Faced with geopolitical risks, there is no other choice but to continue with the Economic Monetary Union. At the same time, faced with economic risks, it is necessary not to be satisfied with the cyclical rebound of the economy we are witnessing, but to take action to hook up to technological progress so that everyone can participate in it. These are the topics addressed by Ignazio Visco, governor of the Bank of Italy, during the study day organized by Prometeia in Bologna for the 40th anniversary of the economic analysis company founded by Nino Andreatta.
“We must continue to make the economic and monetary union complete – Visco began in his speech – I think it is a problem not only of the succession of unions, monetary, banking, capital and fiscal, but of an absence of political vision”. "I believe that in the face of today's geopolitical risks, the only answer to give is to go in this direction" he added, explaining that he shares "the harmonization of certain rules of the game, which must be common".
However, the governor of the Bank of Italy Ignazio Visco wanted to focus his speech on the long-term problems of the Italian economy which have held back its growth in the last 20 years. In this period of time, the advanced countries have had to face two shocks in particular: the globalization of goods and services and technical progress, both in its effects linked to the value chain and in those concerning the dynamics of work. And it is on this last aspect that the governor of the Bank of Italy focused the most. The relationship between technological change and work, he stressed, is controversial. After Ricardo's pessimism there have been other voices; For example, Keynes spoke of a new disease which is technological unemployment, which would consist of a temporary phase of adjustment. If historically it seems that in the long run technological progress has always generated more jobs than it has destroyed, it is not surprising that the debate has revived with new perspectives in recent years, such as the phenomenon of job segregation, from a on one side the qualified elites, on the other the many intermediate workers who have lost their jobs since the 80s. “In Italy it was stronger than elsewhere. There has been greater flexibility (with the Treu, Biagi laws) but it has been used more to contain labor costs rather than to push companies to use new technologies”, said Visco. “I believe – he added – that we have not yet had the strong impact of technological change. These technological developments and their interaction and the prolonged recession can leave permanent marks on our economy”.
CONNECTING INNOVATION FOR EVERYONE
For Visco, the recovery in production and employment that is observed today is the still weak sign of an inversion of the economic cycle, also favored by the revision of the institutional and contractual arrangements carried out in recent times. "Once these positive signals have consolidated - he warned - we should not read in this cyclical rebound, following a long and heavy recession, the indication that the growth difficulties of the Italian economy have been resolved": the trends, those already underway and those that may derive from technological advances, require a long transition towards a new organization of the economy and society. "It is difficult to predict the future - added the Governor - but it is certain that we need to change perspective and understand that it is a priority, on the one hand, to strengthen the ability of our economy to engage innovation and technological progress, fundamental engines of growth and well-being, and, on the other hand, to ensure that everyone can participate in it and enjoy its fruits".
WELFARE, MORE ACTIVE POLICIES AND MINIMUM INCOME
Visco recalled that in one century in Italy the population employed in agriculture went from 60% to 4%. Likewise, it is possible to think that there will be other jobs that will replace the current ones canceled by technology. The question is: how long? What happens during the transition period? There are several unknown factors in this situation which pose problems of equality and the demographic dynamics of businesses. With effects also on welfare.
“If the technological revolution leads to an extensive, albeit transitory, reduction in job opportunities and per capita labor income, who will buy the goods and services produced by increasingly automated production techniques? At the same time, will it be socially sustainable for the fruits of progress to benefit the few? If this is achieved, there is no doubt that there will be strong pressure to review the entire public redistribution system", Visco said, adding that "The problem is perhaps more acute in Italy" because due to its historical genesis, the Italian welfare is strongly geared towards the figure of a full-time, permanent employee.
"In the face of a developed pension system - said Visco - only in the last decade have unemployment benefits been redesigned, bringing them closer to the characteristics they have in other European countries". But, according to the governor of Bank of Italy, "active labor policies continue to be lacking which, although difficult to design and implement, have a potentially important role in retraining and relocating a workforce displaced by global changes". Finally, there is no income support for people in need who have "a weak link with the world of work".
“Due to the thrust of technological innovations – added Visco – it is probable that there will be a strong tendency to reduce the labor input required to produce an ever greater quantity of goods and services. So it will be necessary to find mechanisms for allocating working time such that everyone can participate in the production process, training periods will have to alternate with work periods to keep pace with technological progress".
EDUCATION LESS PROFITABLE THAN ELSEWHERE
The use of digital technologies is in fact strongly influenced by the skills of the workers. The adoption of new technologies requires adaptation to even complex organizational changes and favors the very production of innovation. In Italy, Visco recalled, the share of workers who use computers in Italy is the lowest among OECD countries
On the other hand, the link between technological progress and education is twofold. And it presents a paradox. On the one hand, education is a profitable investment in Italy, albeit less so than in other advanced countries: more educated people have less difficulty finding a job, have less fragmented careers and earn higher salaries.
However, the levels of schooling and the proportion of graduates are low. A phenomenon which, explains Visco, is attributable to the strategies of companies, whose demand for qualified labor is held back by specialization in traditional and labour-intensive sectors, by the small size of the company, as well as by the institutional and regulatory context.
There is more. According to Visco “the poor performance of education can also signal, however, a perverse interaction between the demand and supply of human capital which amplifies their respective shortcomings. On the one hand, businesses may have reacted to low-quality education, in conditions of imperfect information, with a generalized offer of low wages; in turn these would not be sufficient to justify a higher investment in education. On the other hand, the presence of significant difficulties in finding adequate skills in the labor market may have prompted companies not to raise wages, but to reduce the propensity to invest in new technologies, consequently limiting the need for skilled labour".
The result is obvious: the triggering of this vicious circle would further depress the incentive to invest in human capital, furthermore pushing highly skilled workers to look elsewhere for better job opportunities. A study conducted in the Bank of Italy attributes almost half of the gap in the share of graduates between Italy and Germany to this type of interaction.
