Stefano Micossi will leave the general management of Assonime at the end of the year after 23 years of service. The president Patrizia Grieco and the entire association wanted to greet Micossi by organizing a conference yesterday at the Luiss in Rome in which, alongside the illustration of the great progress of the Association of joint-stock companies in the last two decades, they were reproposed – on the basis of a multi-voice essay edited by Luca Paolazzi and not surprisingly entitled "Italy and the thread of growth" - the basic themes that Italian society has not yet managed to address and which are the cause of the substantial stagnation of our economy and its growing detachment from the countries of the rest of Europe. It's about understanding howpick up the thread of growth” given that without growth it is very difficult to satisfy the expectations of individuals and of society as a whole, and in particular of how best to use the energies of the many young people who today in Italy do not study and do not work. The conference, which was attended, among others, by the Governor of the Bank of Italy, Ignazio Visco, the president of the Constitutional Court, Giuliano Amato, and the president of the LUISS Business School, Luigi Abete, focused on some recipes that would allow us to overcome the current stalemate. Among these stand out full membership in Europe, without which we have no possibility of growth, and training at all levels to improve the possibility of meeting the demand and supply of work.
In his concluding speech (which we publish in its entirety below), Stefano Micossi after the customary acknowledgments summarizes the recipe to implement for get out of the crisis. This is a reflection that is particularly timely at a time when one is underway campaign in which the parties pile up the most unburdening proposals without ever giving them such an organicity as to make them plausible to get us back on the path of growth. Indeed hardly anyone ever mentions growth as the first of the objectives to be pursued, without which everything else is written in the sand.
Stefano Micossi's full speech: the problems that continue to be postponed
the European programme Next Generation US it has placed our historical delays at the center of our economic policy, removing the factors that negatively influence growth and productivity: excess bureaucracy, legal uncertainty, the timing of justice, the lack of tangible and intangible infrastructures. Nor can we underestimate the need to draw up a plan to contain our public debt, which makes us supervised in the eyes of European institutions and investors. The Draghi government has given a formidable boost to the spending and reform processes. Significant simplifications of decision-making processes and administrative expenditure procedures have been initiated. A significant reform of the procedures for business crises has been achieved, albeit after a long and somewhat convoluted journey. The important contributions of many illustrious friends for the volume edited by Luca Paolazzi – to whom my special thanks go for the initiative – specify the still desirable reform interventions in the various fields of the economy and institutions.
The problems that are deferred: work and company bargaining
Some issues, however, are still far from being addressed. Firstly, the malfunctioning of the labor market continues to weigh on the evolution of the Italian economy. The Renzi government had tried to address the problem with the Jobs Act, but failed to fully implement the part relating to mobility towards new occupations. Labor productivity continues to stagnate.
Figure 1 shows that over the last (almost) three decades, wages have often grown faster than productivity; figure 2 shows that the problem is more serious in the Mezzogiorno, where in fact private investment is languishing, while both capital and labor tend to migrate elsewhere. Recent studies show, however, that the distribution of wages and productivity presents systematic differences on the territory, discouraging employment and investment. The main cause seems to lie in a dysfunctional wage bargaining system still centered on national sectoral agreements, which do not allow wages to be aligned with productivity. The solution can only lie in the decentralization of bargaining at company level – an objective shared by Confindustria after all – but the small average size of the companies hinders this passage, because the small entrepreneur fears direct confrontation with the union at company level. There are no simple recipes for overcoming this problem, but the goal of decentralization must be pursued by opening up more room for wage differentiation. In this regard, it should be remembered that a reform of this type paved the way, in the mid-XNUMXs, for a very strong recovery of the German economy, which at the time appeared as the great sick man of Europe. Incentives that, rather than hiring under unchanged conditions, can help drive corporate reorganizations and investment in technology that improve job performance.
