Economics

As Poverty Surges in Italy, Populists Propose a ‘Citizens’ Income’

With almost 11 percent of the country unemployed, the Five Star Movement sees its chance.

A meal center serving Livorno’s poor.

Photographer: Chiara Goia for Bloomberg Businessweek

From his perch at a waterfront bar in the Italian port of Livorno, Marco Di Tanto sees far more despair than charm. Although the center of town—an area called New Venice—has scenic streets and winding canals similar to its namesake, the Tuscan city is still reeling from the shutdown of the vast Orlando shipyard in 2002 and the shift of most freight traffic to bigger container ports in Genoa and Naples over the past two decades. “There’s no real work in Livorno anymore,” says Di Tanto, 58, who in 2009 lost his job as a forklift driver at the docks and now picks up informal construction work when he can. “I’ve seen my old colleagues queuing at the soup kitchen.”

That economic malaise is increasingly common across Italy, where unemployment tops 11 percent and the number of people living at or below the poverty line has nearly tripled since 2006, to 4.7 million last year, or almost 8 percent of the population, according to statistics agency Istat. These woes have made Livorno, where the Italian Communist Party was founded in 1921, a petri dish for ideas to help the poor ahead of national elections expected early next year. “Poverty will be center stage in the campaign,” says Giorgio Freddi, professor emeritus of political science at the University of Bologna. The populist Five Star Movement “has imposed the issue on national politics. The mainstream parties are being forced to play catch-up.”

Ina Dhimgjini, the local counselor in charge of welfare and health services, stands outside Livorno’s town hall.
Photographer: Chiara Goia for Bloomberg Businessweek

Five Star is a fast-growing group fueled by anger at the old political class. Three years ago the movement rode economic concerns to power in Livorno, ending 70 years of rule by the Communists and other left-leaning parties. The new mayor, a former engineer named Filippo Nogarin, introduced a €500 ($590) monthly subsidy to the disadvantaged. That idea is a key plank in Five Star’s national platform, and the group’s leaders have promised to quickly implement such a program if they take power. Beppe Grillo, the former television comedian who co-founded the party, says fighting poverty should be a top priority. A basic income can “give people back their dignity,” Grillo’s blog declared in April. “The current government is ignoring millions of families in difficulty.”

The Five Star program echoes universal basic income schemes being considered around the world. Finland in January started an experiment in which 2,000 unemployed people receive a stipend of €560 per month. And the Canadian province of Ontario this summer began trials in three cities in which individuals can get almost C$17,000 ($13,600) per year. Five Star’s version would give Italians below the poverty line as much as €780 a month. Recipients must perform several hours of community service each week and actively seek work, and they’d be cut off after rejecting three job offers. Five Star says the plan would cost €17 billion a year, funded in part by spending cuts as well as tax hikes on banks, insurance companies, and gambling.
 
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Opinion polls show Five Star neck and neck with the Democratic Party, led by ex-Premier Matteo Renzi, and a center-right bloc including Forza Italia, the party of former Premier Silvio Berlusconi. To keep Five Star from dominating the debate, Prime Minister Paolo Gentiloni, a Renzi ally, has approved a less ambitious plan he calls “the first universal tool against poverty.” The scheme, dubbed “inclusion income,” would give 1.7 million people as much as €485 a month as long as they’re actively seeking work, at a cost of about €2 billion a year.

With industrial output down by about 25 percent from 2008 to 2013 in Italy’s worst postwar recession, either plan could be helpful, says Giuseppe Di Taranto, a professor of economic history at Rome’s Luiss University. “We lost lots of jobs, and poverty has risen so much that we’ve got to experiment.”

A woman cycles through a gritty section of Livorno.
Photographer: Chiara Goia for Bloomberg Businessweek

Opposition parties in Livorno ridicule the subsidy. The city’s plan, which lasted six months and benefited 100 families, was “unadulterated propaganda,” says Elisa Amato, a counselor from Forza Italia. Federico Bellandi, the local head of the Democratic Party, likens the idea to an extended campaign ad for Five Star. “It’s only pseudo-income,” he says. “Pure excessive welfarism.” While the subsidy ended in November, this fall the city will introduce a revised version for 250 residents with monthly payments topping out at €220.

The policy’s creators defend it as a shift from programs implemented under the Communists. “We wanted a new, transparent system that is tied to work that’s useful to society,” says Ina Dhimgjini, 31, the local counselor in charge of welfare and health services. Dhimgjini says that while a few beneficiaries of last year’s program have found permanent jobs, that wasn’t really the point. Older programs, she says, simply made people dependent on handouts. “This is about helping the poor,” says Dhimgjini, an Albanian-born attorney whose family moved to Livorno when she was 6. “We found people who weren’t on the radar of social services.”

Fioralba La Morticella, a 50-year-old grandmother who shares her one-bedroom apartment with two unemployed twentysomething daughters and a 3-year-old granddaughter, was among the beneficiaries of the Five Star program. She says the monthly check from City Hall helped her cover the rent and utility bills, and that the work she was required to do twice a week—“picking up garbage and telling teenagers not to damage trees or benches” as a park warden—“felt like I was doing something worthwhile.” Nonetheless, the assistance hasn’t necessarily made her a Five Star supporter. “I’m losing hope,” says La Morticella, who occasionally washes dishes in pizzerias for €6 to €8 an hour. Since the program ended last year, “I’m back where I was,” she says. “No job.” 

    BOTTOM LINE - Italy’s populist Five Star Movement is proposing a universal basic income—an idea that rival parties have started to adopt ahead of elections expected next year.
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