The uphill shortcut of the tax wedge

Italy needs more workers, especially from abroad, but also more productivity. ZeroVirgola restarts from where it arrived two weeks ago, for two reasons: in recent days the final provocation – which also resumed the Final Considerations of the Governor of the Bank of Italy, Fabio Panetta – has generated some reflections on the part of several readers who cannot be dropped. And then because the issue intersects with another catchphrase arriving in the autumn: the tax wedge. Let’s go step by step, and start again from productivity. With the ambition of being more clear than scientific, we defined it as “the added value generated per hour worked”, underlining that in Italy it is low, especially in the less advanced tertiary sector, because it pays for all the various inefficiencies that weigh on society and on the “value” that a worker is able to produce in exchange for the “price” that is recognized to him. Productivity is an insidious quantity, in which elements that are not always measurable are mixed, and it is no coincidence that it is easier to calculate its dynamics than its absolute value. The fact is that we all, as has been pointed out, feel less productive than we would like: because we don’t have the technology we need or because the surrounding conditions penalize our concentration, from the traffic to get to work to a workstation not very ergonomic. As we can see, there are very different and personal factors that penalize productivity, but in general they can be attributed to the context in which we live and operate, for which the State – more or less directly – can be considered responsible or referent. A State that gives us a lot and takes a lot from us, as demonstrated by the tax wedge, which is nothing other than the difference between what the employer pays out and what the worker collects, or rather the sum of tax and social security contributions: according to the latest OECD data relating to 2023, in Italy it is at 45.1%, which ranks fifth in the Organization. In front are, in order, Belgium (52.7%), Germany (47.9%), Austria (47.2%) and France (46.8%), countries in which the levels of social protection, from healthcare to schools, are high and efficient and therefore require huge resources, which however allow workers to be more productive. A kind of virtuous circle, which in Italy – given the inefficiencies of the system – becomes above all vicious, and leads to cuckolded and beaten workers, that is, paid little and not very productive. It is also for this reason that over the years politics has intervened by reducing the tax wedge at the expense of the State, to increase disposable income, compensate for inflation, but ultimately – we want to think romantically – also to make amends for the obstacles that the “system” is unable to remove. As we had the opportunity to discuss with a brilliant colleague, on a theoretical level productivity has fallen further, but on a practical level it has perhaps benefited from the greater confidence that slightly larger paychecks have brought among workers. But now, with the post-Covid loose ends behind us, the new European stability pact has come into force and the approximately 10 billion that the current wedge cut costs the State every year is a price that in theory we can no longer afford. The autumn budget will start from a requirement of at least double: the shortest way to find them is through eliminating the tax wedge cut, as the International Monetary Fund advises. Real. The ideal would be to replace it with a package of targeted investments, perhaps even less expensive but capable of having a structural impact on productivity: will we have the courage (as well as the ability) to develop it? Future generations would be grateful. © all rights reserved