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Financial help: Italy plans new ‘universal single allowance’ for families from July

The Italian government is set to announce new measures to help families on Friday in a new decree.

Families will be able to access child benefit in the form of a universal allowance from July 1st, as indicated by Prime Minister Mario Draghi last month, according to newspaper La Repubblica.

The short-term plans are intended to cover groups of families that have so far been excluded from government family help, such as the disabled, unemployed and the self-employed.

The move is a temporary ‘bridge allowance’ for six months, after which it will become permanent, in a bid to help families and reverse the trend of falling birth rates.

READ ALSO: Fast trains and extended building bonus: How Italy’s EU recovery plan could affect you

Described as “era-changing” by the Italian Prime Minister and also praised by the pope, the universal single allowance forms part of the country’s wider strategy, its so-called Family Act.

The plans are to be presented to the Council of Ministers today in the form of a decree law and are expected to outline how much families will receive in state funds per child.

A minimum of €30 to a maximum of €217.80 will be made available per month for each child. This is the plan for the next few months, valid from July to December 2021 for those who don’t already receive family allowances.

Families eligible are those with an ISEE – the social and economic indicator of household income – of up to €50,000. How much a family can claim is also linked to the amount of children they have.

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The maximum monthly amount is €167.50 for the first and second child, which increases by 30% from the third child onwards.

Therefore, a family with two children can claim a maximum of €335 and it would rise to €653 for three children.

The figure decreases as the ISEE increases, going down to zero for a family with an ISEE of over €50,000.

In addition, an extra €50 will be provided for each disabled child.

The support will be on hand for dependent children up to the age of 21 and, from the age of 18, could be directly credited to the child if they are at university, enrolled in a vocational course, have a low-income job, are a trainee or doing community service.

Photo: Mario Laporta/AFP

It’s expected €3 billion will be made to households overall, with over half of these funds going to groups currently ineligible to claim for family support. That also extends to employees who may be excluded due to overall family income.

For households who can currently access government family benefits, they too will receive a boost with an extra €37.50 per child up to two children and an extra €70 per child for those with three or more children.

For now, these funds will co-exist with other family bonuses, such as the baby bonuses.

Draghi stated during a speech at a conference in May that help is also coming in the form of “the construction of nurseries and kindergartens, the extension of full-time education and the strengthening of school infrastructure”.

“To parliament, I listed the measures for young people, women and families, present in the National Recovery and Resilience Plan,” he added.

Measures of around €21 billion are pledged in total, including incentives for companies “to hire more women and young people”.

Italy has long been experiencing a decline in birth rates, with just 404,000 children born in 2020, according to the national statistics body ISTAT.

READ ALSO: The real reasons young Italians aren’t having kids

That’s the lowest number since the unification of Italy and marks an almost 30 per cent drop compared to ten years ago.

Italy has long counted among one of the lowest birth rates in Europe, and the situation has only been made worse by the coronavirus crisis.

It’s expected the trend will continue this year, as Istat expects a further drop to 384,000-393,000 for 2021— largely due to an expected post-Covid baby bust across the world.

The universal single allowance can be accessed by anyone who pays taxes in Italy and has been resident in the country for at least two years.

Italian and EU citizens and holders of residence permits for work or research purposes for at least six months are eligible.

For those wishing to apply, Italy’s social security and welfare system, INPS, is expected to publish a form online by 30th June.

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UKRAINE

Explained: Why and how Italy will pay for Russian gas in rubles

Italy has said it will comply with Moscow's demand to pay for its gas exports in rubles - so what does that mean exactly? Here's what you need to know.

Explained: Why and how Italy will pay for Russian gas in rubles

What’s going on?

At the end of March, Vladimir Putin issued a demand for countries deemed ‘unfriendly’ to Russia – including all EU member states – to start paying for Russian gas in rubles.

Poland and Bulgaria refused to comply, and Putin cut off their gas supply in retaliation. Finland has said it will join them, and is prepared to lose its own supply as as result.

READ ALSO: Italian energy company to start paying for Russian gas in rubles

Other European countries have been slower to resist. Hungary almost immediately accepted Moscow’s demands, and both France and Germany recently said that they had reached compromises that would allow them to continue receiving Russian gas without breaching EU sanctions.

