WELFARE SYSTEM. A POLITICAL STUDY OF THE ITALIAN SITUATION

Introduction

The increase in life expectancy and the improved health of elderlpeople in general are the main successes of y the current Europe­an economic and social development. Up to now the debate about European societies get­ting older has been centred almost exclusively on the increase in spending on pensions, elderly dependency, etc, the qualitative chan­ges that need to be made to the political, social and economic structures are not even mentioned. “Quantitative” debates are also important although, too often, they give a wrong impression of what elderly people are really like, making them out to be just a bur­den on society. The fact that they give a lot to the social security and care system that is also available to the youngest generations through their incomes and their time is forgotten. According to this intergenerational point of view, adjusting pensions is not only important for the elderly but for society as a whole.

Therefore instead of just being a simple intergovernmental exercise, the “Open Met­hod of Coordination” must become a more democratic process in which all the interested parties like elderly peoples´ and pensioners´ organizations should partici­pate.

We are the first to uphold the idea that a serious reform of the welfare system in Italy is needed. However until we actually start to contemplate suitable measu­res that take into account the longer life expectancy and the demographic stagnation, all projects are condemned to fail, including the pressure groups shy attempts to blackmail and plans to “promote more civil defence”.

Welfare policy

In Italy welfare policies are still being stu­died and changed. One factor that influences this is the radical change in government after the last elections. In fact, the differences that exist in the current majority mean that the re­form process which had already been appro­ved by the former government is now having to be reviewed again and is subject to nego­tiations with the social groups that should have been held in spring of this year.

This negotiation should mainly be focused on the pension system which is a major con­cern for many sectors of elderly people due to certain newspaper articles published concer­ning the levelling down and abolition of the so called 'unfair privileges'.

Nevertheless, there is movement within the care sector too which is also concerned with the discrimination issue. We are in limbo and therefore we cannot determine exactly what the state of affairs is at the moment. All types of pensioners associations complain in parti­cular about the lack of interest shown by the politicians in regards to these issues and

about the fact that the trade union organisa­tions refuse to collaborate as they do not recognise our work and representation value.

Pension funds - what does the harmonization mean?

The reorganisation of the welfare system is one of the 12 points of the Governmental document that has been approved by the Union leaders. Three guidelines are expected: a raise in the retirement age and update the revaluation coefficients, eliminate the bracket and merge all the prevention institutions wit­hin the INPS (National Social Welfare Institu­tion).

When presented like this it seems that the new reform does not affect those who have already retired. In reality, as it has already been suggested, together with the study for an “ex post” harmonization for the former welfa­re funds that over the last few years have been included in the INPS workers Labour Fund, which includes the Public Credit Companies Funds that are now subject to special mana­gement, an INPS Fund would be created in 2010. Furthermore the government, for these Funds, could demand a slight reduction in common social security benefit.

On the other hand we should not forget that according to certain specific laws, all the existing Funds must be adapted to the regulations passed with the Amato reform through decrees before the 31st of Decem­ber, 2007.

These funds are already subject to a con­tinual adjustment process that prevents pen­sions from being completely in line with the price dynamics. So much so that the exten­sion of the subdivision in pension groups produces a balancing that drops from 100% to 90% and to 75% that implies a constant reduction in spending power. Some calcula­tions show a significant drop in spending po­wer in 10 years.

But that isn't the only problem that we are faced with at the moment; we also have to deal with the banks outlook in regards to their topping up Funds. This situation has got worse due to the mergers, amalgamations, etc., that have resulted in new banking organisations being formed.

It is natural that these new companies tend to rationalize their own different types of pro­tection systems that they have inherited alt­hough it may not be so natural that they tend to eliminate them by using the 'individual contribution' system. In this case, it is a ques­tion of the banks having a slightly different point of view about the social problems like welfare.

In the past, the company stuck to setting up Funds and signed agreements with the trade

union organisations with whom, on many occasions, it took on direct responsibility, even through performance bonds from the benefits. Nowadays it seems that this is no longer popular, the current trend is to advise, through the “individual contributions” system, active workers who are registered in the fund about new forms of welfare that are based on per­sonal capitalization Funds that are completely separate from wage dynamics and related prices and only concern earnings made from managing the fund itself. In regards to the registered pensioners, the 'individual contri­bution” is calculated according to the survival charts and the resulting amount is inversely proportional to the specific age of the pensio­ner in question. Of course no one can be for­ced into participating in this type of plan, alt­hough in reality the economic profitability of the Funds decreases and therefore so does the certainty of making payments, this fact is sup­ported by the company's attitude towards their responsibilities.

It is therefore a question of studying companies' social obligation to their own staff, of not considering this type of commit­ment as being separate from the business development nor as creating expenses inste­ad of profits and therefore switching to a type of Group insurance management that, in this case, could generate profits for the system.

The aim of this brief report is to explain what the real meaning of the word “harmoni­zation” is when used in political terms to des­cribe the welfare problem. Some time ago all the parties involved started to accuse the sys­tem and question its sustainability. We cannot deny that such problems do not exist but what we can be sure about is that these problems are not only the responsibility of those who for many years have worked and contributed to the system that was in force nor of those who were already retired at that time (intergenera­tional solidarity). Nowadays pensioners can­not be denied the rights attained, you can't talk about “un­fair privileges”, a reform is nee­ded, one that guarantees workers a posi­tive retirement, that guarantees workers a life style that will not get worse all of a sudden on retiring, that the new welfare tools are used properly so as to avoid imba­lances being produced like those in other countries.

Naturally this new idea of welfare is going to be more expensive than before, benefits will decrease but incomes have to stay the same and this means that additional support through company or category funds as well as individual support are also needed. This all has to be combined accurately to work well so that the fundamental nature of their objective is not altered.

Franco Salza