TRENT. An overall slowdown in the economy of Trentino and of theSouth Tyrol. With a GDP that in 2023 is estimated, in the province of Trento, to be growth of approximately 1% compared to 4% the previous year. There is talk of “expansion of reduced economic activity” in the annual report produced by Bank of Italy entitled “The economy of the autonomous provinces of Trento and Bolzano”.
A very structured report in which the difficulties of companies in finding manpower are analysed, in sectors with various critical issues such as manufacturing and those with better performance such as construction or the service sector. To then get to the demographic trend, the aging of the population and the future challenges that will have to be faced.
“The slowdown in GDP dynamics – he explained Michele Cascarano, economist at the Bank of Italy of Trento – is the effect of some elements: we have a weakening of domestic demand still partially tied to inflation that has eroded the purchasing power of some families and rising interest rates. Then there is the weakness in foreign demand. Both Trentino and Alto Adige are affected by the weakness of the German economy. Germany is an important market for both provinces.”
BUSINESSES
At a sectoral level it is recorded a weakness in demand that is particularly impacting the manufacturing sector. According to data from the Trento Chamber of Commerce, in 2023 the turnover of Trentino manufacturing companies decreased by 4.1% compared to 2022.
Better the construction sector which recorded greater activity with an expansion also thanks to the public operator, to the investment support of the Pnrr and above all thanks to energy requalifications.
Very good tertiary service sector, especially trade. In this case the driving force was tourist presences with strong growth last year in Trentino of 7.7% in Trentino.
THE EMPLOYMENT
One of the problems that have been encountered both in Trentino and Alto Adige in recent years is that of finding manpower.
An investigation carried out last year recorded 42.4% of companies that looked for workers and did not find themthe. The greatest difficulties are in construction sector and for small businesses, especially in the search for qualified personnel.
A shortage that impacts the growth of the company and calculations by the Bank of Italy also show that the shortage of workers is reflected in a greater probability of waiving commissions or an increase in delivery times for goods or services.
SALARY
In 2022, based on national accounts data, in Italy in the private non-agricultural sector de facto hourly wages grew by 1.5 percent in nominal terms, an increase well below inflation (8.1 percent according to the national consumer price index for the entire community).
“Comparing hourly wages – explains Michele Cascarano – it is possible to say that there are no differences between the hourly wages of a Trentino worker and an Italian one. However, if we take into account that the two economies, the national one and the Trentino one, are different in particular in the composition of some sectors, just think of the fact that Trentino is more specialized in tourism where people work part time and in agriculture, then hourly wages, net of these characteristics, are 5% higher in the province of Trento compared to the rest of the country, and 17% in Alto Adige”.
THE FAMILIES
In 2023 the Household gross disposable income grew. The increase, according to the indicator developed by the Bank of Italy, was 4%.
Purchasing power, however, has declined. The reduction was caused by the increase in prices.
At the end of 2022, (latest data available) the Household net wealth amounted to 138 billion euros in Trentino And 175 billion euros in South Tyrol.
DEMOGRAPHICS AND LABOR MARKET: THE ALARM
The demographic scenarios forecast for the two provinces, although more favorable than that for Italy, indicate a contraction in the availability of the workforce, which could lead to obstacles to economic growth.
According to Istat data, at the beginning of 2023 there were 543 thousand residents in the province of Trento and approximately 534 thousand in Bolzano. Compared to 2007, the population increased in Trentino by 7.7% and 10.1% in Alto Adige.
Between 2007 and 2023, active people between 15 and 74 years old increased by 11.3% in the province of Trento and by 14.3% in the province of Bolzano compared to an Italian average where the increase was recorded by 4.9%.
The growth of the workforce in the two provinces was supported by the greater participation of women and older workers who stayed longer. The contribution of foreigners who contributed to supporting the change in the workforce was then fundamental.
According to Istat demographic forecasts, by 2042 the resident population would increase by approximately 6 percent in both provinces (-4.9 in Italy). At the same time, however, the number of working age people would decrease, reflecting the progressive aging of the population: the share of 15-64 year olds in the total would be reduced by more than 7 percentage points, to 55.6 percent in Trentino and 57.2 in Alto Adige.
All of this will obviously have an impact on the market. The workforce in 2042 would contract by approximately 6.1 percent compared to 2022 levels in Trentino and by 4.0 in Alto Adige. Assuming we keep the current male participation rate constant, to be able to maintain the same number of active workers recorded in 2022, a reduction in the gender gap would be necessary (equal to approximately 10 percentage points in both provinces in 2022) by approximately two thirds in Trentino and by half in Alto Adige.
