Italy's labor market is grappling with serious challenges, primarily stemming from skill mismatches between job seekers and employers' needs. Maurizio Del Conte, president of AFOL Metropolitana and law professor at Bocconi University, highlights the alarming levels of inactivity, which place Italy among the highest on the scale worldwide.
Del Conte points out, "Today one of the serious problems of the labor market is finding the right people with the right skills." He emphasizes the importance of addressing the disconnect between labor demand and supply, questioning why Italy experiences this mismatch more acutely than other nations.
The systemic issues can be traced back to the abandonment of effective vocational training structures. Del Conte notes, "We have taken a bad turn" by placing emphasis on lower-end job sectors rather than entering areas where true added value is produced. This choice leads to reduced investments in research and development, inevitably harming career progression and salary growth.
Much of the current workforce is relegated to minimum-wage positions, restricting career advancement. Del Conte states, "The real problem of the Italian salary structure is not so much about the minimums... the problem is we have too many people concentrated at the minimum level, not making careers."
The issue of illegal work also looms large, accounting for over 20% of total labor and GDP. Del Conte describes it as "a gigantic problem" which creates unfair competition for businesses adhering to regulations.
While the overall numbers on employment reflect positive trends—with participation rates rising by 78% over the past ten years—Del Conte warns of the continued lack of European-level work quality. The rise of employment hasn't translated to equivalent improvements in the level of work, primarily due to Italy's fragmented entrepreneurial fabric.
Many Italian enterprises are small and unable to invest adequately, leading to stagnation when it should ideally be on the rise. "When other countries invest billions in new technologies, our small businesses lack the resources for such investments," he explains, underscoring the challenges associated with improving job quality.
Del Conte believes the political sphere holds some responsibility but stresses it’s not solely about the amount spent but the effectiveness of those expenditures. He points to Italy's unprecedented budget available for vocational training due to the National Recovery and Resilience Plan (PNRR) as evidence of potential for reform.
"We have never had so many funds for vocational training as we have had over the last two or three years," Del Conte states, but he remains skeptical: "Why hasn’t anything changed? The funds are available, but they’re not being spent effectively."
The dynamics of the market are also evident through the pension system, which is witnessing declines, especially among those retiring before the age of 64. According to recent reports, the number of new pensioners dropped from 815,000 in 2023 to around 735,000 in 2024, reflecting nearly 10% decline.
This trend aligns with regulatory tightening around retirement pathways, particularly affecting women opting for the Opzione Donna retirement scheme, with retirements plummeting from nearly 12,000 to 3,500.
While Italian professionals are retiring at younger ages, the overall quality of new pensions is being impacted, leading to concerns among economists and labor experts alike.
The 2024 figures show significant reductions with over 261,000 new retirees under 64, marking a notable 16% drop. The decrease was especially severe among employees under the Workers’ Pension Fund, where early retirements dipped from 164,000 to 143,000.
Good news remains, as pension systems are witnessing shifts aimed at revamping how retirees transition out of work, but more holistic changes are required to transform Italy's labor market sustainably.
Del Conte concludes, urging for lasting reform, stating, "We must tackle these structural problems head-on to craft paths and programs to bridge gaps between education and employment for the future workforce."