"Austerity and low wages have compressed domestic demand. We sacrificed public spending and compressed our wages. We thought that to compete with other European countries, we had to keep wages low as a competitive tool. Meanwhile, we continued to become increasingly poorer, so perhaps austerity wasn't the right strategy." ---- (From the Senate hearing of Mario Draghi, former Director of the Treasury, former Governor of the Bank of Italy, former Governor of the ECB, former Prime Minister, March 15, 2025.)
It is now common sense that poverty in our country is constantly growing. The 2024 Istat data (the latest released) are very clear on this point: 2.2 million families, including approximately 5.7 million people, are in absolute poverty; 2.8 million families, including 8.7 million individuals, are in relative poverty. All the numbers are up compared to the previous year, 2023. These are impressive figures, taken together: they indicate that 5 million families, at various levels, are poor. These families represent a total of 14.4 million people, or almost a quarter of Italians.
Compared to ten years earlier, in 2014, the absolute poor have increased by approximately 1.5 million and the relative poor by over 1 million.
To these already dramatic figures we must add the people who are "at risk of poverty," that is, those who are on the brink of the abyss and on the verge of falling into it. But why did a social disaster of this magnitude occur?
A concise answer to this question can only be based on two elements: the decline in wages and the precariousness of work.
Many statistics have now been released on the decline in wages, some of which have become famous. The 2022 OECD report finds that Italy is the only country where, since 1991, real wages have fallen by 2.9% over the past 30 years. The ILO's 2025 World Wage Report, meanwhile, highlights that the purchasing power of Italian wages has fallen by 8.7% since 2008. More recent data include the ISTAT report for 2021-2025, which states that Italian wages have fallen on average, in real terms, by around 9% over the last four years of rising inflation.
Price tensions and soaring energy prices have been the main cause since the outbreak of the war in Ukraine, but the same risks repeating itself with the Israeli-US attack on Iran: a prolonged conflict could cause a more than temporary increase in the cost of gasoline, diesel, gas, and therefore electricity. The inflationary effects already in sight could be compounded by a sharp contraction in production and employment, resulting in further job losses.
This brings us to the second factor contributing to low wages: job insecurity, blackmail, the fear of rebellion, and the inability to escape the need to work to survive.
What's new compared to the past is that even those who have a job are often poor.
The government boasts a record employment rate, with over 24 million active workers at the beginning of 2026, but forgets to mention that there are another 12 million "inactive" workers: those who don't have a job, are losing it, or are so discouraged they don't even look for one.
The increasingly serious emergency is that of the working poor, workers who, despite having a job, are unable to escape poverty. According to the latest data reported by Unimpresa, in the first quarter of 2025, over 3.2 million people in Italy, despite having regular employment, were living below the relative poverty line. This figure represents approximately 14% of employed people, up from 13.5% in 2024.
It's no longer just delivery riders or seasonal workers: today, in-work poverty primarily affects young people under 35 with atypical contracts (28% of the total), low-skilled service sector employees (23%), and a growing share of self-employed workers (19%), particularly small business owners and artisans, who are being squeezed by price increases. It's not just Glovo and Deliveroo delivery workers, who are under judicial scrutiny for gangmastering following the investigations by Prosecutor Storari, but also the fake VAT numbers that keep the advanced service sector afloat.
Precarious contracts and the high cost of living are particularly burdensome: as Unimpresa further notes, 61% of the working poor have a net monthly income of less than EUR1,100, while 38% earn less than EUR800. This situation is particularly dire in the South, where the phenomenon affects 22% of employed workers compared to 12% in the North. And if we only look at the data for the islands, the situation is even worse.
The government has significantly contributed to this critical situation: the abolition of the Citizen's Income and its replacement with the Inclusion Allowance has forced a growing number of workers to accept more precarious and underpaid jobs. The EUR4 billion cut in resources earmarked for the Citizen's Income has further worsened the overall poverty situation.
While the Citizen's Income reached an average of between 1 and 1.5 million households, the Inclusion Allowance reaches just under 760,000 households, to which must be added the approximately 100,000 individuals entitled to Training and Work Support.
More precisely, according to ISTAT calculations, the replacement of the Citizen's Income with the ADI-SFL combination has led to a deterioration in disposable income for approximately 850,000 families, equal to 3.2% of families resident in Italy. The average loss for these households was EUR2,664 in 2024 and affected almost exclusively the poorest segment of the population.
In three-quarters of cases (620,000 families), the household completely lost its right to benefits, while the remaining quarter of households (230,000) were disadvantaged by the new method of calculating financial support.
In short, the Meloni government's war on the poor was a resounding success, winning across the board. The outright rejection of the minimum wage debate was the icing on the cake.
A corollary to this ferocious social policy was the so-called tax wedge reduction, which until 2025 followed the Conte-Draghi line, returning a few dozen euros per month to low-income workers (under EUR28,000) by deducting them from the personal income tax of other workers. Since 2026, however, the wink to the "middle classes" has translated into a two-point cut in the second tax bracket, saving taxes for workers and the "less poor" taxpayers-those earning EUR28,000 and above (though in reality, those earning more are those earning EUR40,000-50,000).
It's therefore not surprising that the Gini inequality index has risen in Italy, too, since redistribution occurs in reverse, taking from the poor to give to the rich.
Draghi is lucid in describing the causes and effects of the disastrous policies he has always advocated and defended. As a good strategist of capital, he senses the emptiness of this strategy and the fundamental failure of the liberal and free-market model, which is no longer able to deliver on its promises. The prospect of an inclusive society, supported by a sustainable welfare system, has become a pipe dream for a West besieged by stronger and more determined competitors in the fight for survival. Despite the sacrifices and austerity imposed on the lower classes, the model has failed in its pursuit of global competition, due to a lack of investment, delayed research, blind faith in the market, and ordo-liberal privatization.
The exploitation of domestic labor and the predation of external resources are no longer sufficient to ensure the reproduction of capital adequately to the needs of competition. It will be interesting to see how they plan to emerge from this black hole: a return to war as global hygiene?
Renato Strumia
https://umanitanova.org/eternamente-poveri-crollo-dei-salari-poverta-e-precarizzazione/
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A-infos-en@ainfos.ca
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