News Analysis: Why Italy poverty, income inequality growing when family income rises

by Eric J. Lyman

ROME, Dec. 9 (Xinhua) -- New figures showing family income is on the rise in Italy are further bolstering the case that the country may be in an economic recovery, but the expanding gap between the country's richest and poorest residents shows the recovery is not helping everyone.

The latest round of macroeconomic figures released by ISTAT, Italy's National Statistics Institute, show that average family income was up by 1.8 percent to 29,988 euros (35,300 U.S. dollars) per year and purchasing power up by 1.7 percent last year compared to two years earlier. Median income rose 2.8 percent in the same period.

But the increase has been far from evenly spread. ISTAT said the top fifth of the population in terms of income enjoyed most of the growth, while the bottom 30 percent of the population was at risk of "poverty and social exclusion". That is up from 28.7 percent the previous year.

Similarly, the percentage of Italians living in poverty rose to 20.6 percent in 2016, compared to 19.9 percent previously. The newest information is among the highest in Western Europe, and is the first time the poverty figure finished above the 20-percent threshold in Italy in more than 30 years.

Most importantly, the gap between the richest 20 percent and the poorest 20 percent of the country -- known as the Gini index -- was 0.331 compared to 0.307 for the European Union as a whole.

The Gini index, named for early 20th-Century Italian sociologist and statistician Corrado Gini, measures inequality on a scale between zero and one, with a higher score an indicator of less economic equality. Industrialized countries generally have lower Gini index than poor or developing countries.

"Italy's economic recovery is still very timid, and it is very uneven," Andrea Ciarini, a professor of economic sociology in the Department of Social and Economic Sciences at Rome's La Sapienza University, told Xinhua. "More and more, the middle class is being left behind."

Among the drivers pushing incomes higher, according to ISTAT, are increases in the numbers of skilled and high-paid self-employed workers, which rebounded in 2016 after falling for several years.

The factors widening the gap between the richest and the poorest are an inflexible labor market, a high value-added tax rate, under-funded social programs, and high unemployment levels among young workers.

Ciarini said that the trend indicating a widening income gap has been in the works for decades in Italy.

"Italy has a very high national debt, but private sector debt has always been low, with much of the debt offset by high savings rates," Ciarini said.

"But more people have to dig into their savings. That is likely to continue and as it does it will erode the economic health of poor and middle class families," Ciarini added. Endtiem