Carlantonio Solimene July 02, 2022
The umpteenth bout of inflation data (over 8% on an annualized basis, levels not seen in almost forty years) comes after the recent decree calming exchange rates. And it has the effect of reducing the weight of government intervention. The three billion that extended rebates for low-wage earners through September suddenly seems like a hot record, and it doesn’t matter if the board has already invested around thirty in this direction since the beginning of the year. More needs to be done or, instead of a fall in GDP, we will have to deal with real social rebellion in the fall. Mario Draghi is aware of this and knows that inflation dynamics need to be acted on on two fronts. On the one hand, the price spiral must somehow be stopped. According to the prime minister’s conviction, expressed a few weeks ago by his economic adviser, the price increases are mainly due to the increase in energy prices. For this reason, she is fighting on international tables to introduce a cap on the price of gas, which is now almost 150 euros per megawatt / hour and could rise further after the news of the interruption of Gazprom’s supplies to Germany for about ten days in July. Some progress was made in this regard at the last G7 summit, but it will take a long time. And the situation threatens to explode sooner.
For this reason, action must be taken on the second front, income support. When asked specifically, Draghi said that the dispute with the social partners – trade unions and employers’ associations – would start next week. On the table, of course, will be the reduction of the control wedge. However, in order to be really noticed by the workers, they have to be significant. Much more than the intervention of the Conte Bis, amounting to about three billion, and in fact passed without any results. The resources to focus on — without wanting to resort to budget variance — could come from tax revenues, which are up thanks to year-on-year GDP growth. While treasure could also be found through the billions advanced by Quota 100, tens of billions were saved thanks to meeting the lower than expected level. But then it is important to coordinate the scope and type of measures. The different composition of the majority does not help either.
Letta and Conte push for the minimum wage. Salvini hopes for further fiscal peace. Fornaro di LeU has focused on pensions. Italia viva calls for the elimination of the stumbling blocks that block companies’ productivity. In what is already a complicated and mostly tense political situation, mediation will have to be sought. To ask for a moment of national cohesion, Secretary of Labor Andrea Orlando is: “We need to bring together three aspects: the modalities for the contract renewal; reducing the tax burden on labor and interventions that define minimum wages by sector to tackle bad work,” Orlando says. As mentioned, we will be talking about this starting next week. Draghi has ruled out structural interventions before the budget law for the time being. But he might be forced to accelerate. It will certainly not be a summer vacation for the Premier.
