the minimum wage by law can serve. Implement the Pnrr, the GDP will grow – Corriere.it

Prime Minister Giorgia Meloni has repeatedly said that she does not consider the minimum wage by law as the answer to be given to the question of low wages. The governor of the Bank of Italy, Ignazio Visco, thinks differently. And he explained it thus in a passage of his last General Considerations (Visco will leave, due to the expiry of his mandate, at the end of October): «Temporary work is associated with very prolonged precarious conditions; the share of young people who are still employed on a fixed-term basis after five years remains close to 20 per cent. Too many, not only among young people, do not have a regular job or, despite having one, adequate contractual conditions are not recognized; as in the other major countries, the introduction of a minimum wage, defined with the necessary balance, can respond to the non-negligible needs of social justice». This is perhaps the passage where the governor is most unbalanced with respect to the issues on the political agenda. And it does so, not surprisingly, thinking of young people, to whom he also dedicates the last words of the Considerations: «They will be listened to, helped by other generations to train, without constraints, to translate into realistic interventions the schemes they will be able to develop for a future world , no longer poor, but safer and more just”.

Salary question

The wage issue, i.e. the loss of purchasing power, was evidently triggered by a surge in inflation, with respect to which the governor acknowledges that even the central banks were surprised, committing “large forecast errors”, due to the war in Ukraine and its consequences, which no one had taken into account. However, the Central Bank’s reaction was adequate and for the future, Visco confirms its recommendation to “keep the bar of the monetary response straight, but with the gradualness necessary for the uncertainty that has not yet dissipated”. The governor is also convinced that “the return of inflation to levels in line with the target will be faster and cheaper if everyone – businesses, workers and governments – contributes to this end”, avoiding triggering the spiral between prices and inflation , the risk of which remains contained in any case, says Visco.

Increase productivity

«What is needed for a recovery of purchasing power – warns the governor, addressing both the social partners and the government – is a more sustained growth in productivity. Any budgetary measures will have to remain temporary and targeted; it is good that interventions are terminated promptly when they are no longer indispensable, both because returning to the objective of price stability would be more difficult in the event of excessive public transfers, and in order not to oppose the necessary transition to renewable energy sources”. Visco’s assessment of our production system is nonetheless positive: «Faced with the shocks of unusual intensity in recent years, the Italian economy has shown a remarkable capacity for resistance and reaction» and «the labor market has fully reabsorbed the sharp decline of employment, which had above all concerned young people and women”. In the first quarter of this year «the growth of the economy has once again exceeded expectations. For 2023, the forecasts available today converge on an increase in the product of around one per cent. The renewed vitality of the economic system was manifested in the robust expansion of exports and in the strong recovery of capital accumulation».

Demography and immigrants

The fragilities concern the low dimensional growth of companies and the conditions of workers, in fact. «The share of workers with particularly low annual wages – conventionally less than 60 per cent of the median value of the distribution, now equal to 11,600 euros per year – has still risen, up to 30 per cent, since 25 of the last years of the last century. With the greater diffusion of temporary and part-time work, the number of those who today have a job only for part of the year has significantly increased». While in perspective the demographic decline weighs. «By 2040 the resident population should be reduced by two and a half million people; those between 15 and 64 years of more than six». We need “in addition to a lengthening of the working age, an increase in the migratory balance”.

Pnnr

In the short term, the Pnrr challenge remains to be won. “There’s no time to lose,” says Visco. «It is therefore a crucial point; however, it must be part of a broader long-term strategy to facilitate the transformation of our economy». To which the necessary reforms must also contribute. However, they must never lose sight of budget compatibility. “In the next few years, any increase in expenditure or reduction in revenue, even in the context of already announced reforms such as that of the tax authorities or differentiated autonomy, cannot disregard the identification of adequate and certain structural coverage”, warns Visco. On the National Recovery and Resilience Plan, «improvements are possible. In pursuing any changes, however, it is necessary to take into account the tight program agreed with the European authorities; in this regard, a continuous dialogue with the Commission is absolutely necessary, as well as useful and constructive”. No clashes and sterile controversies, is the invitation. Rather, find a way to implement it: “The alleged inadequacies in the collective debate are being discussed regarding its design, the limited time horizon for achieving the objectives, the possible shortcomings in the ability to implement the measures, but it should be strongly emphasized that the Piano represents a rare, and overall valid, attempt to define a strategic vision for the country. Also for this reason, in addition to investments and other spending interventions, it is crucial to implement the ambitious reform program contained therein, which has been awaited for too long”.

Banking system

Positive judgment but with the invitation not to let our guard down even on the banking system: «Overall, the system is in sufficiently good condition. Last year all the main balance sheet indicators settled on satisfactory aggregate values; in many cases they have improved. The incidence of the stock of non-performing loans remained stable, at modest values ​​and now in line with the European average. Profitability, long depressed by low interest rates and high loan losses, rose significantly, benefiting from the increase in the interest margin. The capital position also improved slightly. But the uncertainty about the economic prospects calls for prudence”.

Subscribe to the newsletter of The Economy

Whatever it Takes by Federico Fubini

The challenges for the economy and markets in an unstable world

Europe Matters by Francesca Basso and Viviana Mazza

Europe, the United States and Italy that count, with innovations and important decisions, but also small important stories

One More Thing by Massimo Sideri

From the world of science and technological innovation the news that changes our lives (more than we think)

And don’t forget the newsletters
The Economy Opinions and the Economy 6 pm