Country Case Studies and Links
by Jamie Wingert
ITALIAN WELFARE STATE
Traditionally Italy has had a two-tiered economy because of the relative poverty in the South and the wealth in the North. Italy was not unified until the latter part of the 19th century. In the past, the state had been concerned only about providing care for those with inadequate means. As the system expanded, it came under great financial pressure. Moreover, widespread cases of corruption and fraud contributed to a public debate and several proposals for a new welfare regime. Subsequent reforms were hampered, however, by economic changes intended to keep inflation down. It was during that time in the early 1990s that the political landscape in Italy changed.
Italy's Current Programs:
- Health Care
In the 1970s the Italian welfare state underwent an enormous expansion. In 1978, the universalistic welfare model was introduced, offering many universal and free services such as a National Health Fund. Health care in Italy is an entitlement and not means tested, as long as an individual is registered with the NHS. Unfortunately, it became later necessary to introduce user charges that led to considerable inequalities in the level of services. One of the reasons was that there was never an existing National Health Plan. Moreover, the NHS started means testing for services such as tests and medicine. In Italy, Doctors are paid not by the individual receiving the treatment, but rather obtain monthly wages from the government.
- Social Security - Social Assistance
Despite its claims to universality, the Italian social security system continued to deal with persistent problems of inequality among beneficiaries. For example, public employees have been treated much better than private sector workers. This created an inequality in coverage based on the employment status. In any case, workers would receive 80 percent or more of their earnings when they were laid off. Women can claim a maternity leave of two months before and three months after birth. A mother would also be provided with 80 percent of her previous wage and an additional six months of optional leave. Her job must be preserved for one year.
For individuals falling through the cracks of the social security system, the local authority will provide social assistance. These services are means tested and apply to needy families. Italy depends heavily on the local communities to provide social services to the elderly, the invalid, and needy families. Local authorities can also provide services to schools such as assistance with the supply of food and transportation. In the 1980s, youth services were added, but unevenly distributed.
Another important aspect of the Italian social security system was the number of volunteer and cooperative social services that were developed at that time.
Social assistance in Italy consists of family benefits. The services rendered to the family depend directly on family size and income. If a family member is disabled, the family will receive an increase in the allowance. Social assistance is entitlement based and means tested.
Education for a child age 10-13 is free except for vocational training for those 14-16 years old. The state is responsible for secondary schooling and university education of up to four years.
The state is also charged with providing financial support for low-income workers and different forms of housing assistance. In terms of housing policy, the 1980s saw government action that promised fair rents to protect tenants. However, as the cost of housing increased, the government was forced to turn its attention to the development of new housing programs.
Unemployment benefits in Italy are provided by the government in the form of cash transfers based on contributions. As in most countries, only the previously employed may receive unemployment money. Unemployment benefits last for 180 days and amount to about 30 percent of previous pay. The system is facing enormous problems due to Italy's persistent high unemployment rates. In fact, most of the increases in social security spending were a direct result of the increase in unemployment. Public debt rose dramatically in the 1980s as a result of the governments efforts to meet demands for more services without raising taxes.
Also, Italy's generous pension system saw change in the 1990s. Indexation was reformed to counteract inflationary pressures. Family assistance was also revised making it dependent on family size and household income. There is still a North-South divide with respect to pension levels, alluding to the most important and persistent problem of the Italian welfare state. That is the disparity between the affluent North and the poorer South. In 1992, the pension system was completely reformed. The goal was to decrease both fragmentation and public spending. As a result, a single pension scheme for all working Italians was created. Nevertheless, old age pension is still insurance-based and proportional to contributions. Persons working in the private sector will receive benefits from the specific scheme provided by their occupational group. While eighteen years of contributing are required to draw a basic pension, forty years are necessary but to receive a full pension. In order to require, men must be 63 and women 58.
Challenges and Reforms
Along with many European countries, Italy faces a problem caused by a change in demographics and population. Due to more liberal lifestyles, an increasing number of women is seeking a higher education and are entering the job market creating pressures in the employment sector. Another challenge concerns the high net aging rate. Moreover, Italy is now a labor importer and no longer a labor exporter. Particularly, the country is facing a tide of immigration from Africa and Albania. The problem here concerns the fact that too many of those immigrants fall out of the social security system.
Italy seemed to go through reforms in cycles. There were many policy changes in the 70s, few in the 80s, while many of the most important reforms occurred in the 1990s. As a result, the NHS was reformed in 1992. Independent health units were established partially within the local authorities. The system became practically privatized, so that if individuals were willing to pay fees they would in turn receive better services. A positive side effect of privatization was that public spending decreased. In 1995, separate insurance schemes were introduced in the regions allowing the members to determine their own levels of services.
Italy, which was once characterized by a classic, conservative-paternalistic, state-centered social insurance model, moved subsequently more towards a social democratic, universalistic system. Yet, external economic pressures and rising deficits meant that the universalistic welfare state never became fully developed. Today Italy has tried to decentralize and privatize aspects of the welfare system in order to cope with the financial pressures of economic integration. While Italy has managed to consolidate its fiscal household and restored some dynamism to its economy, social inequality, and regional disparities are on the rise again.
Mauro Niero. Italy: Right Turn for the Welfare State. In Vic George and Peter Taylor-Gooby (ed.). European of Welfare Policy. Italy, Pg. 117-35.
See also: MISSOC Country Tables