Measuring the Long Wave. Unemployment, Discouragement and Semi-Employment in Italy, During and After the Crisis

Official data indicate a much less severe impact of the international crisis on employment in Italy than might have been predicted. But the standard measure of unemployment agreed at international level has some shortcomings. Its “objective” definition of unemployment is a poor fit with the Italian labour market. Also, the considerable increase in labour hoarding and the emergence of “semi-employment” – the alternation of brief periods of work with periods of unemployment or economic inactivity – make the state of the market hard to assess. This paper offers an in-depth examination of the impact of the crisis, using labour force survey data to measure labour underutilization, labour hoarding, discouraged, and semi-employed workers. The picture that emerges is one of a “long wave” of available labour underutilization. This wave will predictably last for years to come, calling for a decisive reform of unemployment benefits, not just to provide income support for those caught up in the long wave of joblessness, but also to permit quicker reorganization of production. The reform will have to highlight the diverse interests and roles of government and of the social partners, within the framework of a new development and industrial policy.