2 February 2016: the Renzi Government, two years to the day. The Prime Minister presented #twenty-four, a set of slides illustrating the main results of his Presidency. We’ll try to explains what really happened and to clarify the Government’s real merits... in #twelve slides: from the political and institutional reforms to the labour market reform; from the “Good School” to taxes, duties and levies; from the environment and protection of the territory to the relationships between Italy and the European Union.

1. #TWENTY-FOUR VERSUS
#TWELVE: TAKING STOCK OF
THE RENZI GOVERNMENT
March 2016

2. 22 February 2016: the Renzi Government, two years to the day.
With his typical, timely communicative style, the Prime Minister
presented #twenty-four, a set of slides (his usual self-celebratory
touch) illustrating the main results of his Presidency.
The #twenty-four series compares Italy today and Italy two years
ago; it uses the classic before/after method to provide important
statistics about youth unemployment, trend in GDP, etc.
The slides are concise by nature. However, presenting numbers alone,
without any details about those figures, neither explains what really
happened, nor does it clarify the Government’s real merits.
So we’ll try, in #twelve slides!
LIKE CLOCKWORK, ALMOST PREDICTABLE

3. POLITICAL AND INSTITUTIONAL REFORMS
TheRenziGovernmentcanbecreditedwiththemostradicalchanges
in the political and institutional framework ever made in recent years.
It wouldn’t be irreverent to say, as many maintain, that this is a new
“constitutional moment” in Italy’s history.
There are two main reforms: the new electoral law, the Italicum, and
the constitutional reform, still being debated. The two reforms are
closely related. The Prime Minister has taken a gamble: the new law
only affects the Chamber of Deputies and will come into force in
July 2016.
The Italicum ignores the Senate, because according to the Renzi-
Boschi constitutional reform senators will no longer vote motions
of no confidence and will no longer be chosen by the electorate. If
elections were to be held before approval of the Senate reform, Italy
would vote with two different electoral laws: a big risk indeed!

4. The Government considers that the Italicum and the constitutional
reform will achieve the same goals: to simplify the political framework,
ensure greater governability, and cut short the time it takes for
Parliament to pass laws.
The Italicum will give a majority premium to the list that wins 40% of
the popular vote; if this minimum threshold is not reached there will be
a second round run-off. Parties must pass a 3% minimum threshold
in the first round. In short: greater governability seems achievable,
although there is a real risk of an extremely distorted parliamentary
representativity. Amongst other things, the constitutional reform
changes the Senate: down from 315 to 100 senators nominated by
MunicipalitiesandRegionalCouncils.Amarginalroleintheapproval
of laws and no participation in the election of the President of the
Republic.But are we sure laws can’t be approved within a set time by
simply modifying the regulations governing the Chamber of Deputies
and Senate? Why change the Constitution?
THE END OF THE PERFECT
BICAMERAL SYSTEM. WAS IT WORTH IT?

5. Intheso-called“DelrioLaw”theGovernmenthasrevisedthefunctions
of Provinces, Metropolitan Cities and Municipalities, but without
modifying Article V of the Constitution. Modifications to their
functions will deal with by the constitutional reform.
Although Provinces continue to exist they have lost nearly all
their functions: they will only be responsible for plans regarding
transportation, the environment and mobility, plus school building
management. Provincial representatives – no longer elected – will
receive no allowance. However, overall savings are lower than the
figuresprovidedbygovernment:roughlytenmillion,i.e.,thecouncillors’
salaries. Ten Metropolitan Cities (Turin, Milan, Venice, Genoa,
Bologna, Florence, Roma Capitale, Bari, Naples and Reggio Calabria)
have finally been created to replace their respective Provinces. ‘Large
area’ functions for improved government of homogeneous territories.
A point in favour of Renzi, but also a huge problem: the resources to
make them work are still insufficient.
PROVINCES ADIEU.
WELCOME METROPOLITAN CITIES.

6. THE LABOUR MARKET REFORM
The labour market reform, the so-called Jobs Act, is one of the
pièces de résistance of the Renzi Government: the main novelties
are the new increasing law protection employment contract and
the amendment of Article 18. In addition, reduced social security
contributions for new employees (for 2015).
According to the figures provided by INPS (Italian Social Security
Service), since Renzi took office these measures have led to a 0.6%
dropinunemploymentandroughly606,000newlabourcontracts
in 2015 compared to 2014.
On the contrary, according to ISTAT (Italian National Institute of
Statistics), the net number of new jobs is roughly 112,000: INPS
calculates every new labour contract signed in Italy (i.e., if a person
has three contracts with three companies INPS adds them together),
while ISTAT considers the net number of workers.
However, there has been no reduction in the employment gap
between men and women.

7. A BLOW TO PRECARIOUS EMPLOYMENT?
The Jobs Act has undoubtedly created employment, but less
than expected. Modification of Article 18 has de facto legitimised
economic dismissal: the worker simply receives a termination
indemnity.
The increasing law protection contract certainly has its
advantages: it has eliminated the contract jungle and severely
curtailed precariousness after a certain number of years in
employment.Nevertheless,duringthefirstthreeyearsofemployment
the worker is considered to be on probation and can be dismissed
without the right to be reinstated.
Reduced social security contributions for businesses who hire
workers have had a balm-like effect in 2015: although the new
Stability Law has extended it to 2016, it has significantly reduced
the amount.

