Italy’s populist government opened its new minimum income welfare program Wednesday, fulfilling a key campaign promise of the 5-Star Movement to try to reduce poverty and unemployment in the eurozone’s third-largest economy.
The so-called “citizen’s income” is essentially a new system of welfare and unemployment benefits for poorer households, providing more money than current unemployment benefits.
Eligible residents receive pre-paid debit cards to pay for groceries, pharmaceuticals, utility bills and rent, among other things. In exchange, able-bodied participants enroll in a job-finding and job-training program.
“The fact of getting the money has a relative importance,” said Rosario Morrone, a 60-year-old who said she has been jobless for 25 years. “My main interest is to go back to work,” she said, as she submitted her application at a government center in Rome’s outskirts Wednesday, the first day they were being accepted.
The scheme is slated to cost the Italian government 7.1 billion euros this year, a spending spree that helped spark months of heated budget negotiations with the European Union. At about 133 percent of GDP, Italy’s debt load is the second-highest in Europe, after Greece’s.
Italy also has the third-highest unemployment rate in the EU, hitting 10.5 percent in January. Youth unemployment was 33 percent that month, again second only to Greece.
Deputy Premier and 5-Star leader Luigi Di Maio has cited the need to jumpstart the economy and create jobs while addressing Italy’s growing number of people living in poverty in spearheading the “citizen’s income” program.
He said Wednesday that a “revolution” had begun for the poor and unemployed.
“Today we’re keeping a promise,” he said. “The state is finally taking care of the invisibles.”
WHO IS ELIGIBLE?
Italian or EU citizens, or legal residents who have lived in Italy at least 10 years and whose annual household income doesn’t exceed 9,360 euros ($10,604).
Participants in the scheme also cannot own pleasure boats, second homes worth more than 30,000 euros or have bought a car in the six months prior to applying.
While the government has said that 5 million people could benefit in this country of 60 million, the national statistics bureau said the figure is more like 2.7 million. Of those, only 900,000 are considered to be able-bodied to work.
The elderly, the disabled or sick, or those caring for young children are exempt from the job hunt requirement, though some are expected to perform community service.
HOW DOES IT WORK?
Once an application has been approved, participants receive a monthly pre-paid debit card to pay for groceries, pharmaceuticals, utility bills and limited cash withdrawals, and then a separate amount for rent or mortgage payments.
The amount depends on the family size and housing type; the card cannot be used for gambling.
Able-bodied workers must sign up for job placement or training programs. The first job offer is to be located within 100 kilometers of home, the second offer within 250 kilometers and the third anywhere in Italy, with some caveats.
Employers receive financial incentives for hiring candidates from the program.
For starters, the government expects to hire 6,000 people to beef up and implement the job-training aspect of the program.
HOW CAN YOU LOSE THE BENEFITS?
The benefits of course end if the participant ultimately finds a job that brings them out of poverty.
But participants can lose their benefits early if they fail to sign up for the job-finding or job-training program or the community service requirement. They can also lose their benefits if they fail to update their status, incomes or family size, or if they are found to have received income on the side.
Participants caught presenting false information on their application risk up to six years in prison, with lesser penalties for those who fail to update changes to their household income or assets.
WILL IT BE EFFECTIVE?
Michele Raitano, professor of economic policy at Rome’s La Sapienza University, said the measures are primarily aimed at reducing poverty and giving a dignified standard of life to the poor.
But while some experts worry the cost could add to Italy’s debt, Raitano says the benefits could help spur the economy, which is in a technical recession, “simply because these people will consume more and Italy is lacking consumption.”
“We must not expect too many different goals to be achieved by this measure,” he cautioned. “It could create more jobs and could also stimulate consumption, but the main goal and the aspect that the measure should be evaluated for is the fight against poverty, which is what Italy needs and lacked.”q