Italy Adds Job But Labor Divide Persists

The jobless rate is slowly coming down, but young Italians still struggle to find stable employment

Italian prime minister Matteo Renzi hailed a drop in unemployment the national statistics agency announced on Friday as proof that his reforms are paying off.

But the decrease was hardly inspiring. The eurozone’s third economy added some 90,000 jobs in March, bringing the jobless rate down from 11.6 to 11.4 percent.

Unemployment has been steadily falling since Renzi, a social democrat, took office in early 2014. Labor reforms his government enacted last year do appear to have had an impact. But there is more to be done.

Jobs act

Renzi’s signature jobs legislation made it easier for companies to fire workers and introduced a new type of permanent contract that helped reduce short-term forms of employment with little or no social benefits.

The law had two major caveats, though.

One is that — at the insistence of Renzi’s trade union allies — it did not apply to anyone already in work, meaning companies must still often navigate a legal maze when they want to dismiss an employee.

The second is that tax breaks companies receive for hiring workers under the new contract are scaled back this year. This has encouraged hiring in the short term at the detriment of labor market stability in the long term.


The reforms also did nothing to lift licensing requirements and other types of restrictions that make it difficult for young Italians to start a career as a lawyer, notary, pharmacist or taxi driver.

The divide between older workers on secure contracts who are almost impossible to lay off and youngsters who can only find temp jobs will likely persist for many years.