Italian Economy,Italian capitalist economy

Italy has a capitalist economy with high GDP per capita and developed infrastructure. According to both the International Monetary Fund and the World Bank, in 2009 Italy was the seventh-largest economy in the World and the fourth-largest in Europe. Italy is member of the Group of Eight (G8) industrialized nations, the European Union and the OECD.

History

1800s and early 1900s

 Economic history of Italy

The unification of Italy in 1861-70 broke down the feudal land system that had survived in the south since the Middle Ages, especially where land had been the inalienable property of aristocrats, religious bodies, or the king. The breakdown of feudalism, however, and redistribution of land did not necessarily lead to small farmers in the south winding up with land of their own or land they could work and profit from. Many remained landless, and plots grew smaller and smaller and thus more and more unproductive as land was subdivided among heirs.

A factory in Turin, set in 1898, during the period of industrialisation.

The Italian diaspora did not affect all regions of the nation equally, principally low income agricultural areas with a high proportion of small peasant land holdings. In the second phase of emigration (1900 to World War I) most emigrants were from the south and most of them were from rural areas, driven off the land by inefficient land management policies. Robert Foerster, in Italian Emigration of our Times (1919) says, " [Emigration has been]…well nigh expulsion; it has been exodus, in the sense of depopulation; it has been characteristically permanent. ". Mezzadria, a form of sharefarming where tenant families obtained a plot to work on from an owner and kept a reasonable share of the profits, was more prevalent in central Italy, which is one of the reasons why there was less emigration from that part of Italy. Although owning land was the basic yardstick of wealth, farming in the south was socially despised. People did not invest in agricultural equipment but in such things as low-risk state bonds.

Fascist Era

Main articles: Economy of Italy under Fascism, 1922-1943 and Italian economic battles

Italy had emerged from World War I in a poor and weakened condition. The National Fascist Party of Benito Mussolini came to power in Italy in 1922, at the end of a period of social unrest. During the first four years of the new regime, from 1922 to 1925, the Fascist had a generally laissez-faire economic policy: they initially reduced taxes, regulations and trade restrictions on the whole. However, "once Mussolini acquired a firmer hold of power... laissez-faire was progressively abandoned in favour of government intervention, free trade was replaced by protectionism and economic objectives were increasingly couched in exhortations and military terminology." In 1929, Italy was hit hard by the Great Depression. Trying to handle the crisis, the Fascist government nationalized the holdings of large banks which had accrued significant industrial securities. A number of mixed entities were formed, whose purpose it was to bring together representatives of the government and of the major businesses. These representatives discussed economic policy and manipulated prices and wages so as to satisfy both the wishes of the government and the wishes of business. This economic model based on a partnership between government and business was soon extended to the political sphere, in what came to be known as corporatism.

Throughout the 1930s, the Italian economy maintained the corporatist model that had been established during the Great Depression. At the same time, however, Mussolini had growing ambitions of extending Italy's foreign influence through both diplomacy and military intervention. After the invasion of Ethiopia, Italy began supplying both troops and equipment to the Spanish nationalists under General Francisco Franco, who were fighting in the Spanish Civil War against a leftist government. These foreign interventions required increased military spending, and the Italian economy became increasingly subordinated to the needs of its armed forces. By 1939, Italy had the highest percentage of state-owned enterprises after the Soviet Union. Finally, Italy's involvement in World War II as a member of the Axis powers required the establishment of a war economy. This put severe strain on the corporatist model, since the war quickly started going badly for Italy and it became difficult for the government to persuade business leaders to finance what they saw as a military disaster. The Allied invasion of Italy in 1943 caused the Italian political structure - and the economy - to rapidly collapse. The Allies, on the one hand, and the Germans on the other, took over the administration of the areas of Italy under their control. By the end of the war, the Italian economy had been all but destroyed; per capita income in 1944 was at its lowest point since the beginning of the 20th century.

Post-war economic miracle

 Italian economic miracle

The Pirelli Tower under construction, symbol of the post-war economic miracle.

Despite World War II's grand-scale negative effects on the Italian economy, in the 1950s and 60s Italy was transformed from a poor, agricultural and mass emigration country into one of the world's major industrialized powers, an event known as the Italian economic miracle. After 1964, Italy maintained for a while a constant growth rate of above 8% every year, boosted by reconstruction and modernization.The 1973 oil crisis temporarily halted the economic boom, causing high inflation rate and high energy prices (Italy is highly dependant on foreign oil and natural gas resources). This economic recession went on into the mid-1980s until a reduce of public costs and spendings, tighter budgets and deficits, a steady economic growth, and a lowered inflation rate meant that by the recovery plan of 1983, Italy left recession. This plan led to an increasing GDP growth, lower inflation, and increased industrial/agricultural/commercial produce, exports and output, yet made the unemployment rate rise. A decrease in energy prices and lowered value of the dollar led to foreign exchange being liberalised and the economy to re-grow rapidly.As a matter of fact, in 1987, Italy had a period when it surpassed the British economy (an event known as il sorpasso), becoming the fifth in the world. On 15 May 1991 Italy became the fourth worldwide economic power, overcoming France, with a GDP of US$ 1.268 trillion, compared to France's GDP of US$ 1.209 trillion and Britain's of US$ 1.087 trillion. Despite this, however, Italy's alleged (according to the Economist's) 1987 GDP growth of a phenomenal 18%, it was shortly re-overtaken by both France and the United Kingdom during the 1990s, when Italy's economic growth has been particularly stagnant, with an average of 1.23% compared to an EU average of 2.28%. However, as of the 2000s recession and more notably the 2008 recession and the 2009 recession, Italy was one of the few countries whose economy did not contract dramatically, and kept a relatively stable economic growth, yet figures for economic growth in 2009 and 2010 have showed a negative average, ranging from around -1% to -5%.

