Great Recession and Labour Market In Italy: The Case of Albanian Immigrants

The impact of the Great Recession has been different across countries both in terms of production and labour market. These differences can be explained by the nature of the recession, the labour market institutions and policies, and workers’ skill. In this perspective, Tridico (2013) ranks EU countries on a Crisis Management Index (CMI) identifying those countries which performed the best during the crisis and those which performed the worst. His study considers both the labour market (employment, unemployment and labour productivity) and the GDP (recession and recovery) performance of the EU countries computing the CMI scores according to the dynamics of country performance on GDP, employment, unemployment and employment elasticity effects over the period 2007–2011.

The results are quite interesting, with Italy ranked 10th (over a ranking of 27 countries); the top seven countries in the ranking are Austria, Poland, Luxembourg, Malta, Germany, Netherlands and Belgium, while the bottom seven countries in the ranking are Spain, Latvia, Ireland, Lithuania, Estonia, Greece and Portugal). Tridico (2013) argues that the EU countries which performed relatively better during the economic crisis were those which have less flexible labour markets and thus managed to maintain stable employment levels. These countries typically feature a mix of economic policies and social institutions that operate to stabilize their levels of consumption and aggregate demand.

By contrast, the countries which performed the worst during the crisis typically have very flexible labour markets combined with wider inequality, greater exposure to foreign banks, stronger reliance on the housing sector, less effective labour market policies and lower related expenditure, lower trade union density, higher levels of private indebtedness, strong financialization and a lower level of savings (Tridico, 2013). Concluding, he stresses that the first group of countries identifies better with a coordinated or corporatist market economy model, while the second group identifies better with a liberal (or hybrid) market economy model. Thus Italy performed relatively well during the first phase of the Great Recession with lower losses in employment thanks also to an inflexible labour market.

These characteristics of the Italian labour market are found also by Mussida and Lucarelli (2014). In their study, they make an analysis based on longitudinal Labour Force Survey (LFS) data for the period 2004-2011 focusing on two time periods: 2004-2008 and 2008-2011 (respectively before and during the recession) and take into consideration only individuals older than 15 years of age and younger than 64. As they argue, the choice to use longitudinal data provides an understanding of mobility which is hidden when using cross-sectional data, which they say only allow for considering changes in labour market states, but are unable to say much about how they were determined.

In their study they provide a descriptive analysis of the indicators of dynamics and performance computed at the geographical level (regional, area and national levels). They also provide a complementary investigation carried out using a microeconometric approach which enables them to highlight the determinants of dynamics and performance. They use as indicators of dynamics and performance macro and micro conditions of employment. Macro dynamics are, for example, from employment to: unemployment, grey zone (zone between unemployment and inactivity), and hard inactivity. While micro-conditions (or character of employment) are at individual’s level and measure changes of job, movements between the professional statuses of employee, self-employed etc. In particular, the micro-econometric approach allows them to test how gender, education, age, family status, region of residence and nationality affect the labour market dynamics and performance. For this purpose, they use binary regression models which, according to them, reflects the need to obtain a simplified representation of labour market dynamics and performance.

Thus in this model they have that in terms of dynamics, the dependent variable is 1 for the presence of a movement/change and 0 otherwise. While in terms of performance the dummy variable is 1 for improved labour market conditions and 0 otherwise. Mussida and Lucarelli (2014) find that the Italian economy is characterised by an inflexible and tight labour market during the period taken into consideration. As regards labour market performance, they find that during the crisis some marginal categories, such as women and young people living in the Southern regions of Italy, suffered not only from the negative effects of the downturn, but also from the deeper structural weakness of the Italian economic system.

In particular, even if women and young people are found to be more dynamic with respect to the rest of the population, they show poor labour market performance and Mussida and Lucarelli (2014) argue that these tendencies have been exacerbated by the recession. The problem of structural weakness of the Italian economic system and the bad performance of Southern regions has been investigated by many studies, one of them is provided by Lagravinese
(2015).

Specifically, he studies the phenomena of “regional resilience” in Italy by using two indexes: the resistance index (a measure of the phase of the shock) and the recovery index (a measure of the phase of recovery from the shock). From this analysis emerges a marked contrast in resilience and long-run growth between the North and South of Italy. In particular, the author argues that the North-South gap has become more evident since 1995, with the paths of these two areas that have started to diverge significantly, with an improvement in employment in the Northern regions.

In the Southern regions, after a slight recovery in the early 2000s, the economy plunged into a deep structural crisis, with strong recessionary effects in 2008–2010. It emerges a country divided in two areas, with the North which performs better than the South. In Italy also gender differences in labour market performance are relevant, with women performing worse than men as pointed out by Mussida and Lucarelli (2014). The case of women, has been the focus of Andreotti and Fellini (2012). In this study their objective is to investigate the consequences of the crisis on different female profiles (reconstructed by the authors from their behaviour on the labour market) in the two macro-areas of the country (North and South).

Their analysis reveals two interesting elements. The first concerns the profile features: in the North, the profile of women more engaged in the family is relatively less educated, while educated and qualified women are more attached to the labour market; in the South, instead, they find the opposite result, with the profile of women more committed on employment being less educated and qualified, and women engaged in the family being the most educated. Regards the employment trend of women during the crisis, they show significant differences between profiles and macro-areas. Specifically, they find that in the North the crisis stops the growth path of labour market participation increasing the percentage of discouraged8 workers, while in the South the crisis impacted negatively on women participation and the behaviour of inactive women. Finally, turning to the analysis of the Italian labour market during the crisis D’Amauri (2010) classifies workers according to their contractual characteristics.

As in previous studies, data are taken from the Italian Labor Force Survey (ILFS) (the longitudinal version of the dataset) but this study takes into consideration the period 2006-2009. His methodology consists in the estimation of individual probabilities of transition from employment to non-employment and vice versa at one-year intervals including both a pre-crisis interval (2006Q -2008Q3) and a crisis one (2008Q4 – 2009Q4). His results show that the downturn significantly reduced hirings, while increasing terminations for employees with flexible contracts. Then, according to his estimates, the crisis significantly increased the probability of experiencing a transition out of employment for employees with fixed term contracts and for quasi-employees9, while self-employed and workers with open ended contracts suffered less the downturn.