Keep growing there welfare spending in Italy, continuing the path accentuated first for the pandemic and now for the upside of inflation, showing clear differences between north and south. But the Italian system in the coming years, if corrective policies are not intervened, could see a strong imbalance both due to the reduction of the birth rate, and for the emigration of Italians to other countries, not compensated by immigration. 2035 will be the year in which the number of retirees will exceed that of workers.
This is the photograph that emerged in the 2022 edition of the Think Tank Report “Welfare, Italy” supported by Unipol Group with the collaboration of The European House - Ambrosetti and with the support of a scientific committee composed of Veronica De Romanis, Giuseppe Guzzetti, Walter Ricciardi and Stefano Scarpetta presented today in Rome.
Welfare 2022, Mattarella: giving a quick response to new needs
The Forum was opened by the message of President of the Republic which he highlighted as “The collaboration between the public, private and third sectors it is a key, in the confirmation of the universal nature of rights, to enhance and modernize services”. Furthermore, Mattarella underlined how "the range of needs of people and communities is changing and expanding and, therefore, a equally fast adjustment of the answers that the State and the State-community make available. The picture offered by PNRR it is an opportunity in this direction”.
Spending on welfare is still increasing: in 2022 +18 billion
According to the estimates of the Think Tank “Welfare, Italy”, the generalized increase of welfare spending induced by the pandemic continues even in the post COVID-19. After seeing a growth of 46 billion in the 2020, between 2021 and 2022 there was a further increase of 22 billion, of which 18 billion in 2022 alone, reaching 615 billion euros in its traditional pillars: Health, Social Policies, Welfare and Education. In particular, the pension continues to absorb about half of welfare spending (48,4%), followed by Health (21,8%), from social policies (18,2%) and from education (11,6%).
The differences between north and south: Trento stands out, Calabria is black
Observing the Italian map, it can be seen that, as usual, there is a clear cut split between North, Central and South in the response capacity of the welfare system of the Italian regions, but there is one gap reduction compared to the previous edition. In detail, the public administration of Trento is confirmed first in the standings (81,3 points), followed by that of Bolzano (78,7 points) and since Friuli-Venice Julia (77,4 points). The Veneto (70,1), the last region of the North, is positioned ahead of all the regions of central and southern Italy. In particular, the last 8 Regions all belong to Southern and Insular Italy and the first of the area, the Sardinia (14th with 62,8 points), is more than 18 points behind the PA of Trento and precedes the Calabrialast in the standings. If you exclude the Regions with Special Statute -who have a different relationship with the State- in the first line is theEmilia Romagna with (75,9 points) followed by Lombardia (73,8) Piemonte (70,6) and Liguria ,(70,5).
Compared to the previous edition, a slight one emerges decrease polarization in the response capacity of the welfare system of the Italian Regions (-2,1 points), with the gap between the best and worst Regions going from 32,7 points to 30,6 points (mainly due to a decrease in the PA score of Trent).
The impact of inflation threatens to push an additional 300.000 families into absolute poverty
The impact ofprice increase in the wake of economic recovery of 2021 and subsequently because of the conflict in Ukraine, is aggravating the situation of weaker families. The report predicts that the inflationary boost could push up the number of households in absolute poverty at 2,3 million (from 2 million), following the highest number since the beginning of the Istat survey in 2005.
The impacts will be particularly severe for the already most vulnerable families, who are destined to essential expenses (food, rent, water, electricity and gas, health) 76% of their income (vs. 56% for higher income families): for less well-off families, the disposable income for out-of-pocket expenses (not necessary for subsistence) has already been more than decimated by inflation, shrinking by 20,7% (15,7 percentage points more than the richest quintile). In addition, inflation will also have a negative impact on savings and on value of real wages: according to OECD estimates, in 2022 the value of real wages in Italy will decrease by -3,1% (compared to the OECD average of -2,3%), in a context in which Italy, in the last 30 years, has it was the only country in the OECD area that saw a decrease in wages (-0,1% per year between 1990 and 2020).
