Posted Oct 16, 2017 by Martin Armstrong
The high taxation in Europe has crippled the economy. Those in power have not yet figured out that 70% of employment is created by the small business owner who they consider the rich and thus the enemy. Nowhere has this been more the case in Italy, Greece, and Spain. Italy is the next on the list of this Year From Political Hell come May 2018 and with youth unemployment above 30% for the past six years, the solution is not to lower taxes, but to steal from pensions to pay benefits to the youth.
In 2015 alone, some 50,000 Italians under 40 years of age migrated elsewhere to find jobs. Nearly half of them had gone to university to get degrees to no avail. All the fancy papers to frame and hang on the wall are not worth the cost of a frame. Italy and Greece are bleeding as their young talent cannot find a job and are pouring out of the country. The loss of these people is being argued is costing Italy 1% per year in economic growth. The estimate is closer to a 2% loss on GDO for Greece.
The center-left government of Prime Minister Paolo Gentiloni has recognized the crisis but as all leftist governments, they just cannot bring themselves to look in a mirror. The proposition in the coming budget is to provide for measures that would motivate companies to hire young people. Because of the EU budget rules imposed by German Austerity, there is no room for more government spending. This youth unemployment is becoming a major issue because of the upcoming elections in 2018.
How can government create more spending yet remain inside the EU rules? The new scheme is to lower social security contributions for newly hired employees under a certain age. Therefore, employers will see that young people who they hire will have less money taken out for state pension contribution and thus make them cheaper to hire. In addition, Italy’s government is considering sending up to half a million civil servants to retirement and therefore create government jobs for the youth.ng workers.
The solution is by no means lowering the taxes on small business to create economic growth. These proposals will create the incentive for business to ONLY hire the youth and to terminate the higher cost employees whenever possible. Lowering the pension costs in social security contributions can only lead also to the dismissal of those employed young people as soon as they grow older and exceed the age limit to be determined. And the promise of new jobs in the state fails to account for the rise in pension costs.
The Italian pensions system is a Ponzi Scheme so retirees are paid for by the contributions from the youth. The entire pension system is in crisis and this scheme concocted post-World War II is reaching the breaking point. Even in the USA, the census has revealed that of the 18-34 age group, 32.1% live in their parents’ house, while 31.6% live with a spouse or partner in their own homes and 14% live alone, as single parents or in a home with roommates or renters. The number of youth living at home into their 30s is greater than out on their own.
In Italy, the age at which young Italians can expect to be financially dependent on their parents is also growing rising rapidly and is expected to reach 38% by as early as 2018. Without a complete restructure of government, using the analysis of whatever trend is in motion will remain in motion will reach a staggering 48% by the end of the next 8.6-year wave 2028.
The Italian government is not addressing the issue and even on the retirement front, the government plans to increase the retirement age to 67 years after the elections.
This is why the whole system is simply UNSUSTAINABLE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!