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ECONOMY

Italy’s employment rate reaches record high as fixed-term jobs soar

Employment is on the rise in Italy – especially for female workers – but the job market is still in difficulty as youth unemployment and temporary roles are increasing too.

Italy’s employment rate reaches record high as fixed-term jobs soar
Employment is on the rise in Italy, especially for female workers. But so too is youth unemployment and precarious fixed-term contracts. (Photo by MIGUEL MEDINA / AFP)

Italy’s employment rate reached a record 59.9 percent in March, according to Italy’s National statistics bureau ISTAT.

With over 23 million people currently in employment, that marks the highest figure since 2004, when the agency’s records began.

In March, the number of employed Italians increased by 804,000 compared to the same month last year. Meanwhile, the unemployment rate dropped to 8.3 percent (a 0.2 percent decrease from March 2021) – a figure not seen since 2010.

Such growth in national employment was largely driven by female workers, whose number increased by 85,000 compared to March last year. That brings the number of employed women in Italy to a total of 9,776,000.

READ ALSO: 11 statistics that show the state of gender equality in Italy

The data follow a hard-hit economy due to the effects of the Covid-19 pandemic.

When Italy’s first nationwide lockdown began in early March 2020, some 11.5 million people lost work or had their incomes slashed, and had to apply for government aid.

Before the coronavirus crisis, Italy was still feeling the impact of the 2008 financial crash. The national unemployment rate had been hovering at around nine percent, which was still observed in the country’s job market in the late 2010s. 

Given the state of Italy’s finances at the end of 2020, a number of early reports had indicated that Italy’s economy would only set out on its path to recovery by the beginning of 2023. However, the latest ISTAT figures point towards the country getting ahead of schedule.

READ ALSO: Italy to cut income tax for lower earners

Other data in the ISTAT report hint towards some caution too, though. The unemployment rate for people aged between 15 and 24 rose to 24.5 percent (up by 0.3 percent on the previous year).

The number of people on fixed-term employment contracts is also soaring and now stands at 3,150,000 workers (about 13.7 percent of all employed people).

Tania Sacchetti, a regional secretary for Italian trade union CGIL (Confederazione Generale Italiana del Lavoro), said, “In spite of a considerable drop in the national unemployment rate, the most striking aspect is that the rise in employment numbers largely stemmed from the boom of fixed-term contracts.”

“This is a sign that these [fixed-term contracts] are no longer an instrument to solve temporary or surrounding problems but they are now a structural feature [of the job market].”

Andrea Garnero, a labour economist at the OECD (Organisation for Economic Co-operation and Development), attributes the cause of this to the nature of Italy’s economy.

While the manufacturing industry is struggling, secondary and tertiary sectors such as the provision of services are in relatively good health. Such sectors produce “precarious and low-added-value employment”, creating the imbalance between permanent contracts and short-term ones.

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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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