OECD Economic Surveys ITALY OECD Economic …

1 February 2015 OECD Economic SurveysI TA LY SPECIAL FEATURES: LABOUR MARKET REFORM; MORE AND BETTER QUALITY JOBSMost recent editions Volume 2015/6 I TA LYOECD Economic SurveysVolume 2015/6 February 2015 Australia, December 2014 Austria, July 2013 Belgium, February 2015 Brazil, October 2013 Canada, June 2014 Chile, October 2013 China, March 2013 Colombia, January 2015 Czech Republic, March 2014 Denmark, January 2014 Estonia, January 2015 Euro area, April 2014 European Union, April 2014 Finland, February 2014 France, March 2013 Germany, May 2014 Greece, November 2013 Hungary, January 2014 Iceland, June 2013 India, November 2014 Indonesia, September 2012 Ireland, September 2013 Israel, December 2013 ITALY , February 2015 Japan, April 2013 Korea, June 2014 Latvia, February 2015 Luxembourg, December 2012 Mexico, January 2015 Netherlands, April 2014 New Zealand.

2 June 2013 Norway, March 2014 Poland, March 2014 Portugal, October 2014 Russian Federation, January 2014 Slovak Republic, November 2014 Slovenia, April 2013 South Africa, March 2013 Spain, September 2014 Sweden, December 2012 Switzerland, November 2013 Turkey, July 2014 United Kingdom, February 2015 United States, June 2014 Consult this publication on line at work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical for more 978-92-64-22875-710 2015 05 1 PISSN 0376-64382015 SUBSCRIPTION (18 ISSUES)9 HSTCQE*ccihfh+OECD Economic SurveysI TA LY FEBRUARY 2015 OECD Economic Surveys :Italy2015 This document and any map included herein are without prejudice to the status of orsovereignty over any territory, to the delimitation of international frontiers and boundariesand to the name of any territory, city or 978-92-64-22875-7 (print)ISBN 978-92-64-22876-4 (PDF)Series: OECD Economic SurveysISSN 0376-6438 (print)ISSN 1609-7513 (online)OECD Economic Surveys : ItalyISSN 1995-3283 (print)ISSN 1999-0340 (online)The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities.

3 The useof such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israelisettlements in the West Bank under the terms of international credits:Cover to OECD publications may be found on line OECD 2015 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases andmultimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitableacknowledgement of OECD as source and copyright owner is given. All requests for public or commercial use and translation rights shouldbe submitted Requests for permission to photocopy portions of this material for public or commercial use shall beaddressed directly to the Copyright Clearance Center (CCC) the Centre fran ais d exploitation du droit de copie cite this publication as:OECD (2015),OECD Economic Surveys : ITALY 2015, OECD Publishing, OF CONTENTSOECD Economic Surveys .

4 ITALY OECD 20153 Table of contentsBasic statistics of ITALY , 7 Executive 9 Main 11 Assessment and 13A pr olonged recession and uncertain 17 Institutional reforms can be the basis for better policymaking and 21 Recommendations to boost efficiency through institutional 26 Labour market and competition reforms to improve productivityand 26 Policy recommendations for the labour market and 34 Addressing fiscal and financial 35 Recommendations for fiscal and financial stock of structural 43 Thematic chaptersChapter market reform for more and better quality 51 The labourmarket suffers from structural 53 The government s labour market reform package: Will it work?.. 59 More and better quality jobs in a dynamic and inclusive 73 Policy recommendations for job creation and job 88 Chapter fiscal sustainability: Structural fiscal 92 Spending 100 Recommendations for structural fiscal 114 Boxes1.

5 Recent government measures to increase Finance for Growth .. new OECD modelling framework for estimating Employment protection legislation for different employment contractsbefore the 61 TABLE OF CONTENTSOECD Economic Surveys : ITALY OECD Unemployment and social benefit system in Structure of authorities/institutions and Gender gaps in paid and unpaid Research and development: Tax credits and the patent Supply and demand for skills at the local The enabling law for tax 96 Tables1. Reform impacts on the level of GDP in the medium and long 172. TheEconomicOutlookto 183. Progress on structural 244. Recent reforms easing regulation on labour market contractsin selected 275. Fiscal consolidation in successive 366. Public debt, arrears and contingent liabilities, Stocktaking of recent and current labour market Recent reforms easing regulation on labour market contractsin selected Broad outcome measures of job quality and their Cost to companies of dealing with the tax Components of public Sub-national government spending, 109 Figures1.

6 Lack of growth is linked to low scores on 142. Low productivity has led to poor competitiveness, high unemploymentand rising 153. Recession has widened the regional 194. Bank lending has been declining, while interest rates remain highfor private 205. ALMP spending is relatively low and concentrated on some 296. The tax wedge for low-income workers is 317. Low gas prices, high electricity 338. Carbon intensity index of the energy 349. The underlying primary budget surplus is now 3510. Debt will decline if the budget remains 3711. VAT Gap estimates in the EU26 countries, ITALY s potential output has stagnated mostly due to weak Unemployment is high and increasing especially among Labour force participation is low especially among womenand older Large differences in activity and unemployment across OECD estimates of structural unemployment and the output gap differfrom the European Limited employment prospects for temporary Both earnings and household income inequality have Social transfers are currently poorly 60 TABLE OF CONTENTSOECD Economic Surveys .

