Social shock absorbers in Italy: a comparison with the main European countries

This paper analyses the Italian system of social shock absorbers (unemployment benefits and short-time work schemes) and active labour market policies (ALMPs), in comparison with those implemented in the main euro-area economies. The analysis also includes guaranteed minimum income schemes that, despite not being social shock absorbers, act as last resort incomes when these absorbers are not accessible or sufficient for households’ basic needs. The overall structure of the Italian social insurance system is fairly similar to that in Germany, France and Spain, as are the types of schemes in place. However, each scheme features some design and implementation weaknesses with respect to its European counterpart. The most critical aspects involve: poor implementation and coordination of the ALMPs with the unemployment benefit and the new minimum income scheme; the eligibility for short-time work schemes to closing firms, maintaining inefficient job matches; labour supply disincentives and inequalities in the design of the new minimum income scheme.