What liberalization really means by James Walston

“Liberalisation” is the buzzword today but it is not always clear exactly what it means. It includes freeing up taxis and chemists, banks, insurance companies and petrol distribution and sale, all of which the Monti government is trying to do. But there are whole sectors of the economy and society that are far more difficult to deal with by law.

One example: an American television journalist, Wolf Achtner, is doing something revolutionary – he is applying for the job of editor of RAI’s flagship evening news programme, Tg1, a post which is vacant at the moment. He is experienced and should be a plausible candidate, so his application should not be news; what makes it extraordinary is that senior jobs in the public sector are rarely advertised on the open market and even more rarely given to qualified outsiders. Political loyalty is the first requisite for any of these jobs, and if the chosen candidate happens to be good, then that is an unexpected bonus.

It’s not only high-profile media jobs that are handed out for political loyalty rather than professional qualifications. A recent Eurostat survey found that more than three out of four young people (77 per cent) look for work through friends and relations. Less than a third (31.9 per cent) use the employment exchange, the lowest in the EU apart from Cyprus (in Germany the figure is 82.8 per cent, EU27 56.1 per cent). This means that it is certainly not just the public sector where loyalty often trumps merit and ability. There are more small and medium-sized companies in Italy than in most of the rest of Europe, which is a partial explanation for the overwhelming use of private connections, but the downside is that merit is often irrelevant. A new book, Scurriculum. L’Italia della demeritocrazia by Alberto Fiorillo and Paolo Casicci, paints a depressing picture of the costs of giving jobs to loyal incompetents.

Of course Italy is not the only country where jobs come through connections and apparently open search procedures are a cover to legitimise an insider candidate, but it is striking how even the form of a level playing field is not respected.

Public sector jobs, from ministries to universities to the magistrature, are normally awarded by competitive exams and procedures, which often mask the string-pulling and clientelistic practices, but – either way – connections are essential.

Another ongoing story illustrates the importance of connections over more universal principles. The minister for the public administration, the magistrate Filippo Patroni Griffi, is in the spotlight after having paid €177,000 in 2008 for a three-bedroom flat close to the Colosseum, a property with a market value of around €800,000 today. He bought the flat from INPS, the national pension fund, when he was a sitting tenant, and after having won a case against INPS to lower the price. No one suggests anything illegal; the resentment is in the knowledge that first of all one needs friends in order to become a tenant of INPS (or of any other public institution), and then that friends in the magistrature are certainly help in any legal action. When INPS and other public bodies sell property, the prices are far from the free market. The minister’s good fortune is paid for by the people who receive their pensions from INPS, as well as with a good measure of social resentment.

Then there are the measures that the government passed as a decree law last month. If Monti manages to implement even half of them it will mean a revolution in both the Italian economy and consumer habits, one which today’s opinion polls say that most Italians strongly favour. They think, not unreasonably, that they will save money. Who will pay is not very clear yet.

The number of taxi and pharmacy licences is likely to be increased; lawyers, accountants and notaries are also likely to have to open their doors, as well as give clients estimates for the job to do. Fuel distribution is going to be eased, allowing petrol stations to sell a wide variety of goods (as in most other European countries) and to buy their fuel from other distributors rather than be tied to a single brand. The railways too are likely to see other companies using the tracks, a reform which has already begun in a small way. Also on the public side there is a good chance that local transport service will be opened to competition along with some other services. There are ongoing rumblings to make the labour market more flexible, possibly introducing the Danish model, which makes hiring and firing relatively easy but also provides sufficient support for laid-off workers.

It all sounds wonderful if you don’t belong to one of the “liberalised” fields, most of which have been threatening action. Taxi drivers are already on the warpath and have held some dress rehearsals for what is more a lockout than a strike. Lawyers are strongly represented in parliament and have already said that they will boycott the ceremony of the opening of the new judicial year. There was a transport strike on 27 January and a 10-day petrol station strike has been announced. The unions have repeatedly said they will not accept any reduction of job security.

There is a potential for serious social unrest; the political parties all pay lip-service to the need to liberalise, but they are also looking to their constituencies and saying “open up everything but don’t touch our supporters’ interests.”

This is the real test for Monti – in comparison, his austerity budget was child’s play. Now he will have to navigate between very, very divergent interest groups with very different game plans to look after those interests, plus political parties which are increasingly disconnected from society.

His strongest weapon is the depth of the crisis, which does allow procrastination. He could set the ball rolling by offering jobs in the public broadcaster to the most qualified and sell publically owned housing to the highest bidder on the open market.