Italy’s unemployment rate rose to 11.6 per cent in June. Although this is a marginal rise, it is worrying for a country that is struggling to recover after multiple recessions and weak growth.
Yet there are reasons to remain optimistic.
For starters, employment has expanded by more than one per cent on the year ending June 2016, the fastest rate since 2008. And employment has been growing for the last two years, after nearly six years of contraction.
Around 22.8m people were in work by June this year, the highest level since May 2009.
So why is the unemployment rate still so high and rising?
The reason is more people joining the labour force and actively looking for work.
In June around 13.6m people in Italy were economically inactive, roughly 35 per cent of the working-age population. This is a large number, particularly compared to other advanced countries like Germany and the UK where it’s 22 per cent of the population.
But before the crisis, inactivity levels in Italy were even higher – by 60,000. The rate has therefore dropped by five per cent.
The rate of inactivity among men is now about the same as in the pre-crisis period, at about 25 per cent. Same as in France.
The real change? More women in labour force
45 per cent of Italian working-age women are inactive, that’s double the rate in Denmark and Switzerland. In the south the proportion reaches a staggering 60 per cent.
Yet Italian female inactivity has never been so low; it is actually the first time since records began that the rate of inactive women went marginally below 45 per cent.
“This is a trend that has been going on for over 20 years”, explains Andrea Garnero, labour economist at the OECD, “and it did not stop even during the crisis”. This is in contrast with economic inactivity in men, which spiked during and as a consequence of the crisis.
The culture is changing, but behind the trend there are also government policies which have been aimed at encouraging more women in the workforce, not to mention that “one breadwinner is not enough for many households anymore” as Dr. Garnero puts it.
Step by step
A lot of women are landing part-time jobs – indeed the proportion of female part-timers in Italy has doubled since 2000 and is now largely in line with other major European countries. Yet more than half of them are “involuntary”, meaning they’d rather work full-time. That compares with 40 per cent in France and only 12 per cent in the UK.
Matteo Renzi, the reformist prime minister, will need better numbers than these to be in strong position ahead of a crucial referendum in October.
Crucially, higher employment will help growth by boosting demand.
In the first quarter this year, domestic consumption accounted for 0.2 percentage points of the 0.3 per cent growth in GDP. As global demand declines, more people in the workforce will make all the difference – something to watch out for as the quarterly GDP data is released in two weeks’ time.
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