Italy’s Business Lobby Says New Citizens’ Income Is Too Generous

(Bloomberg) -- Italy’s populist leaders have made a lot of promises, from cutting taxes to freezing big infrastructure projects, but their most ambitious pledge, to provide disadvantaged citizens with a state-sponsored income, could soon become a reality.

Prime Minister Giuseppe Conte and his deputy Luigi Di Maio, leader of the party that dreamed up the so-called citizens income plan to distribute cash to poor Italians, on Monday presented the first of the plastic cards that will entitle citizens below the poverty line to claim a monthly subsidy, provided they’re looking for work.

Di Maio and his anti-establishment Five Star Movement rode to an unlikely electoral victory in March of last year, winning the most votes, at least partly on the back of the citizens income promise.

Di Maio fought hard for funding for the plan in a bruising budget battle later in the year, a clash which at several points threatened to split the government he effectively runs along with coalition partner the League.

The budget fight seemed a distant memory at the glitzy program presentation ceremony in Rome on Monday, as Di Maio lifted a white sheet off a glass case which contained what he called “card number one.” Eventually, as many as 5 million Italians will be eligible for the microchip-embedded cards and benefits.

Channeling Einstein

“We’ll be injecting 8 billion euros ($9.2 billion) into the real economy every year -- people will be able to spend those 8 billion,” Di Maio said, at one point channeling Albert Einstein, saying those who claim something is impossible should leave those who are actually doing it alone.

While critics deride the citizens income plan as a costly handout Italy cannot afford, Five Star argues the measure will boost internal demand. The Movement’s coalition partner, Deputy Premier Matteo Salvini’s League party, has been lukewarm about the program, and Salvini didn’t attend the event Monday.

The income-support measure is aimed at pensioners as well as people of working age below the absolute poverty level. Under the program, the latter must be willing to accept a job offer or lose the benefit. Companies hiring a citizens income recipient will pay lower social security contributions. Potential beneficiaries can apply from March 6 for subsidies starting in April -- the month before European parliamentary elections are scheduled.

Business leaders are dubious on the plan, too. The citizens’ income risks being too generous and may stop people from looking for work, the nation’s main business lobby said earlier Monday.

The monthly benefit of up to 780 euros ($893) could discourage an unmarried Italian in his or her twenties from seeking employment, Confindustria’s head of labor and welfare affairs Pierangelo Albini told lawmakers in Rome.

Albini noted that the benefit compares with what young employees in some Italian regions earn on a first job, creating a disincentive to work.

“The measure deals with a real problem requiring of course a solution,” Albini said. “What is a matter for debate is the way that solution is provided. We fear this tool, instead of prompting people to look for a job, could have the effect of discouraging them from doing so.”

©2019 Bloomberg L.P.

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