7 ITALY OECD Employment protection legislation for permanent workers has Allocation of labour to the most productive firms is Job mismatch and under-qualification are significant in Income support for the long-term unemployed is very weak in ALMP spending is relatively low and concentrated on some Labour market institutions affect wages for different Wages are more elastic for new hires than incumbent Tax wedge is high in ITALY especially among low-income Women do more unpaid work than Educational attainment is Returns from education are Number of start-ups is limited and Many start-ups do not grow Resources do not flow to more innovative Skills supply and demand, Italian sub-regions, Public spending is relatively high in VAT Gap estimates in the EU26 countries, Tax expenditures are Unpredictable property Cuts in total discretionary spending, while other spending Low public High pay for some civil The share of sub-national spending is below the overall OECD 109 ThisSurveyis published on the responsibility of the Economic andDevelopment Review Committee of the OECD, which is charged with theexamination of the Economic situation of member Economic situation and policies of ITALY were reviewed by the Committeeon 12 January 2015.

8 The draft was revised in the light of the discussions and givenfinal approval as the agreed report of the whole Committee on 30 January Secretariat s draft report was prepared for the Committee by Paul O Brienand Yosuke Jin under the supervision of Patrick Lenain. Hermes Morgavi andJosette Rabesona provided statistical research assistance, and Brigitte Beyelerprovided administrative support. TheSurveyalso benefited from contributionsby Willem Adema, Jonathan Barr, Ivana Capozza, Chiara Criscuolo andFederica previousSurveyof ITALY was issued in May for the StatLinks2at the bottom of the tables or graphs in this book. To download the matching Excel spreadsheet, just type the link into your Internet browser, starting with the prefix, or click on the link from the e-book OECD Publications on:This book service that delivers Excel files from the printed page!

9 OECDA lertsBASIC STATISTICS OF ITALY , 2013(Numbers in parentheses refer to the OECD average)aLAND, PEOPLE AND ELECTORAL CYCLEP opulation (million) density per ( )Under 15 (%) ( )Life expectancy (years, 2012) ( )Over 65 (%) ( ) ( )Foreign-born (%, 2012) ( )Latest 5-year average growth (%) ( )Latest general electionFebruary 2013 ECONOMYG ross domestic product (GDP)Value added shares (%)In current prices (billion USD)2 149 Primary ( )In current prices (billion EUR)1 619 Industry including ( )Latest 5-year average real growth (%) ( ) ( )Per capita (000 USD PPP) ( )GENERAL GOVERNMENTPer cent of ( )Gross financial ( ) ( )Net financial ( )EXTERNAL ACCOUNTSE xchange rate (EUR per USD) exports (% of total merchandise exports)PPP exchange rate (USA = 1) and transport per cent of GDPM anufactured of goods and ( )Miscellaneous manufactured of goods and ( )Main imports (% of total merchandise imports)Current account ( )Machinery and transport international investment fuels, lubricants and related and related products, MARKET, SKILLS AND INNOVATIONE mployment rate for 15-64 year-olds (%) ( )Unemployment rate, Labour Force survey (age 15 and over) (%) ( ) ( )Youth (age 15-24, %) ( ) ( )Long-term unemployed (1 year and over, %) ( )Participation rate for 15-64 year-olds (%) ( )Tertiary educational attainment 25-64 year-olds (%, 2012) ( )Average hours worked per year1 752(1 771)Gross domestic expenditure on R&D (% of GDP, 2012) ( )ENVIRONMENTT otal primary energy supply per capita (toe) ( )

10 CO2emissions from fuel combustion per capita (tonnes, 2012) ( )Renewables (%) ( )Water abstractions per capita (1 000 m3, 2008) particulate matter concentration (urban, PM10, g/m3, 2011) ( )Municipal waste per capita (tonnes, 2010) ( )SOCIETYI ncome inequality (Gini coefficient, 2010) ( )Education outcomes (PISA score, 2012)Relative poverty rate (%, 2010) ( )Reading490(496)Median equivalised household income (000 USD PPP, 2010) ( )Mathematics485(494)Public and private spending (% of GDP)Science494(501)Health care (2012) ( )Share of women in parliament (%, December 2014) ( )Pensions (2011) ( )Net official development assistance (% of GNI) ( )Education (primary, secondary, post sec. non tertiary, 2011) ( )Better life )Where the OECD aggregate is not provided in the source database, a simple OECD average of latest available data is calculated wheredata exist for at least 29 member :Calculations based on data extracted from the databases of the following organisations: OECD, International Energy Agency,World Bank, International Monetary Fund and Inter-Parliamentary Economic Surveys : ITALY OECD 20159 Executive summary Main findings Key recommendationsEXECUTIVE SUMMARYOECD Economic Surveys .