Italy: New anti-poverty scheme sparks concerns in Brussels

Rome: The Italian government is phasing out its minimum income scheme for citizens in favour of a new system aimed at boosting employment, a move that is being monitored by the European Commission and criticised by advocates of welfare benefits.

Following a law decree passed in May, the government has set about dismantling the minimum income scheme, introduced in 2019 despite harsh opposition by the right and far-right parties, including the now-governing Brothers of Italy party.

“Our objective is to go from the citizens’ income to the occupation income, which is accessible through employment,” said Prime Minister Giorgia Meloni, who argued that the former scheme failed to promote labour market reintegration for the unemployed.

The previous system, which was used by two million people in June, proved effective in reducing poverty but failed to increase employment. According to economists Stefano Toso and Massimo Baldini, this was mainly due to the economic crisis, the limitations of job-seeking services and the weak labour demand, especially in the south.

Under the new system, households with minors, people with disabilities or over 60 will continue to receive the current support until the end of the year and then a €500 inclusion allowance per month per person from January 2024. The benefit will not change substantially for this group of beneficiaries.

Meanwhile, employable people aged between 18 and 59, who were previously benefitting from the scheme, no longer receive benefits but are granted €350 per month for a maximum of 12 months, provided they enrol in training to seek employment.

The new system has sparked criticism both in Italy – with protests against the new measure – and in Brussels, where both policymakers and activists are voicing concerns. The European Commission is also following the developments in Italy.

“The Commission is looking into the new measure,” a spokesperson told EURACTIV, adding that while the EU has no competences on the matter, it supports minimum income as “an important social safety net”.

In February, the Commission opened an infringement procedure on Italy’s previous minimum income scheme. According to the institution, the scheme was “contrary to EU law” as it was only available to people with ten years of residence, including two consecutive years.

Under the new scheme, the residency requirement has been shortened to five years but still requires two years of consecutive residence.

A Council recommendation on adequate minimum income schemes, adopted by member states in January, states that the residency requirement should be “proportionate” but does not provide a specific time limit.

According to Kahina Rabahi, policy and advocacy coordinator at the European Anti-Poverty Network (EAPN), the shortened requirement is a positive aspect of the new Italian system but “it is still not enough.”

“If you’re paying taxes, participating in the country, I don’t see why the length of residency should make any difference to the right to a decent income,” she told EURACTIV.

According to the government, the new scheme is expected to boost employment and reintegrate a larger number of people deemed fit to work in the labour market through training.

However, OECD economist Daniele Pacifico criticised this approach due to the temporary nature of the €350 allowance. In his view, beneficiaries risk ending up locked out of the state’s support system if they do not find a job within one year.

Rabahi said increasing wages and working conditions more generally would be a more effective tool to lift people out of poverty.

“Work is not the golden solution to ending poverty, it’s not realistic,” she said, pointing out that around 12% of Italian workers are at risk of poverty. “The measure treats poverty as an individual fault and it does nothing to how wealth is distributed in the country.”

According to Sara Matthieu, member of the European Parliament (Greens) and rapporteur on minimum income, the new scheme also fails to acknowledge the socio-economic fragmentation in the peninsula.

“The system is hitting the poor the hardest,” she said, adding that “the lion’s share of unemployment is in the south of Italy.”

While the unemployment rate in Italy reached a low 7.6% rate in July, the percentage of unemployed in northern regions is around 5%, while in some southern regions it can reach 15%.

In Rabahi’s view, “instead of improving what they had, the [Italian] far-right government decided to go against the general European trend towards social protection.”

However, according to Matthieu, the trend in Europe is rather going in the opposite direction.

“In my own region, Flanders, the right-wing has been campaigning for proposals to cut social benefits,” she explained, adding that pushing for social policy at the European level is “always difficult” given the limited competences that the EU has on the matter.

According to her, the EU needs to pass binding legislation to make sure Italy and all other member states have adequate minimum income systems set above the poverty line. However, the European Commission is unlikely to propose binding rules on minimum income as it falls outside its remit.