The problems that defer: competition in services
A second problem to which attention should be drawn concerns the state of competition. In recent decades, as in other countries, the share of services in the economy has grown, but this has been accompanied by worsening productivity and wages – which are much worse in services than in manufacturing. Poor services together breed poor workers and inefficient annuities. This is a concurrency issue. Italy does not apply the Services Directive and the results are visible. The problem is not the taxi drivers, of course, but the distribution, professional and financial services – where, in fact, the strongest players, when needed, come from outside. The problem has a political dimension that is not easy to address, because increased competition in services affects people more directly – and a weak political system has little inclination to increase competitive pressures on people. It remains that this is a central hub for stimulating growth and productivity.
The problems that are postponed: the management capacity of the public administration
Thirdly, public administration continues to lack management skills, while the attempt to put the service at the center of the users has repeatedly failed. The multiplication of cases of corruption has tightened the management rules and the control system, making decisions difficult, without solving the main problem - which arises from improper political interference spending decisions and management decisions. Multiple attempts to dismantle the system of municipal subsidiaries, through the application of European principles on the boundaries between public and private, have essentially failed. This government has tried to take the bull by the horns, and full credit must be given to the Minister Brunetta, which has launched courageous initiatives to improve skills and make public administrations more efficient. It remains to be seen whether the new government that emerged from the election will continue on this path – again, facing the necessary unpopularity.
The tax system: complex and distortive
A problem within the problem, in improving public administration, concerns our tax system, which is extremely complex and distortive. Every year the budget law worsens it in the frantic search for new revenues and, at the same time, in the disorderly granting of tax breaks and concessions to satisfy different needs and electoral constituencies
The uncertainty of fiscal relationships and the deterioration of the relationship between taxpayers and financial administration are linked in particular to some institutes: the so-called abuse of law, which the frantic search for revenue has transformed into an instrument for systematically contesting the extraordinary operations of companies; the existence of a double 'track' for business income which leads to the divergence of statutory and tax income; the system of sanctions, infested with exaggeratedly punitive laws of a penal nature. The fight against oversized evasion is pursued intermittently, given its 'mass' character and, therefore, the possible strong repercussions of political unpopularity.
The announcement of ambitious tax reform objectives has translated into practice in a reduction of the IRPEF for the most affected brackets of individual incomes (between 28.000 and 55.000 euros per year), while other interventions are postponed to the implementation of a delegation rather generic fiscal, in which objectives of alleviating the constituencies of the parties coexist badly with more systematic objectives of reorganization of the system.
Problems that refer: school and research
Finally, the education and research systems remain in serious pain due to a lack of resources and strong cultural, as well as trade union, resistance to the renewal of programs and a competitive management of university and research funds. The school continues to suffer from weak recruitment channels, insufficient training and a lack of a career path for teachers to repay their efforts and also to develop qualified leadership. The university continues to suffer from lack of autonomy of individual sites and a consensual system for the division of research funds that does not favor the quality of the projects. It is not clear how much the reform interventions of the PNRR, which also have considerable resources (about 20 billion) will help solve these endemic weaknesses.
To foster growth, modernize laws and institutions
In the last twenty years the institutions that govern the functioning of the economy have been profoundly renewed. Among the positive results we can now include the modernization of the corporate and capital market law, together with a solid approach to the regulation of competition and the economic regulation of network services, with the supervision of independent Authorities – mostly based on European law, potentially guaranteeing the independence of national decisions from the political cycle.
However, as I've already noted, the full integration of the services sector and capital market it didn't come true; the authorities that were to guide its implementation have remained incomplete, starting with ESMA. In the direct investment sector, the problem of the national bias with respect to acquisitions from abroad remains strong, while the reference regulatory framework, especially in terms of company mobility, still does not appear adequate, maintaining inefficient segmentations of the capital market.
Overall, the Italian economy maintains great strengths, but the institutional framework for business activity improves slowly and sometimes undergoes considerable setbacks. It is therefore necessary, looking to the future, to maintain the course of the economy with greater determination modernization of the legal and institutional framework for business activity, which constitutes the first condition for restoring Italy to a prospect of sustained growth.
