Matteo Renzi: Still popular, but not yet Europe’s locomotive

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José Manuel Barroso, former president of the European Commission, received Matteo Renzi in March, shortly before Italy took charge of the presidency of the Council of the European Union

“One reform a month” – that was Matteo Renzi’s announcement at the beginning of his mandate as Italy’s prime minister. Nine months later, there’s no sign yet that his country’s economy is recovering. Labour reforms are harshly criticised and unemployment figures remain high. So far, the Italian model can’t be promoted as the example to follow in Europe.

Learn about the big ambitions of a young prime minister who has a difficult relationship with Brussels in this report co-produced by the Euranet Plus News Agency with the Italian Euranet Plus partner station Radio 24 II Sole.

• [Note by the editor: You can listen to the summary podcasts of this audio article in Italian and English at the bottom of this page.]

In February this year, Renzi, freshly nominated as Italian prime minister, promised “one reform a month.” He announced a clear schedule. (audio in Italian)

“Before the end of February, we will change our institutional frame and electoral system. Once for all, and before the end of March, we will work on a global approach on working market. April will be the time for a reform of public administration and May for reforming our fiscal rules,” Renzi said.

And regarding Europe he said he was for reforms for the good of Italy, not because the European Commission President Juncker or Gemran chancellor Merkel called for them. (audio in Italian)

“Regarding Europe: We changed the face of Italy in Europe. I’m not begging for help in Brussels and I try to underline our concept and that is why I say: Dear fellow Italians: if we are serious, we know that reforms are needed for our children, not for Juncker or Mrs. Merkel.

But nine months later, the gap between promises and results is widening.

Unemployment is now at 12 percent, one-third of Italian school buildings are considered unsafe and only the constitutional reforms almost seem completed.

General strike coming up

The electoral law, the Italicum, is being discussed in the Senate and will be anchored to the chamber in February 2015. Done is also the reform of the Senate, which is supposed to save one billion euros of the public budget.

The reform of the labour market provoked fierce opposition from trade unions and the political left. Susanna Camusso, the General Secretary of the Italian General Confederation of Labour, even speaks of a liberal approach the Italian government is taking. (audio in Italian)

“The very little sensibility our government shows, while we invite him to a proper debate with unions on the ‘jobs-act policy,’ and makes our need for a general strike next December 5 stronger. If we do not insist on job creation, this country will not be able to grow again,” Camusso said.

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José Manuel Barroso, President of the European Commission, went to Milan and participated in a High-level Conference on Employment in Europe, notably with Matteo Renzi, Italian Prime Minister and President in office of the Council of the EU and organised by the Italian Presidency, in October 2014

How is this reform seen from outside Italy?

No reform of the labour market would be popular with trade unionist, said Daniel Gros, the Director of the Centre for European Policy Studies. So far, the proposal of the government on labour reforms represents only a very general framework, the reforms themselves still have to be implemented by legislation, he explained.

As for the effects, Gros underlined that it is always difficult to do labour market reforms when the economy is going down. But since this has been the case in Italy for the last ten years, the reforms have to be implemented anyway, Gros said.

“It is never a good time to do them and there is very little Italy can do about the international business cycle, about what happens in the rest of the Eurozone. So one can only hope for recovery elsewhere, which would then help Italy. But independently of what happens elsewhere. This has to be done now.”

The latest figures show that the Italian economy has so far not taken off with a decline of GDP of about 0,4 percent this year.

Investments are not necessarily the key to recovery in the euro area – that is a point Daniel Gros made in one of his latest analyses. Speaking of Italy, the economist said that “a lot of investments have been wasted”  since companies have invested, but got no return and therefore have been unable to pay back their debt. Therefore he didn’t recommend more, but better investments.

“Of course now the government will say immediately all our investment is good, and therefore we should do more. But I really doubt that. There is no indication that the way public money is invested has changed. Therefore putting more money down at the same machinery will lead to more waste of resources. Therefore I would say: First of all let us change the machinery which produces investment and then later we can talk about more,” Gros underlined

Italian locomotive not yet full steam ahead

Months ago Renzi set high standards: “If we do what we are capable of doing, Italy will be a locomotive in Europe over the next few years,” he announced. For Gros, this is wishful thinking and not very likely to happen.

“The most one could expect is that Italy no longer becomes the flashing point, also in terms of its sustainability. So we all hope that the growth rate picks up and that Italian fiscal policy then becomes sustainable. Because that is the one thing which could really make the Eurozone explode, namely that Italy does not get his fiscal house in order,” Gros warned.

Renzi’s main achievement could be that he is still very popular, Gros added.

As a matter of fact, Renzi’s personal approval rating remains at a healthy 54 percent.

• Co-production by Radio 24 II Sole and the Euranet Plus News Agency
• Authors: Gigi Donelli, Radio 24 II Sole; Danièle Weber, Euranet Plus News Agency
• Get more podcasts in Italian by Euranet Plus partner Radio 24 II Sole

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• Webpage of the 2014 Italian Persidency of the Council of the EU

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