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Welfare and Work in the Open Economy Volume II: Diverse Responses to Common Challenges in Twelve Countries$
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Fritz W. Scharpf and Vivien A. Schmidt

Print publication date: 2000

Print ISBN-13: 9780199240920

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0199240922.001.0001

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Italy Rescue from Without?

Italy Rescue from Without?

Chapter:
(p.351) 8 Italy Rescue from Without?
Source:
Welfare and Work in the Open Economy Volume II: Diverse Responses to Common Challenges in Twelve Countries
Author(s):

Maurizio Ferrera

Elisabetta Gualmini

Publisher:
Oxford University Press
DOI:10.1093/0199240922.003.0008

Italy's economic and employment problems were to a large extent home made, whereas external economic and political pressures did facilitate internal revitalization. While export‐oriented industries in northern Italy had maintained international competitiveness, overall employment rates were very low, and inflation was very high until the early 1990s. Since the clientelistic Italian state was not able to put the brakes on the spiral of wage and price increases that were automatically linked to all sorts of public and welfare‐state expenditures, public‐sector deficits were rising inexorably. After the collapse of the old party system, however, the unions were able and willing to enter into a series of accords with successive reform governments that not only facilitated price stability through wage restraint but that also legitimated significant welfare cutbacks that contributed to budget consolidation. The impetus for reform was a serious political commitment to meet the stringent Maastricht criteria in order to ensure Italy's membership in the European Monetary Union.

Keywords:   clientelism, employment, European Monetary Union, inflation, Italy, Maastricht criteria, public‐sector deficits, wage restraint, wage‐price spiral, welfare cuts

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