Italy's Draghi presenting 'epochal' virus recovery plan

April 26, 2021

ROME (AP) — Italian Premier Mario Draghi is presenting a 222.1 billion euro ($268.6 billion) coronavirus recovery plan to Parliament on Monday, aiming to not only bounce back from the pandemic but enact “epochal” reforms to address structural problems that long predated COVID-19.

Italy has the biggest share of the EU’s 750 billion euro ($907 billion) recovery pot, with 191.5 billion euros ($231.6 billion) of its six-year plan financed by EU funds. Draghi, the former European Central Bank chief, was put in the premier’s office specifically to make sure the money isn’t wasted since Italy has long had one of the worst records in the EU of making use of available funds.

The plan is heavy on investments to modernize and digitize Italy’s economy and bureaucracy and encourage environmentally sustainable development. Both are directed particularly at the all-important tourism industry — think Venice, the Colosseum and Amalfi coast resorts — which accounts for 13% of Italy’s gross domestic product and was devastated by pandemic-related closures.

Employment options for women and young people are prioritized, given youth unemployment tops 30% and Italy has long ranked at the bottom of the EU in terms of the percentage of women in the workforce. Women accounted for more than half the 456,000 jobs lost in Italy last year.

Here’s a look at Italy’s plans, which were announced on the same day that most of the country began emerging from its latest coronavirus lockdown, with museums reopening and restaurants and bars open for outdoor service.

DIGITAL TRANSFORMATION and EMPLOYMENT

About 27% of the plan is directed at digital transformation of the Italian economy and public administration, broadening access to high-speed internet service, especially in schools, and providing incentives to the private sector to digitize.

Around 22.4 billion euros ($27 billion) are aimed at “social inclusion” investments and programs to boost training and employment opportunities for women and help cities improve access and opportunities for disabled people. The aim of both, coupled with increased day care spots, is to remove obstacles that have traditionally kept Italian women at home caring for the young, old, sick and disabled.

The plan envisages the Italian economy, which shrank 8.8% last year, will grow 3.6 percentage points beyond base forecasts in 2026 and that its employment rate will grow 3.2 percentage points.

SUSTAINABLE DEVELOPMENT

The EU required that at least 37% of its funds be directed toward climate-related investments, part of the bloc’s aim for a cut of 55% of greenhouse gases by 2030 and carbon neutrality by 2050. Italy’s plan is directing 40% overall, or 68.6 billion euros ($82.9 billion), to green-related investments and initiatives: boosting recycling, overhauling public transport systems to favor low-emission vehicles, and reducing water waste through improvements to waterways.

The plan calls for some 31.4 billion euros ($37.9 billion) in transportation infrastructure improvements and extending high-speed rail lines across the peninsula, especially in the underserved south.

EDUCATION AND RESEARCH

Among other things, the plan aims to create 152,000 more day care spots for babies and 76,000 for preschoolers, addressing a structural shortage that has long dissuaded parents from having children and women from working.

Other destinations for the 31.9 billion euro ($38.5 billion) investment in education and research is to spiff up dilapidated school buildings and get them better wired, and revamp the higher-education curriculum to encourage more students to pursue higher degrees.

Italy has long been beset by brain drain, with its brightest students pursuing advanced degrees and jobs abroad, and not coming back.

HEALTH CARE

The structural weakness of Italy’s national health system was on full display during the pandemic, when hospitals in northern Lombardy were overwhelmed and general practitioners were largely left on their own to care for sick patients as Italy became the epicenter of Europe's outbreak.

The 18.5 billion euro ($22.3 billion) investment in health care aims to reinforce in particular the general medicine and preventive care provided at the local level, with a strengthening of home care and telemedicine. Digital infrastructure improvements aim to improve data analysis.

REFORMS

Italy’s lethargic justice system and cumbersome bureaucracy have long been accused of discouraging foreign investment, since lawsuits and criminal trials can last for years and securing permissions to do just about anything can take a similarly long time.

The justice system reform aims to reduce the backlog of court files with temporary hires, while revising norms and procedures to encourage more recourse to mediation. Other reforms are focused on modernizing Italy’s old and outdated public administration, aiming to increase turnover to get more young people hired, digitize systems, simplify procedures for permits and boost competition particularly in public services and utilities.