency toengage in media-oriented political action. Tellingly, on different occasions thePrime Minister/Foreign Secretary has forcibly stated it was “a shame” thatItaly should be the country with the lowest expenditure in Europe (and OECD) fordevelopment aid, but the allocated sum in the 2002 finance bill remained ameagre 0.13% of GDP. In the meantime, there is no sign of a new law ondevelopment aid. Spectacular announcements without substance of financialcommitments multiply (such as the proposal of a Marshall plan for Palestine),while trifling measures are heralded as grand interventions (the anti AIDS fundat the Genoa G8).

In2002, at the International Conference on Financing forDevelopment, in Monterrey, Mexico, the Italian government agreed to thecommitment of increasing ODA to 0.39% of GDP within 2006. We shall see. Thedanger is that in order to declare the growth of ODA it will use the bookkeepingtrick of adding up the money destined to reduce poorer countries’ debt to thesum allocated at present.


[1] It goes without saying that no serious debate has taken place in the country on the reform of the State in a federal direction or on privatisation. The government continues  with covert reforms with a strong impact, local bodies differentiate their welfare models and public resources are redirected in favour of the richer classes, with a manoeuvre of reverse redistribution.

[2] Contingent workers, subcontractors that go to the office every day, have a working schedule and a boss, but are treated as self employed in juridical terms: no vacations, no medical insurance, no pension scheme, etc.

[3] In the EU expense for social protection reached 27.6% of GDP in 1999. In that period Italy spent 25.3% of its GDP for social protection and only came above Spain, Luxembourg and Portugal among EU countries. Between 1990 and 1999 the percentage of Italian expenditure of its GDP grew 0.6%, compared to  the EU’s growth of 2.1%, France’s 2.4%, Germany’s 4.2% (but it underwent reunification), Great Britain’s 3.9%.

[4] Paradoxically, the political and social sectors that most oppose immigration (especially Alleanza Nazionale and the Lega Nord, members of the government coalition)  contribute to the increase of the entry of foreign persons in a poorly protected and unstable labour market through their promotion of private and family-oriented welfare. This is because the best solution for a family that is left with complete responsibility for an elderly  person is often to employ a foreigner irregularly.

[5] The Prime Minister, Paolo Berlusconi, MP Cesare Previti and others have been prosecuted for corruption and for many fiscal crimes, and they are changing both laws and the judiciary system in order both to avoid punishment or to postpone the trial until the terms for being judged are expired.

[6] The latest proposal (which is being discussed while this report is being written) introduces the possibility for the defendant to advance a “legitimate suspect” claim (where the person being judged asks to move the process from one Court to another because he has a legitimate suspicion that the court is not fair towards him, and that he is being persecuted) on the impartiality of the court that has been summoned to judge him. Although this legal recourse already exists, within certain limits, these limits are eliminated by this proposal.