Data prove Italy’s Jobs Act is toxic

The Italian unemployment rate in November showed a decrease of 0.2 percent compared to October, reaching 11.3 percent overall, but this number is not offset by the abandonment of the labor market, represented by the increased inactivity rate. The employment rate remains stable at 56.4 percent, among the lowest in Europe.

The data on the Labor Force Survey, published this week by the National Institute for Statistics, or Istat, shows no significant changes: The number of jobs increased by 36,000 in October, exclusively women, while there were decreases in the number of unemployed (minus 48,000) and inactive (minus 4,000) workers: mainly women who were reactivated in the labor market, while the number of inactive men increased by 31,000.

The only news in November seems to be the monthly increase of 40,000 permanent employees — or jobs with the new indefinite term contract. This information fully agrees with the rational attitude of employers, in response to the announcement of a significant reduction of the tax relief for recruitments in 2016, which will probably be confirmed in December.

But overall, the trend of permanent employment plods along: In the first 11 months of 2015, the number of permanent employees increased by 62,000 jobs, compared with 125,000 new indefinite term contract employees, who most likely perform more than one job in the same period. After months of decline, the number of self-employed people also increased by 20,000.

To cut through the fog of the government’s media avalanche, it should be noted that comparing March to November, the number of employees classified as permanent has increased by just 37,000 jobs. The Jobs Act, combined with tax relief, achieved in eight months what the relief itself accomplished between January and February.

So far, taking into account the €2 billion used by the government for de-contribution (thus excluding IRAP deductions) you can assume that each new permanent job cost about €25,000.

This evidence definitively refutes Prime Minister Matteo Renzi, who assures this growth is the result of the Jobs Act. The communication campaign reduces the decline in unemployment exclusively to indefinite term contracts. If there is any effect of the law — although there are strong doubts about it — these should be attributed once again to the Poletti Decree and/or the Fornero Reform.

On the one hand, the employment increase is due to these new indefinite-term contracts and, on the other hand, the beneficiaries are mainly those over 50. For this age group, the number of employed people goes up to 233,000 workers, while the youngest group, between 15 and 24 years of age, increased by 33,000 positions.

At the same time, there has been a drop of 142,000 employees in the group between 25 and 49 years of age. In particular, the range of 25-34 years shows both a reduction in the number of unemployed (minus 97,000) and inactive (minus 120,000) people: The latter are those who lose their jobs and stop looking for a new one.

Compared to January 2008, there are 1.5 million fewer people between 25 and 34 years employed, while the number of employed people over 50 increased to 1,992,000 workers. In light of these findings, it is unclear how to interpret the statements of Maria Spilabotte, vice president of the Labor Committee: “At last, there is a reversal of the major trend for young women and men.” The unemployment rate for young people between 15 and 24 years of age, although it went down last month to 38.1 percent, remains among the highest in Europe and far from the average in 28 countries, 20 percent, as shown by the data published Thursday by Eurostat itself.

Meanwhile, the political communications, characterized by mere government propaganda, replaces the analysis of the labor market — the causes of employment and its components — with a gang war, in which each gang asks the alleged opponents to recognize its own storyline.

–> article originally published in Italian at il manifesto on Jan. 8, 2015