Italians Abandoning Home for Work Cause Renzi Headaches

When London resident Anthony Perotto and his wife go out for dinner, they sometimes don’t even bother to speak English when ordering food. They just use their own language: Italian.

“Most times and regardless of the kind of cuisine, the waiters are highly educated young Italians,” says Perotto, 49, a lawyer from Milan who moved with his family to the U.K. in 2008. “We have clearly become again a country of emigrants as we were a hundred years ago.”

A stagnant economy over the last 14 years has pushed Italian workers -- especially younger ones -- to go abroad in search of better futures. Their right to work anywhere in the European Union is an easy escape from Italy’s unemployment, which registered 43 percent for those aged 15-24 in May. The government will release jobless figures for June tomorrow, with economists predicting the rate for all workers will stay near the record high.

Prime Minister Matteo Renzi, just 39 years old himself, has focused on halting the chronic brain drain and keeping dynamic university graduates home to help Italy overcome the ravages of recession. Since this year’s economic expansion will be just 0.2 percent, according to the Bank of Italy, the hard part is figuring out just how many more workers will leave and what the long-term effects will be.

GDP Improvement

“As the labor market typically starts to improve two quarters after gross domestic product begins to recover, it’s very unlikely to have a radical change of direction in the next few months,” Filippo Taddei, head of economic policy in Renzi’s Democratic Party, said in a July 25 interview.

Italy’s unemployment rate rose in May to 12.6 percent, close to the record high of 12.7 percent. In June it was unchanged from May, according to the median forecast of eight economists in a Bloomberg survey before tomorrow’s release.

That compares with 11.6 percent for the full 18-member euro region in May and is almost twice the June rate of 6.7 percent for Germany, the area’s economic powerhouse. The median estimates of economists surveyed by Bloomberg call for no change in either the euro-region or German number when figures for June and July respectively are released tomorrow.

The Italian economy has contracted for 10 of the last 11 quarters, showing 0.1 percent growth in the last three months of 2013. National statistics agency Istat will publish preliminary GDP data for the second quarter on Aug. 6.

‘Human Desertification’

The country’s southern regions were particularly hit by the two recessions in the five years through 2013 and are “today lands risking industrial and human desertification, from where people keep emigrating,” state-funded research institute Svimez said in its annual report presented in Rome. There “the number of absolutely poor families more than doubled within 5 years to 1 million,” it said.

Italy is now struggling to join the recovery taking place in many countries of the euro-area where even amid anemic price growth and rising geopolitical tensions economic confidence increased in July, according to a report issued today by the European Commission in Brussels. The index of executive and consumer sentiment rose to 102.2 from a revised 102.1 in June, led by industry and construction.

“Despite signs of improving business confidence, the economic recovery is still struggling to gain traction,” the Rome-based central bank said in the July 18 report cutting the GDP forecast for this year from a January estimate of a 0.7 percent rise. It added there are “downside risks” attached to the new projection.

Worker Migration

The International Monetary Fund predicted last week in its World Economic Outlook update that Italy’s GDP will increase 0.3 percent this year rather than the 0.6 percent estimated in April.

The worsened economic scenario in Italy is bad news for Renzi who had relied on 10 billion euros ($13.4 billion) of cuts to personal income tax for low-income earners to revive consumer demand. In order to boost Italy’s economic performance the government is ready to further reduce taxes for both employers and employees, Taddei said.

The worker migration from the country of almost 62 million people may be more serious than Italy’s official data suggest. About 94,000 early-career workers left the nation in the five years through 2012, according to a May 28 report from Istat based on data provided by local authorities and consular offices.

‘Recession Factor’

Yet, in 2013 alone, more than 44,000 Italians obtained for the first time from the U.K. authorities the national insurance number required to work there, a report from the London-based Office for National Statistics show. The 66 percent annual increase of new national insurance numbers allocated to Italians was the biggest in percentage terms among adults of any European nations entering the country last year, according to ONS.

Reports on new residents in European cities such as Berlin suggest that “more and more young Italians are moving to other countries like Germany to find a job at a pace that is somehow comparable to the one highlighted by the U.K. data,” Italy’s top demographer Massimo Livi Bacci said in a July 29 interview. “There is no doubt that Italy’s official figures underestimate the real size of the phenomenon.”

Livi Bacci said that while the “recession factor” has driven many of the Italians abroad, low-cost airplane flights and increased wealth among some people have also aided the movement of workers to other EU countries.

Humble Wishes

Only a small fraction of those moving abroad register with the local Italian consulate within weeks and some of them fail to do so for months or years until they need it to get a document, said the demography professor at the University of Florence, who authored the 2006 book “A Concise History of World Population.” That is reflected in the Istat figures and explains why they differ so much from other sets of data, he said.

Among those now willing to swell the ranks of Italians abroad in search for a job and a better future is Marco Antonielli, 28, who graduated in Economy in 2011 from the University of Florence and worked in a Brussels-based research institute for a year before trying to get a job at home.

“I sent my CV around in Italy but it didn’t work out and I now look forward to work abroad -- London would be ideal,” he said. “And I would be ready to do even more humble things there to earn some money before getting a proper job.”

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