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Italy: Investments in Educational Services to Tackle the Lowest Female Labour Participation Rate in the EU

DBRS Morningstar acknowledges that Italy BBB (high), Stable has the lowest female labour participation rate in the European Union (EU) on average since 2014. In addition, it has the largest share of people Not in Education, Employment, or Training (NEET). These features constrain the country's GDP potential and largely reflect an inadequate supply of education services and an aged education infrastructure. They also reflect a quality of public education that fails to provide many young people with the skills needed for jobs.

Key Highlights
• Italy has the lowest female labour participation rate in the EU on average since 2014. It compares unfavourably with Portugal and is considerably worse than Sweden and the Netherlands - the highest in the EU.
• The improvement in the female participation rate will likely depend 1) on the success of the procurement procedures of investments in the 2022-2023 period to be followed by construction works largely only starting in 2024 and 2) by a decision from women in favour of joining the labour market.
• The country also has the largest share of NEET in the EU and developing a new Istituti Tecnici Superiori (ITS) is a first step to reduce the skills mismatch.

Quote: “In DBRS Morningstar's view the government’s additional spending of EUR 17.6 billion largely for infrastructure coupled with some reforms, although not without challenges, should positively affect the overall education system and in turn human capital. This could enhance Italy's long-term economic outlook,” said Carlo Capuano, Vice President of the Sovereign Group at DBRS Morningstar.