The Italian vision on a social Europe: political integration
The European elections in 2014 made clear that Italy is possibly the stronger progressive force of the Union. The results gave the Italian government both the legitimacy and the responsibility to advance a progressive agenda for Europe. However, a precarious fiscal position and a prolonged stagnation weaken the position of Italy and make it difficult to pursue a reformist agenda for Europe. This brief post reviews the two main lines of actions that the current Italian government has engaged in to achieve a more ‘social’ Europe and introduces its upcoming move as well.
From Austerity to Investment
Since Prime Minister Renzi took office in early 2014, the priorities have been clearly identified: structural reforms at home and a request for flexibility in the application of the Stability and Growth Pact. Contrary to what Thillaye observes for France, in Rome it was well understood that first and foremost Italy had to prove to other EU partners it was able to deliver reforms at home. The request for more fiscal space did not entail a rejection of the fiscal consolidation mantra but it rather aimed at stressing the relevance of public investment to support demand and contrast socio-economic discomfort.
In its quest for flexibility and investment, the Italian government did not put the accent on social investment or social protection. Rather, it planned on using fiscal space predominantly for infrastructure investments and tax cuts. Even though the ‘investment motive’ in Italy had not much to deal with a social agenda, it was at least useful at home to end – or postpone – additional socially painful austerity measures, and at the European level to relaunch a discussion on investment.
Automatic Adjustment Tool for Euro Area Imbalances and Political Integration.
From the standpoint of Italy, the social malaise affecting Europe requires a more effective economic governance and a different institutional architecture. Italy strongly advocates for a broadening and deepening integration of the single currency area.
Completion of the Banking Union remains a priority but alongside banking and finance matters, Italian authorities are pushing for the enhancement of risk-sharing arrangements within the EMU. In particular, the establishment of a common mechanism to contrast shocks to the labour market in the euro area, as has been voiced by Minister Pier Carlo Padoan.
While a European unemployment insurance scheme appears to be Padoan’s most preferred option, Italy remains very much open to discuss other ways to address asymmetric shocks, to earmark any required national resources for a specific fund or to consider a fiscal capacity of the euro area. Two attributes appear nonetheless unavoidable: the adjustment tool must enter into place automatically and it must feature an inventive structure preventing permanent transfers.
According to the analysis carried out in Rome, the weakness of the European economic governance is not due to the predominance of macroeconomic objectives over social ones; it is rather due to a lack of political integration. It follows that, besides the call for a fiscal adjustment capacity for the euro area, the ‘social dimension’ of the Italian vision for the Union is rather limited. For instance, official documents do not mention the need to strike a new balance between macroeconomic and social objectives in the European Semester and do not make reference to the necessity of enhancing the portability of social rights within the Union.
As far as the Italian government is concerned, restoring upward convergence in Europe is feasible just by ensuring a deeper political integration preventing the emergence of social imbalances.
Restoring Trust: a Common Action on Education
In Italy, solidarity is seen as an essential element for a well-functioning economic Union and dependent on mutual trust. Italian actions are thus targeted to restore confidence and trust that has been lost in the crisis in the short-to-medium term, with the ambition to set the ground for more solidarity and integration in order to be able to share risks in a not-so-far future.
After having addressed at the European level very divisive issues such as flexibility and migration, Prime Minister Renzi is now likely to follow a different strategy and try to gather consensus for a common European action on a more unifying subject: education. In his address at the State of the Union 2016, Prime Minister Renzi stated it clearly; education will be the key word of Italy for the EU agenda over the up-coming year.
It is not yet evident how such common action will be designed in practice, whether it entails a big push for an ambitious child guarantee or for an all-encompassing EU initiative for human capital investment. However, the clear-cut idea is to find common ground for positive integration on a not so sensitive topic, with the expectation of yielding positive spill-overs in terms of heightened mutual trust and work thereafter on other dossiers with a renewed European spirit.
To sum up, it appears that Italy does not really have a specific agenda to progress towards a more ‘social’ Union; though the Italian push for the revitalisation of political integration and economic cooperation can have a beneficial incidental impact on social matters, such as labour market imbalances and human capital development. It has to be said that to attain a triple A social rating for the Union, the Commission should have more support from the biggest progressive force of Europe.
David Rinaldi is author of the report “New Start Social Europe”, Research Fellow at the Centre for European Policy Studies (CEPS) in Brussels and Associate Research Fellow at the thinktank Notre Europe – Jacques Delors Institute in Paris.