Alberto Sordi said: “The Americans are strong!”. And indeed, when it comes to job creation, that’s true. The famous American job machine continues to operate: from the beginning of 2020, when the pandemic hit the world, to today, the American economy has created 6 million jobs (which rises to 28 million if the comparison is made with the nadir of employment, in April 2020). But there are also other job machines in the world, and they are found in unexpected places, like Italy. The graph compares, starting from the beginning of 2020, employment trends in Italy, the USA and Germany.
The Italian job machine, as we can see, did better than the American one, and much better than the German one (“The Italians are strong!”, Alberto Sordi would have said). Incidentally: as can be seen from the graph, the fall in employment when Covid broke out was much more intense in America, where the social safety nets are much less tense than in Europe. If the feats of the Italian job machine are surprising, another surprise, as can be seen from the second graph, comes from the comparison – within the Peninsula – between employment in the Centre-North and that of the South. The graph shows how employment in the South (we talked about it in more detail in “Il Mattino” on 24 May) has increased more than in the Centre-North (“The southerners are strong!”, Alberto Sordi would have said…).
At this point, let’s try to answer two questions. First, where does the strength of employment in Italy come from? Second, are there any contraindications to this momentum? We could say, following the famous Chinese saying according to which a crisis is also an opportunity (or, in Christian style, when God closes a door, he opens a door), that crises are good for us: starting from 2020 there have been the black swans, from Covid first to the war in the heart of Europe and then to the bloody conflict in the Middle East. And it is precisely since then that jobs in Italy have gone up a gear. But in truth the employment performance comes from further afield. Past reforms of the labor market are, like all structural reforms, difficult to implement politically, because the results are seen after a time that goes beyond the electoral horizons of governments, whether right-wing or left-wing. But sometimes they do it anyway, and today we reap the fruits of those structural reforms, from those of Treu to those of the Jobs Act, made in past years.
After the decline due to Covid, employment shot up, regaining the levels implicit in the previous growing trend; and, in addition to quantity, quality has also improved, with a higher share of permanent contracts. These are signs that indicate how the underlying factors continue to operate; on the one hand, better matching between job supply and demand, with reduced misalignments between what demand requires and what the education system provides; on the other hand, cultural factors that push women to enter the job market; and on the other hand, the growing importance of services in the added value of GDP: services have a higher labor intensity. In short, on this crucial aspect of the economy it is fair to say that recent years signal a structural change in our labor market, a break in trends that not only concerns the labor market, but also the prowess of the production system. Looking ahead, employment should continue to increase, both in the North and in the South: throughout Italy, companies report difficulties in finding workers, a sign that the demand for work is there. The supply will struggle to increase, given the misalignment between the skills required and those available. But eventually this misalignment will reduce. On the second point – that of possible contraindications – there is the issue of productivity. If we look, for example, at the comparative trends of GDP and employment, we see that the latter has increased more than GDP; which, by definition, means that productivity – GDP per employee – has decreased. However, productivity is a difficult concept to handle, especially at the most comprehensive level: namely, GDP per employee.
Productivity makes sense at the level of the individual factory, but the calculation becomes increasingly problematic as one moves up to the macroeconomic level. Composition effects come into play, especially in times of strong structural changes such as those underway: for example, as mentioned before, if services (with high labor intensity) grow to the detriment of manufacturing, productivity decreases, but this does not it is necessarily bad. In Italy, where the employment rate is particularly low in international comparison, priority must be given to increasing the number of people employed. Employment is much more than a statistic. As already said (see, again, “Il Mattino” of 24 May), earning a job does not just mean bringing home an income: having a job becomes a factor of social cohesion, of individual dignity, of defense of family.
