Measuring the Long Wave. Unemployment, Discouragement and Semi-Employment in Italy, During and After the Crisis

The official data indicate a much less severe impact of the international crisis on employment and on the incomes of wage-earners and pensioners in Italy than might have been predicted. But the standard measure of unemployment agreed at international level has some shortcomings. For one thing, the “objective” definition of unemployment is a poor fit with the Italian labour market. And for another, the considerable increase in labour hoarding and the emergence of “semi-employment”—the alternation of brief periods of work with periods of unemployment or economic inactivity—make the state of the market hard to assess. The paper offers a more in-depth examination of the impact of the crisis, using labour force survey data to count labour underutilization, funded and unfunded labour hoarding, the discouraged, and semi-employed workers. The picture that emerges is one of a “long wave” of available labour underutilization: the Italian labour market has to cope with an increase in joblessness broadly conceived of about 1,400,000—more than twice the rise in official unemployment. This wave will inevitably last for years to come, until the pools of implicit and explicit unemployment are reabsorbed and jobs are created for those now unoccupied and the new entrants. So now is the time for reform of unemployment benefits, not just to provide income support for those caught up in the long wave of joblessness, but also to permit quicker reorganization of production. The reform will have to highlight the diverse interests and roles of government and of the social partners, within the framework of a new development and industrial policy.