8. THE “GOOD SCHOOL”. A GOOD REFORM?
Every Government’s idea about education, scholastic reform, and
the ensuing students’ protests it triggers, are part of a Government’s
‘dowry’. The Renzi Government is no exception: when the ‘Good
School’ was approved, the students took to the streets!
The Reform has its strong points: investment in school buildings;
greater resources for culture; hiring of roughly 150,000 precarious
workers before 2016. However it drew harsh criticism regarding
the possibility for Principals to choose their own teachers: this
prerogative is more suited to a manager in a private business than to
the head of a public educational facility.
Schools have been given additional functions, but it will take a
few years for schools to function at operating speed and thus allow
assessment.Supportersofthereformsayit’sastepforwardtowards
modernisation and independence. Detractors consider the ‘Good
School’ as a way to privatise public education.

9. TAXES, DUTIES AND LEVIES: WHAT’S CHANGED?
However has little effect on the tax
burden, because the money needed to
finance this manoeuvre comes in part
from other taxes. The tax wedge has
been reduced: apart from the elimi-
nation of social security contributions
for newly-hired workers, labour costs
are not longer included in the taxable
amount of IRAP. Then there’s the 80
euro a month for low income employ-
ees. At a cost of roughly 10billioneuro.
Money hasn’t come in, but it was clear
from the start that having your cake and
eating it was out of the question!
The Italian tax system need-
ed to be simplified and the
tax burden on citizens need-
ed to be reduced.
Renziknewthisandhasdone
something about it, even if
the tax burden in Italy is still
the highest in the EU: over
64% for businesses.
The IMU tax on people’s pri-
mary residence is long gone,
and in June 2016 the TASI
will follow suit. This gives
families an economic benefit.

10. Of all the reforms launched by the Renzi Government, and several
undeniable achievements, reviving economic growth is the least suc-
cessful (and certainly the most difficult). In 2015 the GDP grew by an
anaemic 0.6%: Italy is the last carriage of the European train in which
growth is better everywhere else.
Several commendable reforms, such as the Patent Box and Unlock
Italy, don’t seem to have made much difference: consumption and in-
dustrial production levels are practically identical to what they were
two years ago. Instead, Renzi has done much better when it comes to
foreign investments: on this subject he’s passed with flying colours!
The economic change of pace also depends on foreign variables,
such as the price of oil, the cost of energy and competition with non-
EU countries: instead there’s been a lack of that little extra courage
needed to stimulate – for example – domestic demand.
REVIVING GROWTH: WHEN?

11. THE ENVIRONMENT
AND PROTECTION OF THE TERRITORY
Hydrogeological instability is one of Italy’s major problems; heavy
rains can trigger landslides, destroy houses and cause victims. The
Renzi government has promised to invest 9 billion euro in seven
years to heal Italy’s wounded territory.
Seven hundred of the 1.3 billion euro envisaged in the first Plan
have already been allocated: good. Bureaucratic hold-ups and red
tape are the problem (most of the resources are allocated to Regions
and Special Commissioners for under compulsory administration):
at present, only a small amount of these funds has actually led to
worksites that are already operational.
The Unlock Italy decree by the Renzi Government has declared
activities involving the ‘research and cultivation of hydrocarbons’ as
strategic; in a nutshell, it has sanctioned drilling in exchange for
more oil: was it a good choice? On April 17 the Italians will be able
to say yea or nay in the abrogative referendum!

12. Matteo Renzi has adopted a two-step ap-
proach to the European Union: in agree-
ment with the establishment until the
rather unexciting Semester of the Ital-
ian Presidency, he has now vigorously
raised his voice during his second year
in office.
In short, after maintaining a unified front
with Angela Merkel – albeit with some
differences – during negotiations with
Greece when the first Tsipras govern-
ment was in power, Renzi has begun to
askEuropeforgreaterflexibilityregard-
ing public finances.
RENZI AND EUROPE: IF THIS IS LOVE…
After all, nearly all the ma-
noeuvresbytheItalianGov-
ernment are implemented in
deficit and will only be suc-
cessful if Europe lessens
its grip, especially because
the long-awaited spending
review has never been im-
plemented: in the spring the
EU will let Italy know if it ac-
cepts Renzi’s proposals.
Let’s hope for the best!

13. WHERE THERE’S SMOKE THERE’S FIRE?
So,twoyearswithaRenziGovernment:agreatmanyannouncements,
and many achievements. Some of which we feel are steps forward,
others are instead more to do with communication rather than
substance.Overall,however,thescalestipinhisfavourwhilewewait
for several crucial problems to be solved. An example? Managing the
migrant crisis; greater commitment to achieve economic growth;
greater flexibility accorded by the EU; the cadastral reform; (what
kind of?) completion of the initiative already underway regarding civil
unions and adoptions. In addition, the constitutional reform has
to be completed, otherwise there will be an inevitable short circuit
between the electoral law and new structure of local authorities.
2016 will be a watershed year for the Renzi Government: we will
wait confidently to see whether, in twelve months’ time, some of the
priorities listed here will be inserted in #thirty-six, the next set of
slides which – we are absolutely certain – we will be able to examine
next February! Unless...

14. Telos Analisi & Strategie
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