RBS Research on Work in Italy: investments in startups grow to over 1 billion, resignations are booming
- The phenomenon of “large resignation” is booming in the peninsula: over 307 thousand people in the first quarter of 2022 alone;
- Employment grows by +4.1%, along with precarious employment: there are more than 3 million precarious workers, mainly due to an increase in contracts for seasonal (+113%) and intermittent (+85%) hires; not seen so many temporary employees since 1977;
- Irregular and undeclared work is “worth” 202.9 billion euros and accounts for 11.3 percent of Italian GDP; it is carried out by 14 percent of self-employed workers;
- In the North, the largest number of evaders pretending to be entrepreneurs: in the lead is Lombardy (130,800), followed by Campania, Lazio and Sicily; at the provincial level, Rome holds the record (84,000);
- 10 million Italian workers are expected to be smart working by the end of the year;
- Startups in Italy are increasing but not growing in size: it takes about €4,155 to start one, a figure 10 times higher than in Germany (€466);
- Lombardy holds the record of innovative startups in the country (26.8 percent), followed by Lazio (11.6 percent) and Campania (8.9 percent);
- In 2021, +85,000 workers were employed in startups; a woman is present in 42.6 percent of the total membership of Italian startups.
Rome Business School published the study “Work in Italy: the challenges of employees, entrepreneurs and startuppers. Critical issues, opportunities and future trends.” The researchers, Giacomo Salvanelli Crime Analyst and Entrepreneur Innovation Expert, and Valerio Mancini, Director of the RBS Research Center, analyze the state of employment and precariousness in Italy in the post-pandemic context, the importance of developing new skills and competencies for the world of work 2.0, and the scenarios, challenges and opportunities of the startup world in Italy.
Italian employment growth in the first months of 2022 reached levels not seen since before the pandemic. Comparing the March 2022-May 2022 quarter with the previous quarter (December 2021-February 2022) shows an increase in the employment level of 0.6 percent, a total of 136 thousand more employed. However, there has been a sharp increase in precarious employment, the gender gap remains, 24.5% of young people are now unemployed, and the phenomenon of “large resignations” (ISTAT) is continuously increasing. While more than 307,000 people have resigned from a permanent contract, the employment rate stands at 59.9% as of March 2022, but this is not a stable job. Effectively, there are over 23 million people employed in Italy, more than before the pandemic, but of these, term employees number 3 million 150 thousand, a figure not seen since 1977.
The dilemma of temporary and illegal employment
According to INPS data, 1,865,000 hires were activated between January and March 2022, an increase of 43 percent compared to the same period in 2021. The growth affected all types of contracts, particularly seasonal (+113%) and intermittent (+85%) hires, followed by permanent contracts (+44%) and apprenticeships (+43%). Thus, these are mostly contracts that do not offer stability to workers. In comparison, the increases in the other categories of hiring appear to be small: fixed-term (+35 percent) and temporary workers (+29 percent).
Similarly, irregulars are also on the rise. A parallel world that is “worth” 202.9 billion euros and accounts for 11.3 percent of Italian GDP. According to one from Confartigianato, 14 percent of those who are self-employed (3.2 million) are irregular, a share that represents the third largest sector in the Italian economy. These work mainly in craft, construction, beauty and auto repair businesses.
The phenomenon of undeclared work closely affects all Italian regions. In the South, the rate of undeclared work out of total employment is 17.5 percent, in the North Central 10.7 percent and in the Northeast 9.2 percent. At the bottom of the ranking is Calabria, where one-fifth (21.5 percent) of the employed is not regular, followed by Campania (18.7 percent) and Sicily (18.5 percent). In contrast, the lowest rate of irregular employment (8.4 percent) is in the Autonomous Province of Bolzano (Confartigianato, 2022). Despite this, the North is home to the largest number of evaders posing as entrepreneurs. The regional ranking sees Lombardy in the lead, followed by Campania (121,200), Lazio (111,500) and Sicily (95,600). At the provincial level, Rome holds the top spot with 84,000 irregulars, followed by Naples (59,500) and Milan (47,400).These are workers who are not licensed to practice, who have not undergone training or have professional titles or certificates, and do not give guarantees on the safety and quality of work.
Pandemic, vulnerable groups and employment: women, prisoners and the disabled
The pandemic has brought with it major changes in labor dynamics, among them the widespread use of smart working, a phenomenon that will see more than 10 million Italian workers on the move by the end of the year, but which has led to difficulties particularly for women (31 percent) according to the Nomisma-CRIF Observatory. Despite steps forward and new initiatives, the gender gap in Italy is still more than present: the difference in paychecks between men and women is 23.7 percent against a European average of 29.6 percent, one in two women in Italy works, there is a high percentage of part-time contracts (49.8 percent), high wage gap (estimated at 5.6 percent by the World Economic Forum, but for other Eurostat surveys at 12 percent), lack of career opportunities (only 28 percent of managers are women, worse in Europe only Cyprus) and lack of access to STEM education (16 percent of women against 34 percent of men).
