There is a conditioned reflex that runs through the changing phases of Italian economic policy.

It doesn’t matter what colour the government is or where it sits in Parliament: if there is a structural and complex problem, the solution is never a comprehensive reform, long-term planning or, to exaggerate, an impact assessment. No, the answer is always and only one: a nice bonus.
The important thing is that it is temporary, preferably spendable during an election campaign, and strictly devoid of any real funding.

The latest masterpiece of its kind is the “Right to Stay” bill put forward by the Democratic Party. The stated aim, delivered with great sincerity, is a noble one: to stem the dramatic exodus of young talent fleeing abroad.
And how do they plan to convince an engineer or a researcher not to board a flight to Munich or Amsterdam?
With a phantasmagorical increase of €200 net per month in their pay packet, for three years, aimed at those under 35 with an income below €45,000.
All this is topped off with a scratchcard of micro-benefits: a pat on the back for buying a first home, a grand total of 250 euros a year towards the cost of returning to one’s home town (basically three full tanks of petrol, or even less given the times) and another 250 euros for a bus pass.

If you just look at the headlines, it seems like the event of the century. If you know the slightest bit about economics, it seems like a Carnival prank gone wrong. But, unfortunately, they’re dead serious.

The 37-month paradox and the precarious employment lottery

Let’s start with the logical masterpiece: the measure lasts three years. One can’t help but wonder, with a touch of bitter irony, what’s in store for the thirty-seventh month. Will the young worker, suddenly deprived of his state allowance, suddenly rediscover the charm of packing his bags? A young person does not plan their life, the purchase of a home or the decision to have a child over a 36-month horizon, knowing that in the fourth year their income will plummet. This is not a youth policy; it is a time-limited handout. Just like the yoghurt you forget at the back of the fridge.

But the real shock comes when you look at who the beneficiaries are. The measure turns out to be almost comically regressive (and therefore unfair), following the logic of ‘when it rains, it pours’: are you under 35 and already have a permanent contract? Well done, the state is giving you a bonus. Are you under 35 but a casual worker, a freelancer or a self-employed person struggling every day just to keep your head above water? Oh well, nothing for you for now. Find yourself a stable job. The important thing is that you do it before you turn 35. Because if you land the contract of a lifetime at 36, well, that’s your problem. Get out of the bonus lottery and sort yourself out.

This creates a vast gap in terms of age and employment status, which manages the remarkable feat of excluding precisely the most vulnerable groups in the labour market – those who, in theory, would be most in need of protection and who, in fact, are the first to leave Italy.

The abacus of imagination: funding reality with Monopoly money

If the social framework is full of holes, the issue of financial backing veers straight into the realm of science fiction. This is where political number-crunching really comes into its own.

The funding allocated to cover this reform is the FISPE Fund (Fund for Social Inclusion and the Fight against Educational Poverty), which currently stands at a whopping 856 million euros. Now, let’s do some simple maths. The €200-a-month measure alone would cost around €8 billion a year. To this must be added a further €2 billion needed for the package to bring back the more than 600,000 young people who, according to the PD’s own calculations, have already left over the last decade.

If we add up the various items, we easily arrive at an actual expenditure of at least 12 billion euros a year, to be repeated over three years. Do you notice anything? They want to fund expenditure of 12 billion using a piggy bank that contains less than one. A funding shortfall so glaringly obvious that it makes the state’s accountants look like circus magicians.

How can the problem be solved? Simple: by drawing on a mysterious ‘slush fund’ that politicians keep bringing up and raiding every few years, and, above all, by introducing a hefty tax on companies with revenues exceeding 50 billion euros. Global, one presumes. The Big Tech firms of Silicon Valley, one would wager.

The idea has an undeniable populist appeal, straight out of a school assembly: let’s tax Mark Zuckerberg and Elon Musk to pay for our children’s tram fares. It’s a pity that international taxation doesn’t work the way our MPs would like. Thinking of financing a certain, ongoing, billion-euro expenditure by the Italian state by relying on a hypothetical, complex and highly uncertain extraterritorial tax on the web giants amounts to selling off young people’s future by financing it with Monopoly money. The risk? Replicating the ‘Facade Bonus’ disaster on a grand scale: a black hole in the public finances, funding that has vanished into thin air and zero structural benefits. A ‘Facade Bonus 2.0’, but at the expense of the younger generations.

The trio of recovery measures (sigh): hidden wealth taxes and hidden wage cuts

The “Right to Stay”, for that matter, did not emerge from a cosmic vacuum, but forms part of a formidable trio of economic proposals designed to revive (sigh) the country. A comprehensive vision that seems to systematically ignore the laws of economic gravity.

Alongside the €200 ‘yoghurt tax’ comes the inevitable wealth tax. An ideological banner waved at every opportunity, yet for which the rate, the tax base and, of course, the expected revenue are unknown. Taxpayers are being asked to sign a blank cheque on trust, without a shred of analysis on what will happen to private savings and investments.

The second pillar is the statutory minimum wage of €9 an hour. Here too, guesswork reigns supreme. It is not a question of being opposed to a decent wage – far from it – but of the complete lack of scientific studies to back up that figure. In 2018, the Nannicini proposal envisaged a serious approach, based on collective bargaining and linked to productivity across different sectors. Today, that compass has been thrown out in favour of a social media slogan, perfect for racking up ‘likes’ but potentially devastating for businesses operating in low-margin markets.

The big taboo: if you don’t produce, you don’t pay

The fundamental flaw in this whole system is the stubborn refusal to face up to the reality of our industrial landscape. Wages do not rise simply because a political committee decides so, or because the state decides to play Santa Claus for 36 months. Salaries only rise steadily if the efficiency and added value of what is produced are increased. It is called productivity, a word that in certain circles seems almost like blasphemy.

The correlation between company size, turnover and salaries is stark. There are companies in Italy that pay very well, offer employee benefits, provide career progression and attract staff from abroad. These are the companies that generate high turnover because they are highly productive. And, as it happens, they are the companies with more than 50 employees.

The real tragedy for Italy is that there are very few such companies: fewer than 4,000 across the whole country. The remaining 90% of our industrial fabric consists of a vast array of micro, nano and small businesses. These are often outstanding enterprises born of family ingenuity, but structurally too small to make significant investments in research and development, to digitise processes, and to establish themselves in high-value-added international markets. If a company has slim margins and is stifled by its small size, it simply does not have the financial scope to raise wages, even if the owner were the most generous employer in the world.

Hope beyond propaganda

As long as Italian politics continues to pamper and protect the status quo of ‘small is beautiful’ – which today simply means ‘small and fragile’ – no bonus will be able to turn things around.
Instead of inventing astronomical taxes on American giants to fund temporary handouts, the state should do the only thing that will help: act as a facilitator for growth.

We need substantial and structural tax incentives for mergers and business combinations between micro and small enterprises, encouraging them to cross the crucial threshold of 50 employees – the difference between efficiency and survival.

We need a total and permanent tax exemption on production bonuses linked to real increases in business productivity, and a drastic cut in the tax wedge that focuses not on age but on merit and value created.

The day the public debate turns to productivity, industrial consolidation and scaling up, perhaps—from that day onwards—we might have some hope. Until then, we will continue to offer our young people handouts on a temporary basis, watching as they, quite rightly, board the first one-way flight.