Overview

A graph showing Italy's GDP growth from 2000-2009 (including forecasts for 2010 and 2011).

A graph which shows the current account balance of Italy (% of GDP), from 1980 to 2009.

Italian exports in 2005.

According to the World Bank, Italy has high levels of freedom for investments, business and trade. Italy is a developed country, and, according to The Economist, has the world's 8th highest quality of life. The country enjoys a very high standard of living, and is the world's 18th most developed country, surpassing Germany and the UK. According to the last Eurostat data, Italian per capita GDP at purchasing power parity remains approximately equal to the EU average,while the unemployment rate (8.5%) stands as one of the EU's lowest.

Italy has the world's 4th largest gold reserve. The country is also well-known for its influential and innovative business economic sector, an industrious and competitive agricultural sector, and for its creative and high-quality automobile, industrial, appliance and fashion design.

Despite this, the country's economy suffers from many problems. After a strong GDP growth of +8% from 1964 onwards, the last decade's average annual growth rate lagged with 1.23% in comparison to an average EU annual growth rate of 2.28%. In addition, Italian living standards have a considerable north-south divide. The average GDP per capita in Northern Italy can far exceed the EU average (an example of this could be the Province of Bolzano-Bozen, with a 2006 average GDP per capita of €32,900 (US$ 43,861), which is 135.5% of EU average), whilst some regions and provinces in Southern Italy can be considerably below the EU average (such as Campania, which has an average GDP per capita of € 16,294, or US$ 21,722). Italy has often been referred the sick man of Europe, characterised by economic stagnation, political instability and problems in pursuing reform programs.

Italy suffers from structural weaknesses due to its geographical conformation and the lack of raw materials and energy resources: in 2006 the country imported more than 86% of its total energy consumption (99.7% of the solid fuels, 92.5% of oil, 91.2% of natural gas and 15% of electricity). The Italian economy is weakened by the lack of infrastructure development, market reforms and research investment, and also high public deficit. In the Index of Economic Freedom 2008, the country ranked 64th in the world and 29th in Europe, the lowest rating in the Eurozone. Italy still receives development assistance from the European Union every year. Between 2000 and 2006, Italy received €27.4 billion from the EU. The country has an inefficient state bureaucracy, low property rights protection and high levels of corruption, heavy taxation and public spending that accounts for about half of the national GDP. In addition, the most recent data show that Italy's spending in R&D in 2006 was equal to 1.14% of GDP, below the EU average of 1.84% and the Lisbon Strategy target of devoting 3% of GDP to research and development activities.

Organized crime is a contributing factor in Italy's economic weakness. The Mafia directly controls 14.6% of Italy's GDP, and exerts influence over 13 million Italians. However, at 0.013 per 1,000 people, Italy has only the 47th highest murder rate in the world, in a sample of 63 countries. It also has the 43th highest number of rapes per 1.000 people in the world, out of a sample of 65 countries.

Italy has a smaller number of world-class multinational corporations than other economies of comparable size, but there is a large number of small and medium-sized enterprises, and in the Northern "industrial triangle" (Milan-Turin-Genoa) or the Tuscan industrial triangle (Florence-Prato-Pistoia), where there is an area of intense industrial and machinery production, notably in their several industrial districts, which were for long the backbone of the Italian industry. This has produced a manufacturing sector often focused on the export of niche market and luxury products, capable of facing the competition from China and other emerging Asian economies based on lower labour costs.

The country is the world's 8th largest exporter. In 2007, Italy's total merchandise exports were at US$ 491.507 billion, US$ 118.261 billion for commercial services and they were at US$ 504.404 billion by selected region, according to the World Trade Organization. Italy's major exports and companies by sector are motor vehicles (Fiat Group, Aprilia, Ducati, Piaggio); chemicals and petrochemicals (Eni); energy and electrical engineering (Enel, Edison); home appliances (Candy, Indesit), aerospace and defense technologies (Alenia, Agusta, Finmeccanica), firearms (Beretta), fashion (Armani, Valentino, Versace, Dolce & Gabbana, Roberto Cavalli, Benetton, Prada, Luxottica); food processing (Ferrero, Barilla Group, Martini & Rossi, Campari, