Italy cuts anti-poverty subsidies as critics slam 'provocation'

ROME – Italy’s right-wing government on Monday rolled back anti-poverty subsidies introduced in 2019 that helped some four million people in 2022, as critics denounced a “provocation” on the international May Day labour holiday.

Prime Minister Giorgia Meloni, who leads the country’s most far-right coalition since World War II, said the “citizens’ income” benefits would be replaced by a more limited “inclusion cheque” for qualifying households.

The government says the current subsidies cost too much, at around €8 billion (S$12 billion) in 2022, and discourage able-bodied people, especially young people, from looking for jobs.

The new inclusion cheques, set to begin in January 2024, would cost around €5.4 billion annually, and be available only to households with minors, seniors 60 or older, and handicapped people.

Since taking office in 2022, Ms Meloni has pushed corporate tax cuts

while also promising to restore Italy’s economic credibility

by vowing to reduce debt and deficits incurred, most recently during the Covid-19 pandemic.

“We are reforming the citizens’ income to make a distinction between those who are able to work and those who aren’t,” Ms Meloni said in a statement.

In decrees published on Monday, her government also made it easier for companies to hire on short-term contracts – which unions blast as keeping workers in precarious economic situations – while promising tax breaks to firms hiring people benefiting from the new inclusion cheques.

The goal is to stimulate hiring and encourage more youths to find work in the eurozone’s third-largest economy, where the unemployment rate for 15 to 24-year-olds, at 22.4 per cent in February, is nearly three times above the national average (eight per cent).

The government also said jobseekers would have to sign up for training programmes or “useful projects for the community”, in exchange for a maximum of €350 a month – a measure that would cost €2.1 billion in 2024 alone.

Pro-business, or workers?

The citizens’ income programme was introduced by the populist Five Star Movement (M5S) in 2019, and supporters say it has provided precious help to millions of low-income households, in particular in impoverished southern regions.

Italy’s INPS social security agency says the citizens’ revenue benefited four million people in 2022, with an average monthly subsidy of €550.

The new inclusion cheques will be capped at €500 a month, though further aid will be offered for households with elderly or handicapped members, or those that do not own their homes.

“A serious government does not meet on May 1 to condemn young people to a life of precariousness, destroying their dream of having a home or children,” said former Five Star premier Giuseppe Conte.

Mr Roberto Fico, a popular former speaker of the lower house of Parliament, called Ms Meloni’s move a “provocation”.

In a statement, Ms Meloni defended “a strong signal and a privilege to honour workers on this day of celebration, bringing them the answers they are expecting”.

Combined with recent fiscal aid for low-income households and the new payroll tax exclusions for firms announced on Monday, Ms Meloni said in a separate video message that her government had made “the biggest tax cuts in decades”.

Thousands of May Day demonstrators nonetheless turned out across the country, including Rome where some threw eggs at government buildings, as labour unions held their main joint rally in the southern city of Potenza. AFP