OECD Employment Outlook 2022

Italy

Labour markets have continued to improve in 2022, but the outlook is uncertain

Total employment in the OECD returned to pre‑crisis levels at the end of 2021 and continued to grow in the first months of 2022. The OECD unemployment rate gradually fell from its peak of 8.8% in April 2020 to a level of 4.9% in July 2022, slightly below the 5.3% value recorded in December 2019. However, the labour market recovery has been uneven across countries and sectors and is still incomplete, while its sustainability is challenged by the economic fallout of Russia’s unprovoked war of aggression against Ukraine.

• In Italy, the labour market impact of the COVID‑19 crisis was cushioned by the extensive use of Cassa Integrazione. Despite the massive drop in hours worked, the peak unemployment rate in the second quarter of 2020 was only 0.5 percentage points higher than the 9.7% level recorded in December 2019. The labour market continued to improve in the first few months of 2022, with the unemployment rate falling to 7.9% by July 2022 – still well above the OECD average of 4.9%.

• In June 2022, the employment rate stood at 60.1% – 1.1 percentage points above its level in December 2019. The increase in the employment rate was larger for men (+1.2 percentage points to 69.1%) than for women (+0.9 percentage points to 51%).

Figure 1. The unemployment rate has fallen below pre‑crisis levels in most OECD countries

Note: Latest month available refers to May 2022 for the United Kingdom and to August 2022 for the United States.

Source: OECD (2022), “Unemployment rate” (indicator), https://doi.org/10.1787/52570002-en (accessed on 2 September 2022).

Despite tight labour markets, real wages are falling

Vacancies surged to record highs in the OECD area, and reports of labour shortages rose significantly in many industries and countries. Despite this, nominal wage growth remains well below the high inflation induced by the commodity price hikes spurred by Russia’s war of aggression against Ukraine. The decline in real wages is expected to continue over the course of 2022, as inflation is projected to remain well above the negotiated nominal wages for 2022.

• In Italy, vacancy rates reached record levels in the second half of 2021, stabilising around 1.9 in Q1 2022. The increase was particularly pronounced in Food and Accommodation, where the vacancy rate reached 3% in Q1 2022.

• Despite the tightening of the labour market, nominal wage growth remains weak in Italy. Year-on-year changes in negotiated hourly wages remained around 1% in the second quarter of 2022. Meanwhile, however, inflation reached 6.9% in Q2 2022 (against 9.7% for the OECD as a whole)

• The OECD expects real wages to fall by 3% in Italy over the course of 2022, against an average drop in OECD countries of 2.3%.

Figure 2. Real wages are expected to fall in 2022

Note: Figure shows projections for 2022.

Source: Economic Outlook 111 database; and OECD calculations.

Young people are still lagging behind older adults in the recovery

Young people were particularly affected by the initial ravages of the crisis. By Q1 2022, on average across the OECD, young people had recovered much of the lost ground, but were still lagging behind older adults. The employment rate of those aged 15 to 24 years was below pre‑crisis levels in a majority of OECD countries and, on average, just at the level of Q1 2019. By contrast, it had increased over the same period by 1 and 3 percentage points, respectively, for adults aged 25‑54 and 55‑64.

• As part of its Recovery Plan, Italy has deployed a new programme – “Garanzia di Occupabilita’ dei lavoratori” (GOL) – of active labour market policies with the aim of providing support tailored to the needs of the individual in the form of career guidance, upskilling, and reskilling. The programme also provides for the experimental implementation of small-scale projects to evaluate the feasibility of their adoption on a larger scale.

• The programme is aimed primarily at disadvantaged groups – including youth – and is open to individuals without employment as well as low-income workers, whether employees or self-employed.