2nd Oct 2022

Flagship 5-Star 'citizen wage' under fire in Italian parliament

  • Giuseppe Conte has been president of the Five Star Movement since August - it now faces an existential crisis over parliamentary plans to cut its flagship policy (Photo: Consilium)
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The Italian parliament's current reform of the 5 Star Movement's (M5S) keynote but controversial citizenship wage - aimed at watering it down - is bound to further raise tensions between the ruling coalition parties.

All the governing groups, even though allied with the M5S in prime minister Mario Draghi's cabinet of national unity, intend to radically change the measure, which currently pays up to €710 a month to the unemployed, turning it into a more pro-active labor-support policy that incentivises the jobless to find work.

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  • Comedian Beppe Grillo, here pictured in 2012, was one of the founders of the populist Five Star Movement (Photo: pasere)

The rightwing League party, supported by hard-right opposition Brothers of Italy, is spearheading the battle in parliament to dismantle the measure, and use part of the earmarked resources to instead fund tax cuts.

Recent investigations by tax authorities have brought to light a series of frauds on the citizenship wage, pushing political forces to review the measure.

According to several probes, annual fraud of around €40-50m from the total €8.8bn budget has been committed by some allegedly jobless - including criminals, mafiosi, owners of luxury cars, multiple properties, boutiques and yachts, and people who falsely declare several children in order to receive a higher benefit.

Last week the police stopped a gang about to defraud the state for another €60m. Following checks by tax authorities nearly 5,000 cases of fraud have been discovered this year, while roughly 15 percent of beneficiaries are not entitled to the wage.

The citizenship wage, a monthly income paid to the unemployed on condition they possess an Italian passport, has been the 5 Star Movement's flagship policy ever since it stepped on Italy's political stage in 2009, promising a salary to everyone.

In 2018 - thanks at least partly to the proposal - the M5S rose to power.

"This has been the cornerstone of our mission, a trigger of our birth and the reason why voters chose us. It's part of our identity. We won't allow any party to dismantle it and if they dare, we will block other key laws", one 5-Star member, who wished to remain anonymous, told EUobserver.

M5S leader Giuseppe Conte has repeatedly stressed that "nobody will take our scalp in sign of victory". However, over the next few weeks, the citizenship wage will undergo a radical transformation.

"It is preposterous that there are Italian pensioners who get €500 per month, while many jobless receive up to €700 just because they're Italian, and some are not even entitled to such benefit" according to a League party official, speaking non-attributed.

The re-financing of the citizenship income has been inserted in the budget document for 2022, currently under discussion in parliament.

The League has already presented amendments to water-down the measure, and shift part of the resources to fund what it sees as more pro-growth policies.

League wants 'flat tax' instead

"The budget law has earmarked some €8.8bn to re-fund it but we have the numbers to make sure a significant part of that amount goes into tax cuts for workers and firms. Our ultimate goal is to re-introduce a flat tax for workers earning up to €100,000 per year", said the League official.

"The battle in parliament has just begun, and we have many weeks ahead to stop more frauds from being committed by so-called 'jobless' who are stealing public money and living off taxpayers' money", he added.

Parliament now has a month to finalise and clear the budget document, before it is forwarded to the European Commission by year-end.

Meanwhile, the Democrat party intends to reform the 5 Star measure by boosting the role of local authorities in liaising between job offers and demand.

"Clearly many things aren't working with the actual rules. We need to make sure that controls by authorities are made before the monthly cheque is paid out, not at a later stage, and boost the efficiency of recruitment centres that have so far failed. We need a brand new welfare framework which incentivises the jobless to actively look for a job, instead of sitting around all day long", said one Democrat.

Sources argued that the citizenship wage has already been detrimental to Italy's labour market, creating a "perverse mechanism" whereby it is easier to remain unemployed and receive €700 per month.

Another negative outcome, they say, has been the increase in black market jobs that allow beneficiaries to evade tax while simultaneously receiving the citizenship wage.

According to the current scheme, beneficiaries can decline an offer from a job centre up to three times, if deemed not suitable or if the workplace is far from their home or in another region. They can also write in their application form that they are "not immediately available."

The budget document has already toughened the citizenship-wage rules.

It will lower the monthly cheque (still to be defined, but would be a set amount progressively lowered each month), and cut the number of declinable job offers to just one. Additionally, if a member of one family finds a job the benefit will be cut for the others. Applicants who do not confirm their immediate availability to work will no longer be considered.

A special parliament committee has been set-up to identify how to further improve the scheme and strengthen its controls. The professional figure of a so-called 'navigator', who liaises between the jobless and employment centres - which has proven inefficient - will also be cut.

Ruling and opposition parties have the required majority in parliament to further weaken the citizenship income and toughen its requirements.

One former 5 Star MP, who recently quit the party, again speaking unattributed, warned "without the citizenship wage the M5S will be left with a handful of dust. Supporters will abandon them. It'll be their end".

Author bio

Silvia Marchetti is a Rome-based freelance reporter. She covers finance, economics, travel and culture for a wide range of international media.

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