Access to training also touches another part of the population that is particularly vulnerable and has been even more so during the pandemic: prisoners. According to the Antigone Association’s 17th report on prison conditions, “Prison Seen from Within,” the majority of training projects have come to a standstill due to the ban on third parties entering prisons and the lack of the possibility of conducting training via videoconferencing, unlike school courses. In fact, during the first half of 2020, only 92 vocational training courses were activated in Italy, compared to 203 in the second half of 2019; there were 758 participants compared to 2,506 in previous months, in fact witnessing a decrease of more than a third of the users who were able to take part.
It is not only the number of participants that are decreasing, but also the number of courses delivered and completed: starting in the 1990s where the percentages of those enrolled out of the number of those in attendance hovered around 7.75 percent of the total inmate population, the trend then gradually declined, eventually reaching the percentage of 1.41 percent-the lowest ever reached-in the second half of 2020. This is a situation that touches all regions, with the largest number of courses being activated in: Piedmont, Lombardy, Sicily and Marche.
Also having difficulty accessing dedicated training are people with disabilities and cognitive difficulties. At this time, for Valerio Mancini, among the authors of the research, the answer lies in digital: “to facilitate access to the world of work for the most fragile and vulnerable people, it will be necessary to focus on technologies that can do things that go ‘beyond,’ beyond age, beyond clinical pathologies, beyond cognitive problems, beyond seeing and hearing, beyond being able to move, beyond being able to speak: this is one of its greatest values.” This means that the training method must evolve and be highly innovative, for example with the use of AI.
The startup landscape: opportunities and limitations in Italy
Italy’s startup ecosystem has been growing more and more in recent years, approaching one billion in capitalization. According to the Ministry of Economic Development (MISE), it was already worth 938 million euros at the end of 2021, with an average of 64,898 euros per company. Among the different sectors, the business services sector makes up the vast majority of innovative startups operating in Italy (75 percent), with the main activity subcategories being software production and IT consulting (37.4 percent), research and development activities (14.7 percent), information services activities (8.7 percent), and manufacturing (16.6 percent).
Also according to MISE data, Lombardy holds the top spot for innovative startups: as many as 3,755 innovative startups (26.8 percent of the total), followed by Lazio (11.6 percent) and Campania (8.9 percent). At the bottom of the ranking are Molise with 79 innovative startups and Valle d’Aosta with just 19. Milan, a province with 2,640 innovative startups, 18.8 percent of the total number of companies, jumps out. It is followed by Rome (10.48 percent) and Naples (4.45 percent) with a clear gap. In 2021, +85,000 workers were employed in startups, demonstrating the strong impact of startups in employment.
Returning to the numbers on gender inequality, it is appreciated that innovative startups in which at least one woman is present in the shareholder structure are 42.6 percent of the total: a share that is also lower, albeit to a lesser extent, than that recorded by other new startups (45.4 percent). The main sectors in which female-driven startups operate are: digital platforms (26 percent), health (20 percent) and circular economy (18 percent).
Looking at the startup situation at the European level, 2021 is confirmed as a record year for investment, with a figure of more than $100 billion in invested capital and 100 new unicorns (startups with a market valuation over $1 billion). In Italy, as of December 2021, taking into account rounds, crowdfunding and investments disclosed to the media by business angels, we arrive at a record total figure of 1.392 billion invested, significantly higher than the 700 million in 2019 and 2020 (up about 50 percent), according to Startup Italia. Although these figures demonstrate the great opportunities that startups represent, Italy has only one unicorn (Scalapay) and lags behind the advancement in countries such as the United Kingdom where in the first nine months of 2021 alone, there were 68 rounds of more than $100 million, accounting for 37 percent of all rounds of this size in Europe.
The clear gap between Italy and some other European countries in terms of startup investments mirrors a system that still has significant criticalities. For Giacomo Salvanelli, one of the authors of the research, “in Italy we do not invest ininnovation as much as in the rest of Europe. Bureaucracy, tax pressure and low investment are a big limitation. Startups in Italy are increasing but not growing in size.” Confirming the difficulty in creating a startup in Italy are data from Unimpresa’s Centro studi (2021) that reveal that to start one, it takes about €4,155, a figure 10 times higher than in Germany (€466) and more than 15 times higher than what is spent in France (€270), and as much as 188 times more than in Croatia (€22).
Toward workers 4.0: NRP, specialized training and soft skills
Italy, to be more sustainable and innovative, requires workers and entrepreneurs to possess more and increasingly specific skills. According to the World Economic Forum (WEF), 85 million jobs will be lost by 2025, yet as many as 97 million new jobs will be created, structured to better accommodate the new division of labor between humans, machines and software. The share of basic skills set to change will be 40 percent, so 50 percent of all workers will have to retrain. For Emanuele Cacciatore, Lecturer in the Master in Human Resources Management at Rome Business School, “the number of skills required for a single job is increasing year on year by 10 percent, dramatically reducing the useful life of hard skills. To cope with this phenomenon, HR departments must be able to anticipate the skills that will be needed in order to be ready to train their employees, implementing modern approaches and tools to improve the learning experience.”
Therefore, it will also be up to companies to train employees: about 40 percent of workers will need to learn new digital skills in order to perform the required tasks. The need to train also comes from having to, and being able to, know how to seize the opportunities offered by the National Recovery and Resilience Plan (NRP). This “new deal” of resources toward sectors of high productivity and complexity will make room for the Italian 4.0 economy: a more sustainable and innovative economy that makes use of sustainable business models capable of reaping all the benefits of digitization.
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