LDN - Business

Dusty files and paper clips: behind Italy's welfare revolution

[October 23, 2018] By Francesca Piscioneri

NAPLES, Italy (Reuters) - Outside the job center in a poor quarter of Naples in southern Italy, Emanuele Varriale uses a ballpoint pen to fill in a form certifying he is looking for work.

But he has no hope that the center will find him a job.

Inside the dusty office, scores of people are completing the same form, helped by five middle-aged employees working with piles of folders and paper clips more than computers.

"I have only come for the certificate", says 26-year-old Varriale, who lost his job in a fruit shop. "My father has been enrolled for 30 years and they've never offered him anything."

The certificate entitles Varriale to a temporary unemployment cheque of a few hundred euros per month, linked to his previous salary. But it could soon give him access to a far more generous income of up to 780 euros ($894) under a new welfare policy designed to lift 5 million Italians out of poverty.

The "citizens' wage," championed by the governing 5-Star Movement, will cost 10 billion euros next year, the most expensive item in a big-spending budget which itself has raised concerns in the European Union that Italy could be sowing the seeds of a financial crisis.

Italy's 550 state-run job centers will be in charge of verifying that recipients of the new benefit meet an important eligibility criteria: that they are actively looking for a job.

But Italians widely regard the centers as being blighted by obsolete technology and insufficient and under-qualified staff, creating fears they will be unable to verify that recipients are genuinely looking for work and could encourage benefit cheats.

Another concern is that they will fail in their most basic task of advertising all job opportunities, raising the risk that even industrious people will be funneled into welfare simply because they were not made aware of suitable vacancies.

The new populist government plans to spend 1 billion euros to modernize the centers -- 10 percent of the total cost of the new policy in its first year in 2019. Critics say it is not enough and that the wage will reward people for doing nothing.

"Lots of people will just sit on their couches because the centers aren't equipped to offer jobs or to check that people are searching for them," said Renato Brunetta, an opposition politician, former minister and professor of labor economics.

The 5-Star Movement used to bill the citizens' wage as a basic-income policy -- an unconditional form of welfare -- but imposed conditions to counter the charge that it would pay people to be idle.

Unlike a basic-income scheme that was tried and abandoned in Finland, Italy will impose the job-seeker requirement for everyone except retirees and those unable to work. It will be means tested and will now more closely resemble income-support schemes offered across the EU, though it will rank among the more generous.

Direct comparisons are complicated, but the 780-euro maximum amount available to a single person with no other income is about double the 318 pounds ($412)available to someone aged 25 or over under Britain's universal credit scheme.

Still, the citizens' wage has drawn scepticism from labor experts who say the job centers are a weak link that is unlikely to be fixed in the five months before it is rolled out.

'HUMILIATING EXPERIENCE'

Labour Minister Luigi Di Maio, head of the 5-Star party, acknowledges the job centers are a "humiliating experience" for the unemployed, but is staking his career on transforming them into a high-tech network that can help people find jobs or guarantee them training courses to improve their skills.

If he fails, it could backfire on 5-Star, embarrass the new government and erode a central pillar of the budget.

Some 700 km (430 miles) north of Naples, a manager at a successful glass-making firm near Venice says that when he needs new staff the last place he turns to is the local job center.

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People fill in a form at an Italian job centre in Scampia near Naples, Italy October 11, 2018. Picture taken October 11, 2018. REUTERS/Alessandro Bianchi

"The few times we tried, it was a dreadful experience," says Alessandro Zanchetta, head of human resources at Somec, whose 400 workers make glass sheeting for ships and skyscrapers.

The candidates sent by the centers always lacked the skills Somec needed, Zanchetta said, adding that he now used private agencies or head-hunters.

In Italy, only 3 percent of unemployed people find work through public job centers, compared to 20 percent in France and Germany, according to the EU's statistics office, Eurostat. Italy's centers employ 8,000 people, compared with 100,000 in Germany and 45,000 in France.

Members of the workforce who receive the citizens' wage, which is due to launch by March, must do eight hours of community service per week and accept one of the first three job offers for which they are qualified.

"We are working on a single software for all the job centers that is able to cross-check databases," 5-Star leader Di Maio told Reuters. "In this way we will know who is receiving the income, how he is being trained, how he is behaving and if he is entitled to receive it again."

He has also launched a public competition to give the centers a new design and logo.

FEARS OF A 'TSUNAMI'

Some labor experts, and some of the centre's employees, are skeptical the system can be overhauled by March, saying that the 1 billion euros budgeted to upgrade them will not be enough.

"It's not clear how we can bring about this revolution in such a short time," says Sonia Palmeri, head of employment policy in the Campania region around Naples.

"We need to hire young and trained people, otherwise we will be overwhelmed (by applicants) like a tsunami."

Michele Tiraboschi, professor of labor law at Modena University, holds out even less hope.

"It's going to be a total failure," he said. "In Italy the job centers never worked, not even after World War Two when the State had the monopoly of the labor market."

The average age of job-center employees is 50, and only 26 percent have a university degree, according to a survey by Italy's national agency for labor market policies. Fifty percent said their computer systems were inadequate. In Italy's poor south, 17 percent of job center staff held a degree.

In the south, where most people do not work and many others toil in the shadows of the black economy, the wage is so eagerly awaited that some residents have already tried to claim it.

"I came for the citizens' wage but they told me to come back in 2019," Cuono Orto, a 54-year-old unemployed builder, said despondently as he left the job center in Naples.

($1 = 0.7703 pounds)

($1 = 0.8729 euros)

(Additional reporting by Gavin Jones, editing by Gavin Jones and Timothty Heritage)

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