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OECD report on the labor market in Italy: a dramatic situation

The OECD has published its interesting report on the labor market and, therefore, also examined the Italian one, and the results are not at all positive.

Despite the slowdown in economic growth since the end of 2022, the Italian labor market has reached record levels of employment and record levels of unemployment and inactivity.

The unemployment rate in Italy fell to 6.8% in May 2024, 1 percentage point lower than in May 2023 and 3 percentage points lower than before the COVID-19 crisis, but still above the OECD average of 4.9%. Total employment has also increased over the past year, with a year-over-year increase of 2% in May 2024.

However, Italy's employment rate remains well below the OECD average (62.1% versus 70.2% in Q1 2024).

The OECD predicts that the labor market will continue to grow over the next two years: despite negative demographic developments, total employment is expected to grow by 1.2% in 2024 and 1% in 2025.

Despite recent notable improvements, Italy still lags behind many other OECD countries in terms of youth employment, where further progress is needed to fill the relatively high number of job vacancies. But to convince people to work you need decent wages, and this is where the serious problems begin.

Real wages are growing, but have yet to make up for lost ground

Italy is one of the countries where wage growth between 2019 and the first quarter of 2024 was negative, and even strongly, in real terms. Adjusted for inflation, wages fell from 2019 to 2024.

Compared to real wages from 2019 to the first quarter of 2024 there is still a drop of 6.9%. On an annual basis there is an improvement, because in any case the contracts are renewed and no one accepts increases if they are not adequate, but the damage is present and effective in the incomes of the workers and therefore of the nation.

What is missing is not the "Minimum Wage Law", which would not solve, but rather worsen, the unemployment problem. What would be necessary is an expansionary economic policy, which would free up production and services and allow employment to grow. However, this seems impossible with the constraints of an EU that seems to have been created with the precise objective of depressing growth and seeing wealth reduced.

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The article OECD Report on the labor market in Italy: a dramatic situation comes from Scenari Economici .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/report-ocse-sul-mercato-del-lavoro-in-italia-una-situazione-drammatica/ on Tue, 09 Jul 2024 14:12:06 +0000.