Browse

This chapter investigates the reforms of some important and distinctive sectors of the Italian financial system: the banche popolari and the fondazioni bancarie. These reforms are particularly relevant in the list of events that have marked the year 2015 because they are inextricably intertwined with revisions in the EU supervisory and regulatory architecture and because they are an integral part of the broader government plan to revive economic growth after the fiscal crisis. In particular, the chapter analyzes the long- and short-term factors that set the stage for the reforms to take place. These include transformations in the large cooperative banks and the inaction of key parts of the domestic financial sector with regard to legislative and structural changes; competitive pressures deriving from the buildup of European financial integration; and the backing of domestic and international regulators such as the Bank of Italy, the IMF, and the EU Commission, among others.

The modernization of the public administration has been one of the main objectives pursued by the Renzi government. What distinguishes the reform cycle launched in 2015 is the emphasis on centralization, unification, and the reduction of institutional fragmentation in the public sector after a long period in which autonomy and the organizational pluralism of administrations and government levels were enhanced. This reform strategy is consistent with the underlying trends of transformation in the political and institutional systems, in which the power of the prime minister has gradually increased. The actual impact of these reform measures, however, depends on concrete organizational instruments of subsequent implementing legislation in a context characterized by persistent spending cuts, which are necessary to maintain financial stability.

This chapter discusses Renzi’s leadership with regard to his party and the government. The main argument is that Renzi was able to use his party to support the government through his double role of secretary (of the party) and prime minister (of the government). However, the support of the party for the government’s actions has been regularly contested by an internal left-wing faction and has been weakened by the disaggregation and political autonomy of the local and regional party organizations. The chapter describes and analyzes the divisions within the national party, the difficulty of controlling local and regional organizations and leaders, and the parliamentary achievements of the government, which came about due primarily to the popularity of the prime minister. The personal leadership of Renzi has been a resource for promoting governmental reforms, but a leadership unsupported by a party will have difficulty facing future political and policy challenges.

In July 2015, the so-called Good School reform was approved. This measure introduces several novelties in the school sector, including an increase in resources. The reform was strongly promoted by Prime Minister Renzi, who has simplified the traditional processes of engagement with the teachers’ unions. The aim is to empower school principals and teachers in a meritocratic framework, to overcome the lack of job stability for teachers by establishing new mechanisms of recruitment, and to open schools to extracurricular activities and vocational experiences. These important innovations, which are needed to improve the existing state of affairs, sound more like announcements rather than concrete commitments. In fact, there is a gap between the communication dimension of the reform, which is very effective, and its actual design, which in many aspects is approximate. There is therefore a real risk that the future implementation of the Good School reform might be less substantive than originally perceived.

This chapter analyzes some of the major labor reforms implemented by the Renzi government in 2015 in relation to youth employment, with reference to the Jobs Act. The strategy pursued by the executive has been to concentrate on combating the segmentation of the labor market by liberalizing individual and collective dismissals and by introducing a new type of contract, which offers a generous incentive for new permanent hires. The main goal of this strategy is to decrease the divisions between insiders and outsiders in the hope that this measure will encourage employers to stabilize workers, especially the younger ones, and invest in the development of human capital. Such a strategy, however, rests on weak foundations, which might call into question its effectiveness and with it the stability of Renzi’s leadership.