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Guiding The Case 1 July Jul 2020 0846 1 July 2020

Innovation, SMEs, training: elements of the ‘Colao Plan’ 2020-2022 to get Italy back on track

The 121-page report – ranging from education to enterprises – with an estimated value of 170 billion euro

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Just a few days after a series of meetings of the so-called “Stati Generali”, Vittorio Colao, the former Vodafone Group CEO heading Italy’s task force to deal with the economic emergency caused by Coronavirus, presented his six-point plan to restart the country’s economy.

The 121-page report, ranging from education to the labour market and enterprises, has an estimated value of 170 billion euro and includes measures to be implemented immediately and others to be put in place over the next two years. The roadmap covers the period 2020-2022 but it aims to lay down the foundations for sustainable economic growth. These are the core initiatives: digitalisation and innovation, gender equality and inclusion, and a green revolution - with a focus on six areas: enterprises and the labour market; infrastructures and the environment; tourism, art and culture; public administration; education, research and skills; individuals and families.

In an interview with the Financial Times, Colao explained how the current crisis is a unique opportunity for Italy to move into the future and to force the black market into the official economy thanks to the Ecommerce boom. “As unfortunate as it has been, the virus has allowed the country to achieve the same amount of progress for digital adoption in two months as it would have in five years. Social distancing has forced many small businesses in Italy to suddenly go digital,” the head of the task force said.

With its ‘Cura Italia’ and ‘Decreto Rilancio’ laws, the Italian government aimed to lay down the foundations for economic recovery, allocating funds for social welfare and financial support for companies to prevent mass redundancies. Widespread economic and social hardship require huge efforts and a vision: unless the right steps are taken now, the risk of things getting worse is enormous. “We risk losing companies, human and physical capital that were once productive and are now at risk of falling by the wayside. We need to shift from a protection phase into a recovery phase to help restart the country”, commented Andrea Garnero, labour market economist at the Directorate for Employment, Labour and Social Affairs of the OECD.

Social distancing has forced many small businesses in Italy to suddenly go digital

Vittorio Colao

The ‘Colao Plan’ “contains a wealth of proposals, some of which are quite detailed and original”, Garnero says. For instance, among the immediate measures to support enterprises are proposals to provide liquidity to help companies survive, to grant corporations a legal shield against possible complaints for Covid-19 infections and to facilitate increases in capital. The report contains broader measures to strengthen SMEs and lay down the foundations for sustainable economic growth, which range from supporting innovative start-ups via tax incentives and increasing the ceiling for annual investments.

When it comes to the labour market, the plan contains short-term measures such as allowing for the renewal of fixed-term contracts that are about to expire and postponing tax payments. Longer-term measures are much broader and include incentivising the digital up-skilling of management and retraining the unemployed and furloughed by creating a “skills fund”. Smart working is also in focus: it should be encouraged and regulated by a code of conduct to safeguard workers, the country’s fibre network should be upgraded and the 5G network developed. The plan also proposes setting up a special fund to deal with the digital divide via a voucher system to allow low-income households to access broadband services.

On the sustainability front, the way forward is for a green revolution which will impact major infrastructures (from reservoirs to ports and the railways) as well as the daily life of the population with a specific country-wide plan to improve transport links.

And what about training programmes? The ‘Colao Plan’ proposes modernising the research system by creating poles of scientific excellence and promoting greater gender equality. It also aims to drive the acquisition of skills throughout the education system via specific digital projects, as well as offering more vocational training after secondary education and at university.

In short, the ‘Colao Plan’ includes a large number of proposals designed to envision the future of Italy. But to get there, a series of ‘structural’ limits and risks need to be overcome. “The sticking point will be the willingness and ability of politicians to do what is necessary. Historically Italy has been burdened with an inability to take real measures, which has widened the gap - whether that be digital, on gender equality or the north-south divide - that the country still experiences. It will take more than a few months to make up for lost time,” Garnero maintains.

We need to work out how smart working can be organised in terms of location, so that family responsibility is not a burden and it should be regulated so that it does not become an instrument of segregation.

Andrea Garnero, labour market economist at the Directorate for Employment, Labour and Social Affairs of the OECD.

Some clear-cut decisions have to be taken and actioned as quickly as possible, with detailed far-reaching plans. By encouraging smart working, for example, “as it offers significant opportunities for flexibility and better management of the work-life balance, but it depends on how it is organized - there is no room for improvisation,” Garnero warns.

There was a positive shift in this direction during the emergency, a transition “from a paradigm where performance was measured in terms of the hours worked and being physically present in the workplace” to a model which “measures productivity by objectives, giving employees the flexibility to decide how they achieve them” Garnero says. But now this all has to be mapped out. “We need to work out how smart working can be organised in terms of location, so that family responsibility is not a burden and then it should be regulated it so that it does not become an instrument of segregation, say for women who stay at home to take care of the children while men go to the office and make a career for themselves.”

Economic and social issues are interconnected. These are not easy challenges, but they must be overcome if we are to build a future that is more productive, efficient and fair. A word of caution from Garnero: to date, the government’s economic recovery plans have overlooked an important group and they need answers: the younger generations. “In any crisis they are the ones who pay the highest price and who feel the long-term consequences over their lifetimes, whether that be on the labour market or in education,” Garnero says. “I think we need a specific plan based on the learnings from previous failings. France is currently looking at a scheme to support young people. If there is one instrument we should be using it is a Recovery Fund – seeing as we are borrowing money that will have to be repaid by the younger generations, then let them be part of the plan.

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