The Italian energy company Eni, which is 30 percent owned by the Italian state, said in a statement on Tuesday that it was opening separate accounts in both rubles and euros with Russia’s Gazprombank “on a precautionary basis” in order to maintain its gas supply from Russia.

How would the payments work, and how is this different to what’s already in place?

EU countries would technically still be paying Russia in euros, but then authorising Gazprom’s bank to convert the payments into rubles under a system devised by Russia as a workaround that appears to circumvent sanctions.

Here’s the system Moscow’s proposing: foreign companies open two accounts with Gazprombank, the Russia’s third largest bank and the financial arm of the state-owned energy company Gazprom.

The foreign company would pay into the first account, in the currency stipulated in its contract with Gazprom (almost always euros or US dollars), but would authorise Gazprombank to convert the sum into rubles on the Moscow Stock Exchange.

Gazprom's logo on the Adler thermal power plant in Sochi. Putin has demanded that EU countries pay Gazprom in rubles from now on.

Gazprom’s logo on the Adler thermal power plant in Sochi. Putin has demanded that EU countries pay Gazprom in rubles. Photo by YURI KADOBNOV / AFP.

Gazprombank would then move the sum into the second account and make the payment to Gazprom in rubles, at which point the transaction would be considered complete.

Currently, 97 percent of all EU company contracts with Gazprom are in euros or dollars, according to Reuters. Usually, foreign companies would simply pay the energy giant directly in one of these currencies without going through these extra steps.

Why is Italy acceding to Putin’s demands?

Italy is highly dependent on Russian gas. 95 percent of its gas supply comes from imports, and 40 percent of these are from Russia. 

The country has tried to transition to other sources, most recently signing a deal to boost its gas supplies from Algeria. But despite its best efforts, Italy doesn’t anticipate being able to wean itself off Russian gas until 2025.

Eni CEO Claudio Descalzi had initially rejected Russia’s conditions, but on Tuesday the company announced that it had revised its position, saying the decision to open the accounts with Gazprombank was “taken in compliance with the current international sanctions framework”.

Is it a violation of EU sanctions?

The EU seems to be equivocating about whether the scheme is in breach of the bloc’s sanctions against Russia.

On May 13th, the European Commission reportedly issued revised guidelines to member states indicating that they could continue buying Russian gas without violating EU rules – but didn’t address Russia’s demand that buyers open an account in rubles.

READ ALSO: Italy builds first offshore wind farm amid push for energy independence

The EU has yet to issue clear guidance on whether complying with Putin's demands would breach its sanctions.

The EU has yet to issue clear guidance on whether complying with Putin’s demands would breach its sanctions. Photo by Alexander NEMENOV / POOL / AFP.

On Wednesday, however, Commission Vice President Frans Timmerman warned Italy that opening the two accounts was breaking the EU’s rules, calling it “a breach of the stipulated contracts, which say what currency to pay in… The contracts say euros or dollars, never rubles.”

Italy’s Prime Minister Mario Draghi had called on the Commission to clarify its position earlier this month, saying “if there is not clarity or a line of conduct then it is clear that each company or each country will do as it believes fit.”

Why does Putin want to be paid in rubles?

To shore up Russia’s struggling economy by creating more demand for the currency, boosting its value.

By March 7th, just days after Russia began its invasion of Ukraine, the ruble’s value had plummeted by 45 percent. When Putin issued his ultimatum, it quickly rose again – though remained at 22 percent below its value of before February 24th.

The demand has also had the convenient side effect of creating chaos and sowing discord in Europe, as different EU member states with varying degrees of dependency on Russian gas have very different ideas about how the bloc should respond to Moscow’s demands.

How will this affect people living in Italy?

If Italy is allowed to go ahead with Russia’s scheme – as it has already started doing – people in Italy are likely to be unaffected by the change.

Italy would still be paying the amount prescribed in its contracts, in the currency agreed upon in the contracts, so the price paid by the end consumer would remain the same.

READ ALSO: Italy extends energy bill discount and petrol tax cuts

If the EU bars member states from complying with Russia’s demands, countries like Italy and Germany that are particularly dependent on Russian gas will be left scrambling to come up with alternative energy sources faster than they anticipated – which is likely why Brussels has been hesitant about issuing an outright ban.

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