Poor work and the poverty of economic policy


The conclusions of the working group “Interventions and measures to combat in-work poverty” were recently published , elaborated by a group of experts on the initiative of the Minister of Labor Andrea Orlando, which highlight some worrying aspects of the economic conditions of workers in the our country.

One aspect that emerges in a particularly striking way, alas, is the progressive and inexorable impoverishment of workers . This is a phenomenon that is certainly not new . The new report, however, allows us, also through the observation of some of its limits, to highlight the root causes of this collapse.

Before coming to the data, it should be specified that the report focuses on those who, despite having a job, fall into – or risk falling into – a condition of poverty. This means that we are not talking about the state or the risk of poverty of the entire population, but only of those who are ‘lucky’ to have a job.

This means that the report does not examine the material conditions of those who do not have a job (about 2 and a half million unemployed) and of those who have now stopped looking for one because they are sure they will not find one given the state overall health of the economy (about 1.5 million discouraged).

In the vast majority of cases, these are subjects who do not have an income and who therefore do not navigate in gold.

Now let’s move on to the report data. Firstly, we read that one worker out of four has such low wages (under 12,000 euros a year) that they are at risk of poverty .

This risk, however, takes the form of a certified state of poverty for 11.8% of workers: this means that more than one person out of ten , despite having a job, is in a state of poverty. The figure rises to 22% if we refer only to part-time workers, many of whom are willing to work longer hours, but who have to settle for part-time jobs because they cannot find full-time ones.

Furthermore, one worker in four has relatively low wages, i.e. less than 60% of the median, i.e. the wage that divides all workers exactly into two equal parts (ordered from the worker with the lowest to the highest income).

Furthermore, one element that catches the eye in the study is the persistence of this data: when workers fall below the poverty line, in about half of the cases they fail to go back above that threshold. In other words, once you become poor you tend to stay poor.

The authors, in addition to listing these and other facts characterizing the economic condition of the workers, also dwell on the causes. In particular, they point out that ” behind the increase in in-work poverty over the last 15 years are hidden, in addition to stagnant wages, the increased instability of careers and the explosion of “involuntary” part-time work, determined by the weakness of the Italian economic structure ( and therefore the growth of “small jobs” with low added value) but also from structural changes, such as an increase in the weight of services ».

In conclusion, the authors write, the adoption of five types of policies to reverse the trend is desirable: guarantee adequate minimum wages, strengthen supervision of the data that companies and workers communicate to the public administration, introduce an “in-work benefit” (i.e. a tool able to supplement the incomes of the working poor), incentivize compliance by companies and raise awareness of workers and businesses, promote a review of the EU in-work poverty indicators.

The report in question, of which we have reported the main points, aims to underline the causes of the so-called in-work poverty phenomenon and to propose policies that help to mitigate it. However, it lacks some fundamental aspects which, if brought to light, allow us to identify the exact dimensions of the problem.

On the one hand, in fact, only some of the causes that have brought us here are highlighted. On the other hand, the policy proposals are almost the same as the outline of the political choices that have characterized the last few decades and which are the real cause of the spread of in-work poverty.

Among the elements that are missing in the reconstruction of the causes, there is undoubtedly the explicit reference to the deregulation of the labor market .

Career instability is no coincidence, but it is precisely the consequence of this deregulation, which began with the proliferation of atypical contracts, and in particular of fixed-term ones, with the consequent precariousness of the position of workers, and culminated in the Jobs Act in 2015, which effectively minimized the scope of art. 18 of the Workers’ Statute, making the cases in which the judge can establish the reinstatement of dismissed workers essentially residual without certain legal requirements being met.

Both the explosion of precarious contracts and the neutralization of art. 18 have put employers in a much more favorable position towards workers. If the latter allows, in fact, to more easily use the weapon of dismissal against the more riotous workers, who perhaps require more dignified working conditions, the first has meant that the problem of dismissal does not even arise: it is sufficient, in fact, threaten the worker not to renew his contract.

Another element missing from the list of causes is the almost total cancellation of the tools through which governments could intervene in the economy to support consumption and investment, or, ultimately, to support employment .

Cancellation which took place through joining the European integration project, and which entailed the renunciation of the main instruments of economic policy : monetary policy centralized in the hands of a central bank whose main objective is to keep inflation under control (including controlling wage increases); the renunciation of the exchange rate policy, which prevents recourse to devaluation as a tool to encourage exports; the stringent constraints on public spending, which cause governments to be severely limited when it comes to injecting resources into the economy in order to support the demand for goods and services.

And, certainly not a secondary element, a further instrument for controlling the economic dynamics of an economy has also failed: the control of capital movements , i.e. the possibility for companies to bring money and plants to countries that guarantee higher rates of profit and worse conditions for workers .

It should be noted that these are elements that not only all go in one direction, but that are also closely connected to each other. The bogeyman, agitated by entrepreneurs, of unemployment, through the non-renewal of a precarious contract or through dismissal, would certainly be less effective where the economy concerned was characterized by a situation of full employment or was at least very close to it.

The threat of being out of work would certainly have disappeared again, if workers could easily find another job or if it was difficult for the bosses to take their factories to another country .

Instead, in the absence of adequate tools, workers are essentially left at the mercy of the so-called “market forces” (read: the employers’ inexhaustible thirst for profit). The impoverishment of workers is a direct descendant of that of economic policy instruments.

And this impoverishment is also reflected in the final proposals of the group of economists appointed by the minister. Proposals which, taken individually, are certainly appreciable. No one, in good faith, could oppose the extension of coverage of the minimum wages or greater supervision of compliance with these minimums. The problem is that among the tools that are invoked, exactly the most effective ones are missing.

To combat unemployment and poor work, goodwill and policies compatible with current constraints are not enough. A decisive u-turn is needed: public spending, control of capital movements and stringent regulation of employment relationships, with a strong limitation of fixed-term contracts and the reintroduction of the obligations of reintegration into the workplace pre-existing to the reform of the Jobs Act.

These are the only tools that are truly capable of rescuing the workers’ fortunes and of changing the course that has led us into a swamp of poverty and precariousness, a course towards which the Draghi government has further accelerated with the unblocking of layoffs , the pension reform , the cut of the basic income , the limitations of parental leave and a tax reform that benefits middle and middle-high income earners. 

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