Wednesday,
April 09,
Italian Elections This Weekend: Berlusconi
and Veltroni: Reluctant Winners ???
The
ANNOTICO Report
The
problems seem so numerous, (an incomplete list includes outdated
infrastructure, a weak education system and underqualified
workforce, an ageing population, a fragmented political system, inefficient
state bureaucracy, organised crime, a low employment
rate, a slow legal system, huge public debt, low wages and low productivity),
and a fragmented political system, which is a recipe for policy inertia,
and prevents them from being tackled.
The strong and sometimes coddled Unions, the bloated and
inefficient Bureaucracy, and a predominance of small firms that produce
quality products, but unable to invest in high technology to gain more
productivity.
"To
take on unpopular reforms you need to know you have time, that you won't be
called to task for four or five years, but Italian governments are seldom in
that position and the next one is unlikely to be either"
"Often
they just have time to make an unpopular announcement and are then bogged down
in negotiations with small coalition partners, then the
electorate gets frustrated and the government falls before the reform is
ever passed."
With
a failing economy and a disenchanted, skeptical electorate it is understandable
that neither Berlusconi nor Veltroni seem to be
campaigning with much relish, and neither side is all that desperate to win.
But
take heart. While
The
sale of any one of their portfolios could send the
Guardian
-
From
Reuters
By
Gavin Jones
Wednesday
April 9, 2008
"It's
going to be nasty for whoever wins the election because the outlook is gloomy
and the problems in
In
these circumstances, a probably brief spell in opposition may be a blessing in
disguise for the loser of the vote pitting conservative media tycoon Silvio Berlusconi against former
By
the time the next ballot comes around the worst of the global downturn may be
over. More importantly, the backlash from disaffected Italians may have finally
persuaded politicians to change the voting system to permit stable, cohesive
government.
While
most of the euro zone is showing some resilience in
the face of a surging currency and record high oil prices, Italy is close to
recession, worsening a trend which has seen it underperform
its main partners for at least a decade.
Romano
Prodi's outgoing government last month slashed its
growth forecast for this year to 0.6 percent from 1.5 percent, and the
International Monetary Fund sees
The
outlook makes a mockery of the familar election
promises of tax cuts and handouts made by both Berlusconi and Veltroni.
"The
budget deficit is already set to rise this year so there will be hardly any
room for manoeuvre after the election," said
Tito Boeri, economics professor at
The
situation would not be so serious if
An
incomplete list includes outdated infrastructure, a weak education system and underqualified workforce, an ageing population, a
fragmented political system, inefficient state bureaucracy, organised
crime, a low employment rate, a slow legal system, huge public debt, low wages
and low productivity.
Many
of these are interlinked, but analysts say low labour
productivity and the public debt are probably the most crippling for the
economy. And the political system, a recipe for policy inertia, prevents them
from being tackled.
LABOUR
REFORMS
There
are many reasons Italians have failed to increase output per hour worked like
their competitors, including a rigid labour market
and a predominance of small firms unable to invest in high technology.
"To
boost productivity we have to change job protection rules and centralised wage negotiations," said Boeri. "These are a disincentive for companies to
hire, expand and invest."
Firms
must pay the same rates in the south of the country, where living costs are
much lower, as in the rich north, and they are loath to hire permanent workers
because they cannot fire them in a downturn, analysts say.
It
amounts to more than the gross domestic product and forces the country to pay
some 70 billion euros ($110.1 billion) per year in interest, drastically
reducing the scope for expansionary policies like tax cuts or public
investment.
STRONG
GOVERNMENT, PLEASE
In
these conditions, the country desperately needs a strong, decisive government
to curb unproductive public spending, cut the debt and pass overdue but
unpopular reforms.
But
voting rules that have spawned dozens of tiny yet influential parties and a
constitution giving parliament power at the expense of the prime minister mean
that is just the sort of administration most Italians have never known.
And
they are unlikely to see it after this vote either.
The
electoral law introduced by Berlusconi ahead of the 2006 vote was, in the view
of most observers, designed to ensure a small, unstable majority after the
election he was set to lose.
This
is what happened and at this ballot Italy is saddled with the same hybrid law
based on proportional representation, making another small, unworkable majority
like the one that scuppered Prodi
a very real possibility.
"To
take on unpopular reforms you need to know you have time, that you won't be
called to task for four or five years, but Italian governments are seldom in
that position and the next one is unlikely to be either," said Bank of
America's Moec.
"Often
they just have time to make an unpopular announcement and are then bogged down
in negotiations with small coalition partners, then the
electorate gets frustrated and the government falls before the reform is
ever passed."
With
a failing economy and a disenchanted, sceptical
electorate it is understandable that neither Berlusconi nor Veltroni
seem to be campaigning with much relish.
Perhaps
the real reason the election race has been so dull is that neither side is
all that desperate to win.
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