The annual meeting of the Welfare Italy Forum 2024, organized by the Unipol Group in collaboration with The European House – Ambrosetti in Rome. The aim of the Forum is to offer a concrete contribution to the creating a welfare vision that promotes the social and economic development of the country, promoting inclusiveness and sustainability. The Think Tank “Welfare, Italia” aims to be a permanent platform for comparison and sharing of ideas, as well as the promotion of good practices in the public, private and non-profit sectors. The initiative is supported by a scientific Committee which includes Charles Cimbri, president of Unipol Group; Giuseppe Curigliano, director of the Development of new drugs for innovative therapies at the IEO; Veronica DeRomanis, professor of European Economic Policy at Stanford University in Florence and at Luiss in Rome; Joseph Guzzetti, lawyer and philanthropist, former president of the Cariplo Foundation; Stefano Scarpetta, Director for Employment, Labour and Social Affairs at the OECD; and Valerio DeMolli, managing partner and CEO of The European House – Ambrosetti and Teha Group.
Mattarella: “Welfare as a national identity, no to territorial gaps”
At the opening of the event, the President of the Republic, Sergio Mattarella, sent a message in which he stressed theimportance of welfare for the country's identity: "Modern welfare, in addition to being protection, security and law, is increasingly a relevant component of a country's identity and of the heritage of values of cohesion, solidarity and culture that characterises the Continent”.
The President then highlighted the challenges that the welfare system must face: “We are experiencing profound transformations that impact the structures and the sustainability of the welfare system itself. We cannot allow territorial, generational and social gaps to return, as in the health field, as in other dynamics of social integration. Innovation and planning must characterize this commitment, to implement, over time, the constitutional direction that places the person at the center and that ensures adequate social protection in the name of equal rights, for those in need.”
Welfare in Italy: 2030 billion euros will be needed by 176
By 2030, theItaly will need 176 billion euros more to ensure the sustainability of its welfare system, which currently absorbs 57,9% of public spending, equivalent to 662,7 billion euros in 2023. Despite the increase in demand for social protection, only 8% of health spending is allocated to prevention, a sector with a high potential for economic returns.
The 2024 Report highlights a unbalanced use of welfare resources, with 78,9% of expenditures directed towards “managing the present” and only 21,1% dedicated to investments for new generations and prevention. A worrying gap compared to the European average, with Italian pension expenditure accounting for 16,2% of GDP, compared to 12,3% in the Eurozone.
To address these challenges, theItaly will have to recruit between 250.000 and 440.000 professionals, such as nurses and doctors, and invest in continuous training to develop adequate skills. Currently, 10,5% of young people between 18 and 24 have only a middle school diploma, highlighting a serious problem of educational inclusion.
The think tank “Welfare, Italia” has identified three strategic priorities: introduce regulations to incentivize the use of pension funds for Long Term Care, develop a strategic plan for training and create a single digital access point for welfare services.
Finally, the Welfare Italia Index 2024 shows a increasing regional disparities in the responsiveness of welfare systems, with the Autonomous Province of Trento at the top of the list, followed by Emilia Romagna and the Autonomous Province of Bolzano.
The challenges of economic sustainability: the intervention of Veronica De Romanis
Of particular note was the intervention of Veronica DeRomanis, professor of European Economics at Stanford University and Luiss Guido Carli as well as member of the advisory board of “Welfare, Italia”, during the panel How to ensure financial sustainability and overcome welfare system constraints. His analysis highlighted the main economic challenges that Italy must face to ensure the sustainability of the welfare system, taking into account a global context characterized by uncertainties and rapid changes.
The global economic context: slowdown and geopolitical uncertainties
De Romanis began by outlining the difficult international economic context, marked by a slowdown in growth due to geopolitical uncertainties. “There are huge geopolitical uncertainties that impact growth in all areas of the world,” he said, explaining how these dynamics are slowing down global economies, from the United States to China, passing through Europe. Although Italy maintains growth forecasts above the European average, the the future still appears uncertain.
Italy, according to De Romanis, is influenced in particular by two main factors: the implementation of the National Recovery and Resilience Plan (PNRR) and the evolution of the geopolitical context. Future prospects depend heavily on how these two elements develop, with the monetary policy of the European Central Bank (ECB) playing a decisive role. “There could be another cut by the ECB on Thursday, but much will depend on the context and inflationary risks,” he noted.
The End of Low Rates and the Weight of Public Debt
De Romanis also underlined the change of scenario on the global financial level: “The purchase of a big buyer like the ECB is over,” he explained, highlighting how theItaly must now find new buyers for its public debt. With the end of low interest rates, the country faces a major challenge. “We need dealing with a different context“, he noted, underlining how the pressure on debt sustainability is growing in step with the aging of the population and the decline of young people.
This new economic scenario puts pressure on debt sustainability, with the population aging and the young people decreasing, raising a crucial question: “Who will produce the wealth in the future?” The problem of demography reappears as a long-term risk factor, because if it is true that “we are fewer but we live longer” but when we get older, “it is difficult to acquire innovation and technology.”
The importance of reforms and investments to reduce debt
Speaking of solutions, De Romanis has praised countries like Portugal, Spain and Greece for their ability to reduce public debt through reforms and selective investments. “Portugal, in just five years, has reduced public debt by 30%,” he recalled, suggesting that Italy could take a similar path. Spain and Greece, he said, “have also been able to respond to economic crises with targeted strategies.” There is no shortage of criticism, however, of the management of Italian public spending: “we have spent badly, reducing investments even in recovery phases.” In his view, a restructuring of public spending is essential to address the debt problem. Italy must avoid waste and focus on productive investments to create a virtuous circle. “We need to reduce the deficit and get out of the vicious circle,” he explained.
Female Employment: An Untapped Resource
Another central point of De Romanis' speech concerned thefemale occupation, considered an underutilized resource. “We have a army of people who could participate in the production of wealth“, he said, noting how Italy is among the European countries with the lowest female employment rate. For this reason, he suggested invest in infrastructure that facilitates the entry of women in the world of work, rather than distributing "ineffective bonuses". For De Romanis, an increase in female employment could also contribute to reverse the negative demographic curve, generating a younger, more dynamic workforce.
Education and Human Capital: The Key to the Future
Finally, De Romanis reiterated the importance of invest in training and human capital, two crucial elements to address future challenges. “We cannot talk about the PNRR if we do not address the issue of training”. Italy is, in fact, among the European countries with the lowest level of skills and training among young people. With over two million young people out of the labor market and out of school, Italy must urgently invest in human capital. “The watchword must be: train, train, train”. A strong investment in the skills of young people is essential to counteract negative economic trends.
The new European rules: more careful public spending
Looking to the future, De Romanis highlighted how the new european rules on public spending represent an opportunity for Italy to better manage its financial resources. According to the professor, it is necessary to "adopt a long-term vision, up to 2031", aiming at more selective and targeted spending on investments. The European Union rules, in fact, can trigger a virtuous circle in which well-directed investments contribute to making public finances more sustainable. Three most relevant dossiers that our country must demonstrate it knows how to do: the transformation of “Sure” loans, the capital markets union and European debt. These tools, if used correctly, can help Italy strengthen its welfare system and improve the management of public resources. “We must make our European partners understand that theItaly has entered a virtuous circle,” said De Romanis at the end of his speech.
