September 24, 2020

Why the “frugal” countries accuse Italy of waste


Correspondent in Rome

Updated:

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Italian newspapers say that the so-called “frugal” countries – Holland, Austria, Denmark and Sweden – have sung the forty to Italy, which they accuse of waste and certain privileges, and therefore have toughened the negotiations. Specifically, the Dutch Prime Minister, Mark Rutte, has criticized his Italian colleague, Giuseppe Conte, for lowering the retirement age, which is a privilege. It was a measure that was approved during his first term, when he was part of the governing coalition of the League, whose leader Matteo Salvini made this pension reduction reform his electoral banner. Thanks to this reform of the League, it is allowed in Italy from 2019 to retire at age 62 with 38 years of contribution to Social Security.

Taking into account that the legal retirement age in Italy is 67 years, after the reform introduced by the League, a worker can retire 5 years before the legal age. The difference is notable with frugal countries: in the Netherlands retirement is only possible 2 years before the legal age, in Austria 3 years, in Denmark 1.3 years and in Sweden it is even usual to leave work after the legal age. But, if we stick to the average number of years worked that it takes to retire, in Italy the average is 31.8 years of work, in Austria it takes 37.5 years, in Denmark 39.9 years, in the Netherlands 40.5 years, in Sweden 41.9.

Lack of public spending

That reform of the pensions promoted by the League is, among others, one of the most obvious accusations made by frugal countries. They highlight the lightness with which Italy has reached an astronomical figure in its public debt: 2.5 billion euros, at the risk of reaching 160% of the Gross Domestic Product due to the coronavirus.

Hence, frugal countries intend to put conditionality on the money that will be granted to Italy and other countries. They want to prevent the millions of euros that will come from Brussels through the Recovery Fund from being badly spent on subsidies or customer expenses for electoral reasons. Experts and many Italians welcome the fact that there is some control from Brussels on spending. “This is money that is received from Europe as a whole, and therefore it is only fair that all European countries decide together on how to use it. The whole European Union cannot get money and then each country does what it wants with that money »Economist Carlo Cottarelli, a university professor and director of the Observatory on Italian Public Accounts at the University of Milan, recently told ABC.

Europe has also shown concern about the process of state participation in some companies, fearing that public money will be wasted. An emblematic case is Alitalia, with a management disaster that lasts almost a quarter of a century, with billions of euros paid by taxpayers, and the State is still injecting money to avoid bankruptcy. The last case that now arises is that of Austostrade per l’Italia, whose control that the Benetton family had until now will pass to the State. The last thing frugal countries expect is for Europe’s money to be used to nationalize the economy.

Reform requirement

The consequence of the lack of reforms is that the Italian economy is at the tail end of growth in Europe, a difference that can increase dramatically with this crisis, according to Brussels estimates, cited by Corriere della Sera: “At the end of next year , according to current forecasts, the German economy will be 13% larger than it was on the eve of the other great crisis in 2008; the French will be 7% bigger; the Spanish will be 3% bigger; instead, the Italian it will be 9% smaller than in 2008, the year of the changing of the guard between the last government of Romano Prodi and the last of Silvio Berlusconi ”.

In short, it should come as no surprise that frugal countries ask for control over the money that will come from Europe and that Italy carries out the reforms that have been pending for many years: tax evasion, corruption, bureaucracy, slow justice, demographic decline and bridging the differences between the north and south of the country.

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