Italian media often report how households are struggling to make ends meet. The general perception is that prices are growing and real incomes and wages are losing ground. Even the middle class seems to have its salaries eaten by inflation. An Italian public TV program compared the Italian predicament to other national cases, including Norway. How does this country fare with respect to Italy?
Many are going to say the comparison is not apt: the Norwegian economy is currently booming due to high oil prices, while Italy exports no oil. But Norwegian society is very similar to the rest of Scandinavia: Denmark, Sweden or Finland. These countries have not benefited from the oil boom, but have nevertheless been successful in fostering high social protection and thus minimizing poverty rates.
A big difference between Norway and Italy concerns family policy. Although the family is widely perceived a core social institution in Italy, social statistics point to the fact that it is being seriously neglected by welfare policy. ISTAT data point to the fact that, in Italy, the more kids you have the more you're likely to be poor, and that in Southern regions poverty levels have reached dramatic proportions. In Scandinavia the opposite is true: families with three kids or more generally prosper. The conclusion is straightforward: Italian politicians and policy-makers are neglecting the family.
In Norway, the emphasis on providing for small children is very high. Maternity leaves can last as long as 54 weeks, during which the mother is paid 80% of her latest salary. This encourages women to find gainful employment before giving birth. The leave can be extended by one additional year, with the mother perceiving no additional social security benefits. For the whole duration of the leave, the mother is entitled to maintain her job. And each mother gets a fat check of €4,300 per child born.
An important element is the high activity rate of Scandinavian women: between 75 and 80% of working-age women are in the labor force. In Italy, the corresponding figure is well below 50% and the EU average. This means that the vast majority of Scandinavian households have two income-earners. In Italy, there are many more households exhibiting a single earner.
As for struggling families in other nations because of rising prices and low incomes (the question posed by the TV program), the key issue to be looked at is clearly the pattern of income distribution. The Gini coefficient in Scandinavia is about 0.25, but in Italy it climbs to hefty 0.36 (zero being the value of absolute equality). Scandinavian countries are the opposite of cheap, as everybody knows. In fact, services are more expensive because wages are higher: a hair-dresser or a cleaner do not earn much less than a high official, for instance. The means that when the economy grows, a larger share of the population, including those at the bottom of income distribution, benefits and this translates into a drastic containment of poverty.
by Arnstein Aassve,
Department of Decision Science, Università Bocconi