A Developed Welfare State in an Unqual Society

1. A Developed Welfare State in an Unqual Society Italy as a Case Study Bolzonaro Fabio Department of Sociology University of Cambridge

2. It is commonly assumed that social expenditures have equalizing effects on income distribution We will aspect that those contries having generous welfare states are also those more economically equal Is this conclusion always confirmed?

3. Fig.1 Income inequality on a sample of OECD countries in 2007 Source: Eocd www.eocd.com

4. Tab. 1 Total social expenditure in some OECD countries (percentage of GDP)

5. There seems to be a fairly consistent correspondence between generous welfare states and low levels of income inequality Ex: Sweden and Denemark are the two most economically equal societies and, at the same time, they have two of the most developed systems of social protection Conversely limited welfare regimes are typical of the more unequal societies (Mexico, US etc) However Mediterranean countries and in particular Italy partially contradict this general conclusion: • from 1980 to 2005 the Italian total social expenditure increased of 7% of its GDP reaching the level of 25% • at the same time, from the biginning of 1980s income inequality in Italy steadly increased registering between 1986 and 1989 rates not dissimilar to those of the US and the UK

6. Are Welfare States Always Redistributive? ‘We should question any straightforward link between higher levels of social spending and more income redistribution’ (Esping-Andersen, 2009, 644) The common assumption that the welfare state has always redistributive impacts derives from a misunderstanding of what a wefare state is Any system of social protection has at least two purposes: • it spreads risks and benefits along the life-cycle; • it spreads risks and benefits between different social groups The second dimension has a very limited redistributive impact and it generally absorbs the largest portion of the social expenditure in the majority of contemporary welfare regimes

7. ‘A welfare state is an answer to basic and long-term developmental processes and the problems created by them…it is a general phenomenon of modernisation on the one hand and of processes of social and political mobilisation on the other’ (Flora, 1981, 8). The competitive political dimension is an essential perspective to understand the role and fuctions of any system of social protectionWelfare states are instruments of social stratificationEsping-Andersen (1990) cosiders the Italian welfare state as a typical conservative regime. As such its main characterestics are: • preservation of status differntials; • strong role of the family; • preservation of gender discrimination

8. A Very Unbalanced Welfare State Although some incisive reforms in the 1990s the Italian welfare states still presents its traditional features According to Ferrera ( 2007) it is possible to individuate by two main distorsions: • an unbalanced distribution between different risks (funtional distrosion); • an unbalanced distribution of benefits between different social categories (distributive distorsion) These two anomalies can be recognised by comparing the Italian distribution of social expenditure by function with the average spending of other European countries

9. Source: Eurostat ec.europa.eu/eurostat Fig. 2 Social Expenditure by function in Italy in 2006 (percentage values on total social expenditure)

10. In 2006 Italy spent around 60% of its total budget in old age and survivors pension in contrast with an European average of 46% • What is more impressive is the limited funding destinated to other periods of the life-cycle or voices having a potentially stronger redistributive impact • Family policies are quite under-represented although their crucial role in overcoming different forms of social inequality and the high incidence of child poverty in Italy. The largest part of social services are administrated at local level. As a consequence there are great disparities among different geographical areas

11. Tab. 2 Poverty rates in 2007 in some OECD countries ______________________________________________________________________________________ Country All Children Children in Two ParentBelow 60% of population medianFamilies ______________________________________________________________________________________ United States 23.8 30.2 14.8 United Kingdom (1999) 22.0 28.8 11.2 Greece 21.3 18.7 11.7 Spain 20.8 24.0 14.6 Italy 20.0 26.4 16.4 France 13.7 15.9 5.1 Germany 13.4 14.2 4.7 Denmark 13.4 14.1 2.0 Sweden 12.3 9.2 2.3 ________________________________________________________________________________________________________ Source: Luxembourg Income Study (LIS)

12. Reforms with inequalitiesA closer consideration of the Italian pension reforms Italian pension have traditionally been very generous A political bargain between different forces aimed at preserving their national and local costituencies and clienteles lies behind the over-exmpansion of the pension system If it is generally true that the redistributive impact of old age pensions is quite limited, to a certain extent the Italian context is an execption with this regard. Becasue of the limited economic support offered by public institution to younger generations, old age pensions have become the main source of an informal channel of income redistribution within the same family

13. Putting into question the equality of Italian the pension system means considering the equality of an important, although informal, part of whole the Italian system of social protection The first half of the 1990s has seen the approval of two major pension reforms aimed at: • introducing more uniformity and equality • garanting the long-term financial sustainability of the system Have these reforms promoted more equality?

14. The Traditional Features of the Italian Pension System untile the Beginning of the 1990s Until the reforms of the 1990s the Italian pension system still presented its traditional features: • It was organized along occupational lines; • it was administrated by many different institutions having their own rules in terms of contribution and benefits; • it was an highly fragmented system with evident privileges especially in favour of public workers

15. Amato Reform 1992 Introduced by the Prime Minister Amato, it had two important results: • it harmonized the pension regime between private and public workers • it changed the reference period on the basis of which to calculate the future amount of the pension. The new regime will be only applied to new entrants in the labour market • Dini Reform 1995 after the defeat of the first Berlusconi government which tired to introduce a more incisive pension reform, the new appointed Prime Minister, after a strenuous bargain with labour unions reached an agreement for a new reform. Two important aspects affecting the equality of the whole system should be underlined: • the passage to a contributory related mechanism to calculate the future pension • the new method of calculus will particularly affected workers, especially women and young people, having precarious and low paid jobs during their professional career (Ferrera, 2007) • the reform will start to be implemented only in 2013 and it will be fully operative in 2035

16. A Sort of Conclusion Some points I would like to remark after this brief analysis of the Italian welfare state: • devoting the largest part of social expenditure to old age pensions and a very limited part to other voices implies a clear inter-generational inequality; • Italian families are asked to assumed excessive responsabilities to garantee a sort of safety net. This is especially true for low and medium income families; • Demographic changes will put into question the future sustanability of the Italian system of social protection