EU: new inclusion allowance increases poverty

The new inclusion allowance will increase the incidence of absolute poverty. "Despite some positive accompanying measures, stricter eligibility criteria are expected to reduce the poverty-reducing impact of the new minimum income scheme". This is what the European Commission indicates in its analysis on employment, job skills and social inclusion in Italy published today. The reply of the Ministry of Labour was prompt, speaking of a partial analysis. But let us proceed in order.

Brussels considers that 'on average, without taking into account potential effects of the reform such as increased work incentives, the inclusion allowance is expected to lead to a higher incidence of absolute and child poverty by 0.8 percentage points and 0.5 percentage points, respectively, compared to the previous scheme'. As of this year, the minimum income scheme (formerly citizenship income and now inclusion cheque) does not establish eligibility solely on the basis of income verification, but restricts access only to households belonging to specific demographic categories (including minors, persons aged over 60 or with disabilities, and those followed by social services).

For the Commission, "positive developments are the possibility to cumulate both benefits with an earned income of up to €3,000 per year, as well as the reduction of the residence requirement to 5 years. However, this reform significantly reduces the coverage of the minimum income". Simulations of a static model by the Bank of Italy (which do not take into account the dynamic effects related to activation incentives of beneficiaries) suggest that, among households with Italian citizenship, the new minimum income scheme would reduce the number of beneficiary households by 40 per cent, while among households with a different citizenship the coverage would be reduced by 66 per cent.

The EU Commission's analysis on the inclusion allowance and the incidence on poverty 'is based on a study of a static and partial nature, in the sense that it does not take into account the activation dynamics generated by the new measures and the growth of employment in Italy'. This is what was observed by sources in the Ministry of Labour, according to which 'an overall assessment would probably lead to a more positive analysis'. The 'Reddito di cittadinanza', they recall, has been replaced by the 'Assegno di inclusione' and the 'Supporto per la formazione e il lavoro', which has an essential function of accompanying people to work.