The number of Italians decreases by birth rate and emigration
Given that the demographic dynamics is (together with the labor market) a key function of the welfare system, the Report investigated situation in 2022 and in perspective to 2035 and 2050.
In 2021, for the first time in Italian history, the number of births fell below the 400.000 threshold (reaching 399.000, bringing the natural balance (the difference between the number of newborns and the number of deaths) down by 214.000 people. The data is better than in 2020 when, mainly due to the pandemic, there was a negative natural balance of 335.000 thousand people, the worst since 1918, the year of the "Spanish" epidemic.
Il birth rate in Italy, equal to 6,8 births per thousand inhabitants, is the lowest value throughout the European Union and Italy registers the dependency rate of the elderly highest in the EU-27 (40,1 over-65s per 100 people aged 20-64), behind only Finland (40,3%) and with a value above the European average (35,4%) of 4,7 percentage points.
In perspective, based on the decline in the birth rate, in 2035 in Italy there will be 2,5 million fewer people than in 2020 (equal to 4,4 million people of working age), who are confronted with the growth of 3,6 million over-65s. In 2050, the worst-case scenario predicts a population decline of 10,5 million in our country.
The exodus of Italians abroad is growing, immigration is decreasing
Sul migratory front, between 2011 and 2020, there was a positive balance of 1,7 million people (2,9% of the Italian population in 2020). But it should be noted that if the number of Italian emigrants increased by +93,9% (7th change at EU level), it should also be noted a reduction of 35,8% in the number of immigrants (the worst variation in EU).
In particular, what needs to be emphasized about theItalian emigration it concerns the so-called "Human capital" lost (and not recovered) from the country: of the 121.000 Italians who left Italy in 2020, 26% (about 31.000 people) possessed a degree or higher education qualification.
“Welfare, Italy” estimated that if all the emigrants in 2020 did not return to Italy during their working life, the The country would lose about 147 billion euros, or the sum of the lost cost of education expenditure, equal to 10,5 billion euros, and the lost income earned by emigrants during their working life abroad (estimated at around 35 years), equal to 136,5 billion euros.
In perspective: Italians could decrease between 7 and 10 million by 2050
Ai current demographic trendsin absence of corrective policies, 2035 Italy will lose 4,2% of its population compared to 2022 (equal to 4,4 million people of working age) and will have to support 3,6 million more over-65s than current levels.
If you look at the 2050, in the UN baseline scenario, the Italian population could amount to 52,3 million people, 6,7 million less of 2020, with an incidence of the over-65s equal to 37% of the total. Considering instead the worst case scenario, the decrease in population compared to 2020 levels could be equal to 10,5 million less in 2050.
The welfare system will be put under pressure: in 2035 retirees will outnumber workers
La decrease in the job base andincrease in the elderly population they will put even more pressure on the sustainability of the welfare system of the country. In pension field, in 2035 the number of pensioners will surpass that of the for the first time occupied (the equilibrium ratio should be 3 workers for 2 pensioners) and, in the same year, the incidence of social security expenditure on GDP could reach a peak of 17,5%. Within sanitary – where aging is associated with an increase in non-communicable and chronic diseases and with greater pressure on health and social-health care systems – according to Meridiano Sanità estimates, public health expenditure will reach 164 billion euros by 2035 (7,9% of GDP) and 220 billion euros by 2050 (9,5% of GDP).
The Think Tank charts 6 priorities for action
In this framework, “Welfare, Italy” has identified 6 action priorities, supported by specific addresses
operational, which the country must face to counter the negative demographic dynamics of the country e
make welfare expenditure more sustainable in the light of demographic evolution:
-Integrate the theme of the birth rate within the European social taxonomy
- Promote measures aimed at supporting parenting and increasing female employment
-Mitigate outgoing migratory flows and make the labor market more efficient, also for foreign citizens
-Enhance the contribution of the supplementary pension component
- Promote the expansion of the offer of welfare services through contractual and corporate welfare solutions
-Redefining the Citizenship Income as a tool for social inclusion and strengthening the mechanisms of activation and job placement
