(Bloomberg Businessweek) -- Vittoria Maschietto has a literature degree from Bologna University, lives in central Rome, and works in sales at a prestigious publishing house. She spends her weekends rock-climbing, visiting museums, or hanging out in cafes with friends. There’s just one problem: At 27, she can get only a temporary job that offers no pathway to permanent employment, leaving her with little sense of what’s next. “I feel like I’m stalled,” Maschietto says as she jumps on her scooter to get to a marketing course she’s taking to shore up her prospects.
Her situation mirrors Italy’s as campaigning picks up for elections on March 4. After emerging from its longest recession since World War II, the country has logged 14 straight quarters of growth. A labor reform passed by the ruling Democratic Party helped create 1 million jobs, investment is up, and industrial output has been climbing, driven by strong exports and domestic demand for machinery and equipment.
Yet Italians face thorny underlying issues ranging from difficulty in finding fixed employment to trouble getting bank loans. The jobless rate is at a five-year low, but three-fifths of new positions are temporary contracts like Maschietto’s. Following a short stint as a freelance language teacher in Germany, she returned to Italy in November in search of greater stability, but couldn’t find a permanent job. “I love my work, but I don’t know what I’ll do later,” she says. “There’s a difference between not having a permanent contract and not having anything permanent in your life.”
While Italy has long been ruled by centrist coalitions, the economic malaise and job difficulties of many people, especially the young, have energized populists and extremists on the right and left. A Feb. 7 poll by Istituto Ixè Srl found that only 22 percent of the electorate would vote for the center-left Democratic Party that has governed since 2013—a sharp drop from the 41 percent the party got in the 2014 EU elections. The anti-establishment Five Star Movement, which the Ixè poll says would take 28 percent, has become the single largest party. Led by 31-year-old Luigi Di Maio, Five Star has made great headway by pairing veiled appeals to anti-immigrant sentiment with proposals such as cutting politicians’ pay, reducing taxes, and offering the poor a guaranteed minimum income.
The Forza Italia party of former Premier Silvio Berlusconi has also gained, forming a coalition with the nativist Northern League and the far-right Brothers of Italy. As a group they would get 36 percent of the vote, according to Ixè, making them the biggest single block and the only one with a shot at winning a majority in Parliament. If no party wins the 40 percent needed to form a government, there will likely be a month or more of haggling over coalitions—potentially culminating in a repeat election. With so much uncertainty, Italians feel the country is “rudderless, with no helmsman,” says Giovanni Orsina, a professor of government at Luiss University in Rome. “You’re in a calm spell and the sky is blue. Then you think, ‘Nobody is driving, what happens if there’s a storm or a rock, or anything?’ ”
Italy’s financial sector is still recovering after bad loans and bets on derivatives forced the state last year to bail out Banca Monte dei Paschi di Siena SpA and two smaller banks in the northern region of Veneto, at a cost of more than €10 billion ($12.4 billion). The banking woes have made it harder for businesses to get loans, fueling support for Five Star. In 78 of the country’s 110 provinces, defaults among families and small businesses were higher last year than in the runup to the 2013 elections, a Bloomberg analysis shows. In provinces with the highest rates of default, Five Star’s support is more than 50 percent above the national average.
Although Europe’s No. 2 manufacturing power is on the rebound, many of its companies—big and small—are suffering. Struggling phone carrier Telecom Italia Group plans to cut as many as 7,000 positions via buyouts and early retirements. Alitalia, the national airline, faces its second bankruptcy proceeding in a decade, putting thousands of jobs at risk. “Uncertainty is a problem, which is normal in business, but it’s worse here,” says Peter Elser, a 25-year-old native of Rome who two years ago founded a company that sells handmade linen shirts. Complex tax rules and bureaucratic hurdles to hiring make him lean toward conservative parties, but Elser says no one is offering solutions to address Italy’s deeper economic issues. “The quality of life here is so amazing that you want to stay,” he says. “But then the day-to-day is so hard you feel like giving up.”
To contact the authors of this story: Chiara Albanese in Rome at calbanese10@bloomberg.net, Alessandra Migliaccio in Rome at amigliaccio@bloomberg.net.
To contact the editor responsible for this story: David Rocks at drocks1@bloomberg.net, Cristina Lindblad
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