For anxious Italians, distraught by the impact of the coronavirus lockdown on their livelihoods, “Cure Italy” offers a lifeline.
The 25 billion euro benefits package, unveiled by the government two weeks ago, will help people facing temporary layoffs, extend unemployment benefits to businesses and give a one-time bonus of € 500 to the self-employed and agricultural workers, measures that could be considered. extended if the closure of the third economy in the euro zone lasts longer than expected.
Yet a group of workers will find it difficult to access the much-needed government safety net: those working on the vast Italian black market.
The informal and undocumented economy – illicit activities ranging from cash payment for work to organized crime – is estimated by the Italian statistical office, Istat, at 12.1% of gross domestic product. Other estimates have concluded that the black economy could account for up to 20% of Italian GDP.
While few Italian politicians would like to be seen supporting so-called work in nero, even in times of crisis, the health of the black market has a large impact on the economy as a whole.
Italy’s underground economy was slightly less than Portugal’s total nominal annual production in 2017 – the last year for which figures are available – with an estimated value of 211 billion euros. Of this amount, Istat calculates that around 19 billion euros were linked to criminal activities. The same year, the Italian Senate published a report estimating that the taxes which can reach 132,1 billion euros on the total gross income are evaded each year.
“The informal economy in Italy is very important and the government will not be able to reach these people by simply providing assistance to the companies that employ them,” said Francesco Lippi, professor of economics at the University of Luiss.
52-year-old builder, who spoke to FT on condition of anonymity, said he lost his job three years ago and eventually found a job at a construction company, where he had worked for more than two years. years without official contract. With an average salary of € 1,400 per month paid in cash, he managed to provide for his wife and two children.
But since the national lockdown was imposed across Italy on March 9, he has been unable to work and will not benefit from the new measures announced by the government.
“I now earn zero money. I don’t have a contract. For the state, I do not exist, ”he said. “Unfortunately, in the building industry, many people are not fortunate enough to have a regular contract. Sometimes there is no option but to work in nero. You have to adapt to the system or you will die. ”
Virginia Raggi, Mayor of Rome of the Five Star Movement, sparked anger in parts of the Italian media this month when she expressed sympathy to those working on the black market who lost their earnings as a result stopping the coronavirus.
“Even if it sounds bad to say it, I feel close to the people who work in nero and suddenly find themselves out of work, “she said.
Others have little sympathy for informal workers who pay no taxes and who now find themselves without obvious access to state support, and argue that the situation can serve as a catalyst for bringing non-criminal activity into the books. of the black market.
“If the measures don’t help the informal economy, that’s good, Italy shouldn’t have an informal economy,” said Lorenzo Codogno, former chief economist and managing director of the Italian Treasury. “In fact, this can be a way to encourage parts of the country’s informal economy to emerge and become formal.”
A 28-year-old woman from Rome who gives private language lessons for cash on hand said her work had completely dried up. She normally earns between 300 and 400 € per month.
“This is the only way to get by. I know it’s not much, but it’s all my income. It is really useful to have that little money to buy some of the things I need. Now I have lost all of my purchasing power, ”she said.
Unemployment benefits in Italy are mainly reserved for those who have previously had formal employment. The “citizen income” policy deployed by the Five-Star Movement in 2019 is broader and is currently paid to 2.23 million people, according to the pension and social security agency INPS, with a monthly amount received on average from € 551.57.
However, with Italy locked out and state employment offices operating by appointment only, it is unclear how easy it will be for those who need to register. citizens’ income.
Because many Italians who exist outside the formal economy are now unable to work, there is a risk that the coronavirus epidemic will strengthen the grip of criminal groups in parts of Italy where they are already strong. . Small businesses and individuals facing a cash crisis can be vulnerable to those who have accumulated large amounts of capital through extortion, drug trafficking and other illegal activities.
“We know what happens in a crisis,” said Anna Sergi, a lecturer in criminology at the University of Essex and a specialist in organized crime groups. “On the one hand, you have people and businesses that have liquidity problems, a lot of businesses will collapse. On the other hand, there are people who have a lot of money and who apply for loans related to organized crime. We saw it in Italy during the financial crisis. “
The vast majority of those who work informally unrelated to criminal activity have far fewer options and far less support than their Italian counterparts.
“I just hope this situation is over soon,” said the automaker. “We are running out of money and my kids are tired of eating pasta and beans.”