Italy

   
 

Key Challenges

New stagnation shows economic weaknesses
Italy’s weak economic recovery between 2015 and 2018, coming after a long period of severe economic crisis, gave way in 2019 to a new stagnation. This indicates that the Italian system’s real strengths (strong family bonds, high household saving rates, the resilience of small- to medium-sized businesses, several dynamic manufacturing and export-oriented sectors, and the quality of some public institutions as the presidency of the republic and the central bank) are not themselves sufficient to sustain a strong economic recovery and to tackle a number of serious social problems (such as poverty, inequality and the integration of immigrants).
Governance system overhaul needed
The key tasks any Italian government should address today include a serious overhaul of the governance and administrative apparatus, a thoroughgoing reform of the relationship between the central government and local-government authorities, the implementation of stable and focused economic and social policies, and a steadfast effort to improve the quality of education and research.
Restructured PMO would improve steering
State institutions continue to need significant reform, but in view of the difficulty of constitutional reforms, other available avenues of change should be pursued. Special attention should be given to improving the organization of the Prime Minister’s Office (PMO) to make it a more effective tool for steering and coordinating cabinet decision-making. This is particularly important for a coalition government made up of parties whose policy priorities are not easily made compatible. The accumulation of heterogeneous functions in this office should be discouraged, and nonstrategic functions should be transferred from the PMO to other government bodies so that the PMO can focus on important policymaking issues.
 
More opportunities should be provided for independent experts and open consultation to improve the quality of policymaking. Greater emphasis should be given to strategic and innovative policymaking approaches.
Public sector reform
a key task
The central-state administration should be reformed to make it a more effective instrument for the implementation of policies, as well as for evaluating their effectiveness. A substantial improvement of recruitment procedures, particularly for senior civil servants, should play a crucial role in this regard. Careful performance-evaluation processes for all levels of public administration, a greater level of accountability for senior civil servants, and the simplification of norms and procedures should be a priority. The judiciary should be actively encouraged to accept reforms that increase its professional quality and ability to ensure timely justice. Politicization within the judiciary should be actively discouraged.
Local resources must be sufficient for tasks
Despite the many previous failed attempts, the relationship between the central and local governments must be brought to a more satisfactory equilibrium. The central government must respect the spheres of regional and municipal government autonomy, and ensure that local governments have sufficient predictable resources to carry out their specific functions. At the same time, a higher degree of fiscal responsibility must be required from local governments. Local-government dependency often goes hand-in-hand with irresponsible behavior.
Reforms should target dynamic, growing economy
Economic policymaking needs to promote a more dynamic and growth-oriented economy. This will require further economic liberalization, and the curtailing of monopolistic and oligopolistic power. In addition, business regulation should be simplified to enable traditional and startup businesses to coexist. Economic policy must also focus on reducing the excessive gap between the comparatively dynamic regions and sectors, which have reached high levels of productivity and employment, and the more backward ones, where a lack of innovation, high levels of unemployment and illegal job conditions prevail. This will require significant improvements in physical and financial infrastructure in some areas, as well as an extraordinary effort to enhance the quality of education facilities (with special attention to technical and professional schools). Resources devoted to encouraging young people to establish new innovative businesses should be increased. The government, business associations and trade unions should share responsibility for achieving these goals, which will require an economic culture of cooperation and pragmatism.
Migrants form vital component of workforce
As immigrants form an increasingly large proportion of the workforce, the management of immigration and the effective integration and protection of immigrants’ rights must receive greater attention. A high priority should be put on shrinking an illegal job market that has grown too large. A more realistic path toward citizenship should be adopted in order to facilitate integration.
Education system needs resources despite austerity
Improving the education system should accorded higher priority, despite the austerity agenda. Greater flexibility and openness in the education system will be necessary in order for the system to respond to changing societal needs. After years of severe budget cuts, universities and research centers need to be given sufficient resources to enable them to recruit young people and qualified foreigners. Improving the average skill levels in the workforce, while shifting to a knowledge-based, innovative economy, would increase economic competitiveness.
Seeking common agendas internationally
Italy should participate more actively in EU and international venues. Building closer and more cooperative relationships with neighboring countries, and identifying common agendas rather than focusing on narrow national interests, would allow Italy to exploit its geopolitical potential more effectively.
 

Party Polarization

Multiple cleavages in party system; governing becoming more difficult
Polarization of the party system has increased as a result of a greater divide between anti-establishment parties (e.g., the Five Star Movement) and mainstream parties, as well as between pro-EU and euroskeptic parties (such as Matteo Salvini’s Northern League). With the first Conte cabinet, the government was for the first time in Italy supported by a coalition of parties (Five Stars and the Northern League) that reject many of the traditional positions of Italian politics, and which are also rather critical of some constitutional values. This cooperation between two parties united more by their negative attitudes than by a positive view of Italian needs soon proved difficult, and led to a collapse of the government after little more than 12 months. However, as of the time of writing, the second Conte government – based on a coalition between the Five Star Movement and the Democratic Party – is already facing serious difficulties after just two months. The experience of the two Conte governments shows the difficulties of coalition governing in under conditions of increased polarization. (Score: 4)
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