Young people, women, over-50s wedge and wages, lights and shadows at work

Employment is growing, by July 2024 we are permanently above 24 million; but it is only driven by the over-50s. Demographics are unfortunately being felt, as is the effect of the rising retirement age. For young people and women, the picture shows more shadows than lights; the cost of labour for companies is very high, while productivity is at a standstill; and there is a mismatch that has reached unbearable levels. We have pockets of inactivity and Neet too high. Without getting too far off track, there is a wage problem, but collective bargaining works, and yet well, and where collective bargaining agreements are renewed on time, as in industry, the gap with inflation is closing. The civil service remains too far behind. Let us try to see by macro themes how the labour market is really doing, numbers in hand.

The latest Istat data, a provisional estimate, for June recorded a new, slight increase in the number of employed persons (+16 thousand people). Over the year there are 363 thousand more individuals working. Employment, however, has been rising for months, only in the over-50s bracket: +603 thousand employed compared to June 2024; the middle age bracket, the 35-49 year-olds to be precise, suffered a sharp trend decline, -180 thousand. The newly employed seem to be largely people who have stayed longer at work after the latest pension reforms, especially the Fornero pension reform. In absolute numbers, the number of people employed in Italy has never been so high (although our employment rate is still the lowest in Europe): 24,326,000; in one year there were 472,000 more permanent employees (workers with permanent contracts) and 299,000 fewer temporary employees. In salaried employment, an interesting process of 'substitution' has been taking place for a few months between temporary employment (which is decreasing) and permanent employment (which is increasing), which can also be explained by delayed retirements. Between June 2024 and June 2025, self-employment is also growing: +190 thousand self-employed. The unemployment rate, again in June, dropped to 6.3% (in the Eurozone we are at 6.2%): in absolute numbers, the unemployed in Italy are 1,621,000, down by 94,000 compared to 12 months earlier. There is, however, a problem of inactivity that remains at record levels in Europe: the rate has risen to 32.8%, although over the year, the absolute number of inactive people (including the discouraged) has fallen by 147,000.

For one of the most vulnerable categories of the labour market, namely young people, the picture shows more shadows than lights. The unemployment rate for the under-25s is 20.1%; we are at the bottom internationally (Germany is light years behind us, with a 6.4% rate for the under-25s). Over the year, employment is down both in the under-25 age group (-43 thousand units) and in the 25-34 age group (-17 thousand units), and the rate, although it has grown in recent years, remains low and with strong territorial disparities. One alarm bell is inactivity, which is rearing its head again in these age groups. Then there is the untapped potential of the Neet, i.e. young people who do not study, do not work and are not in training. The latest ISTAT data for 2024 reveal, albeit decreasing, 1.34 million boys and girls between 15 and 29 Neet, with an incidence in the South more than double that of the North. These numbers are weighed down by the far inadequate active policies (and integration between training and work) implemented by governments of all political colours. If we add to this the quota of young 'expats', we realise the alarm. The North-Eastern Foundation has compiled chilling data: between 2011 and 2024, more than 630,000 young people (18-34 years old) have moved abroad; net of returns, the negative balance is close to 440,000, mostly graduates. The result is a loss of human capital that weakens the potential for growth and innovation, with repercussions on productivity, the sustainability of our welfare system, and public accounts.

If we consider the other weak category in the labour market, namely women, the situation is very worrying. With the male employment rate at 71.5 per cent, the female employment rate stands at 54.2 per cent, i.e. more than 17 percentage points lower. We are also at the bottom of the league table internationally, despite the fact that the level of employed women is at the highest point ever reached in Italy. Not only that. The inactivity rate for women is 4 points higher than that of men. Only 20% of girls enrolled then choose science and technology (Stem) courses, compared to 40% of boys. According to the OECD, reducing the gender gap, especially among young people, could increase the annual growth of national GDP per capita by more than 0.35 points between now and 2060, the largest contribution among EU countries.

The latest words of the Minister for the Economy, Giancarlo Giorgetti, sounded a bit of a wake-up call: denatality is a problem, especially for the labour market, and it will become a serious problem in a few years' time. The numbers have been mentioned by all major statistical observers: by 2040, as ISTAT tells us, the number of people of working age will fall by about five million. This could lead, the Bank of Italy added, to a contraction in output estimated at 11 per cent, or 8 per cent in per capita terms. In recent years, births have been less than 400,000 per year; with this trend, net of resounding and unlikely reversals, the population will fall from the current 59 million to 54.7 million by 2050. The effect of this is a slow, silent, but inexorable recomposition of the population: in a median scenario, again ISTAT forecasts indicate that by 2050 people aged 65 and over could represent 34.6% of the total (up from 24.3%). This would increase the old-age dependency ratio, i.e. the indicator expressing the ratio of people over 65 to people of working age (15-64), from 19% in 1980 to an estimated 52% in 2060. Not to mention that in twenty years, from 2004 to 2024, we have already lost over 900,000 young people under 19. The result is a slowdown in the growth of GDP per capita, with a drop, in the absence of a significant increase in productivity, of 40% between now and 2060. According to the OECD, the working-age population will fall by 34% between 2023 and 2060. That is 12 million fewer people (compared to an average decline in the OECD area of 8%). The reduction in the ratio of the employed to the population, again estimated by the OECD, of more than 5 percentage points in 2060, will have serious consequences: without economic policy interventions and the usual growth in productivity, the Paris-based organisation predicts a drop in per capita GDP for Italy of almost 0.5 points per year. In 2060, a (dramatic) -22% compared to today is expected.