2.5M Italians jobless, 200K+ unfilled vacancies. What’s going on?

The Italian Paradox

2.5 Million Italians are unemployed, and yet, Italian companies are unable to fill over 200,000 vacancies. So, what is going on? On December 6, investigative journalists Milena Gabanelli and Rita Querzè published a must-read article about COVID-19 and unemployment in Italy’s largest and most prestigious newspaper, Corriere Della Sera.

In case you don’t speak Italian, we’ve provided a summary in English taking you through the main points. We’ve also added a few of our own thoughts. It’s an interesting case study of one country’s struggle to respond effectively to the challenges of COVID-19 in particular, and manage the labor market in general. We hope you enjoy.

Unemployment and COVID-19 in Italy

The article starts with the numbers, and they’re not good…

  • 2.5 Million Italians are currently unemployed. Since the start of the crisis, Italy has lost 420,000 jobs. Even before the crisis, unemployment was close to 10%.
  • In March 2021, the ban on layoffs is to be lifted. Up to 300,000 additional people are expected to become unemployed as a result.
  • This will also increase the number of people collecting unemployment benefits, increasing the strain on the 23 million Italians who are employed.
  • Employed people only comprise 58.2% of the Italian population. This because there are also 13.5 million inactive and discouraged; young people especially have given up on job searching.
  • Italy spends only 1.53% of GDP on employment, compared to 2.15% in Spain and 2.66% in France.

In short, unemployment is a huge problem in Italy. And yet, there are jobs available.

The article mentions several examples:

  • Euroedile Scaffolding in Treviso has been looking for 20 skilled workers unsuccessfully for two years.
  • Aerea, near Como, is looking for young engineers, but even in the full swing of the pandemic, without success.
  • In the province of Reggio Emilia, manufacturing companies are looking for 166 workers, 84 drivers, 62 bricklayers, 18 engineers.

The Italian Union of Chambers of Commerce, Industry, Handicrafts and Agriculture (Unioncamere) states that the labor demand for December 2020 through February 2021 is 729,000 people, from managers to technicians, from office workers to cleaners. Of this requirement, 33% (240,000 people) cannot be found.

What should a job portal do?

Having painted this somber picture, Ms Gabanelli and Ms Querzè go on to outline the failed attempts to solve this problem. They ask: “How does an efficient job portal work?”

Various projects have been tried, and failed, since the 1990s. Most recently, a portal for matching labor demand and supply was to be created based on supposedly miraculous software from the USA by ANPAL, the national agency for active labor policies supervised by the Ministry of Labor and Social Policies.

Nothing came of it.

And yet, a working job portal is not an unrealistic ambition: after all, other countries have one. For example, click here to read the job portal success story of the Malaysian Public Employment Service.

The authors compare Cliclavoro, the Italian job portal, which had no job offers available, to Pôle Emploi, the French portal (and WCC customer!), which had 619,605. They praise the French portal’s ease of use: simply enter your title and area to get results.

To get similar results, Italy must bring together the main private search engines on a single portal. In addition, Italy’s different Regions should share their databases instead of keeping them for themselves, and closely collaborate with ANPAL.

Incentives to combat unemployment?

Next, the authors roundly criticize Italy’s policy of subsidies and incentives.

Up to now, Italy’s labor policies have simply amounted to “giving money”: unemployment benefits and hiring incentives.

In 2018, Italy spent 4.3 billion on employment incentives, compared to 0.8b in Germany, 0.7b in France, and 1b in Spain. On the other hand, Italy spends very little on services to help the unemployed find work.

A step forward was the 2015 “re-entry allowance”, which rewarded employment centers with 500 to 5000 euros per placement. Sadly, although the government allocated 350 million euros, in practice the service was only provided to 429 people.

One of the reasons? The Italian Public Employment Services do not have sufficient and adequately trained staff.

In other words, to make the re-entry allowance work, first it is necessary to retrain PES staff.

Stop creating tomorrow’s unemployed

Working with the world’s foremost PES, WCC knows that referral to the right training is essential for sustainable job matching. The authors agree: when an unemployed person lacks the skills that the market demands, training makes a difference. Their warning: “Stop creating tomorrow’s unemployed”

In 2018, Italy spent 1.9 billion on professional training overall, compared to 5.9 billion in France and Germany. If we only consider training for the unemployed, Italy only put up around 300 million euros.

The training courses are not linked to the real needs of companies, but are often generic IT or English classes that result in worthless attendance certificates. To be successful, they should align with what the market demands: workers in the sectors of social security, production of goods and services, and drivers. In short, specialized vocational workers with skills and certifications.

Italy’s educational offering does not take labor demand into account. This is why many young people graduate in sun-setting sectors or with already outdated knowledge. They are the unemployed of tomorrow.

The other side of the coin: the higher technical institutes (ITS) churn out fewer than 4,000 graduates a year, while companies could absorb at least 20,000. In the next few years, 85,300 young people with professional qualifications will leave school against the 155,700 required. Anyone involved in “professional demographics” ten years ago knew that there would not be enough doctors and nurses today, but they were not listened to.

And now, Italy reaps what it sowed.

How to make IT work

The authors end on a positive note: there is money available to invest in employment policies. However, it is crucial to spend it wisely, and that means, differently than before.

To invest in employment policies, there is money today. The government has allocated 500 million euros to active labor market policies. Another three billion over three years is to come from the Recovery Fund. It is not yet understood, however, how all this money will be spent.

To change direction, a Reform must be set up where the State plans, and the Regions dispenses benefits, on the basis of national and regional plans coordinated and aimed at finding work. This should not be a quick improvisation. It will take two or three years to make it work and requires a vision that does not expire after the next elections.

Final thoughts

This article may not come as news to you if you’ve kept up with WCC solutions in the past years. It is a familiar problem: there are jobseekers, and there are jobs available, but somehow the matches are not made.

Italy has a wealth of opportunities, but does not yet have the technological and organizational infrastructure to make it work. As we’ve seen time and again with our large Public Employment Services customers, intelligent software is a crucial part of the solution.

WCC Employment Platform enables governments and Public Employment Services to:

  • Identify gaps between the market and the jobseeker on the individual level to help more people find suitable and sustainable work
  • Identify trends and insights on the macro level to influence and steer the labor market
  • Implement Active Labor Market Policies to assist specific target groups

In addition, WCC EP Portal enables:

  • PES caseworkers to assist more jobseekers more effectively in less time
  • Employers to easily upload, tailor, and track vacancies
  • Jobseekers to find more and better job matches, as well as identify the gaps between themselves and these jobs, and how to fix these gaps

More info on job portal solutions

Countries need to do everything they can to stop the COVID-19 pandemic from causing a long-term social crisis. Creating a better and more resilient labor market is an essential investment in their future economy. We believe that our software solutions can enable a significant improvement in Public Employment Services, helping them to meet their goals.

If you would like more information about WCC’s software solutions, please get in touch. Our sales team and consultants are ready to help – wherever you are in the world.

Article by: Sarah Volz
Published on: December 22, 2020

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