Report
Italy: The damage caused by the stagnation of labour productivity
Labour productivity has stagnated in Italy since the 1990s. Most of the economic turmoil in Italy is a consequence of this stagnation of productivity: The deterioration in cost competitiveness, and the resulting decline in Italy’s market shares, the deindustrialisation of the country ; The stagnation of employees ' purchasing power; The low level of potential growth, which has led to low tax revenues and, as a result, a decline in public investments because of the budget constraint; The low level of corporate profitability, and hence the shortfall in their investments that perpetuates the stagnation of profitability; and hence also their financial fragility that has led to a weakening of Italian banks and a decline in credit, reinforc ing the weakness of investment. Any recovery in Italy must therefore involve a restoration of productivity, which should be the only objective of economic policies (whereas a universal income, a flat tax and a more generous pension system have no impact on productivity).
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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