Italian Unemployment Falls To Record On Immigration

Italian Unemployment Falls to Record on Immigration
Bloomberg News
By Sheyam Ghieth

Sept. 20 (Bloomberg) — Italy's unemployment rate fell to the lowest in more than 14 years, a government report showed today. The news isn't as good as it looks.

More than 30 percent of the rise in registered employment in the quarter and almost 40 percent of the increase in the past year came from immigrant workers, the national statistics institute said today in Rome. Many of these registered jobs are low-skilled positions, meaning the economy isn't as healthy as the numbers might otherwise suggest.

The decline in the jobless rate isn't “being reflected in higher economic growth,'' said Susana Garcia-Cervero, an economist at Deutsche Bank AG in London. “Unemployment in Italy is this anomaly where the jobless level doesn't correspond'' to growth levels.

The unemployment rate fell to 7.0 percent in the three months through June from a revised 7.3 percent in the first quarter. That was the lowest the statistics institute started its survey in 1992. It was expected to remain at 7.3 percent, according to the median forecast of 23 economists in a Bloomberg News survey.

Italian joblessness has fallen to the lowest of the euro region's four-largest economies even though growth has averaged just 0.6 percent in the past five years. The expansion in Italy's $1.8 trillion economy will lag behind that of the euro region for at least a 10th year in 2006, expanding 1.7 percent, compared with a 2.5 growth rate for the 12-nation bloc, according to the European Commission.

Winning Residency

The statistics show that the biggest gains in registered employment have come from immigrants gaining legal status, many of whom are already working. More than 900,000 foreign immigrants, the equivalent of almost 2 percent of the population, have won residency in the past three years through a series of government amnesties.

“People who were previously employed in the underground economy are being legalized,'' said Carmen Nuzzo, an economist at Citigroup Inc. in London. “The impetus also reflects the creation of temporary jobs.''

The jobless rate has also been helped by changes to labor laws that have made it easier to hire part-time and temporary workers.

No Break

“I've worked at unpaid internships for years, but the number of jobs out there isn't growing,'' said Carlo Massoni, 32, who's only been able to land short-term contract work since earning a degree as a telecommunications engineer six years ago.

“I haven't had a break since I graduated.''

The number of workers with non-permanent contracts grew 8 percent in the second quarter and those short-term contracts now account for 9.5 percent of total employment, up from 9.0 percent a year earlier, Istat said today.

The lack of permanent job opportunities has left Italy with the second-highest youth jobless rate in the European Union after Greece, currently 24.1 percent of those aged between 15 and 24. Almost half the increase in registered employment in the first half came from people over the age of 50, Istat said.

The jobless level even fell in 2005, when consumer confidence dropped to its lowest in 10 years and growth stalled. Optimism among shoppers has since crawled back to levels comparable with 2002.

Bearing Fruit

Still two consecutive quarters of economic growth are contributing to real employment gains, Nuzzo said. The economy grew 0.7 percent in the first quarter and 0.5 percent in the second quarter, after stalling in the final three months of last year.

“The improvement in growth is beginning to bear fruit in terms of job creation,'' Nuzzo said.

Still more than half of the rise in registered employment in the quarter came from immigrants and temporary contracts. Many of the jobs held by immigrants that are turning up in the Istat survey aren't new. The report is prepared through a telephone survey that asks respondents if they have been working. Many immigrants are reluctant to participate in the survey until they have gained legal residency.

“Quite simply as immigrants get legalized, they are more likely to answer the phone when Istat calls around to see who's working,'' said Marco Valli, an economist at UniCredit Banca Mobiliare SpA in Milan, “They are just registering with authorities, these aren't new jobs.''

New Amnesty

The influx of immigrant workers is likely to be felt for years to come as more workers flood in, particularly from North Africa, and the government tries to control the underground economy by offering residency to many of those already here.

Within a month of taking office in May, Prime Minister Romano Prodi's government passed a law cutting in half the number of years immigrants need to live in Italy to gain citizenship and setting new quotas for those seeking to gain residency.

“These aren't real jobs that are being added, not like in Spain, for example,'' said Dominic White, an economist with ABN Amro Holding NV in London.

In Spain, where legal immigration rose 50 percent last year, the economy created half of all new jobs in the euro region last year. The country's economy posted its biggest year-on-year expansion since 2001 in the second quarter and the unemployment rate is near a 27-year low of 8.5 percent.

To contact the reporters on this story: Sheyam Ghieth in Rome at

Last Updated: September 20, 2006 06:28 EDT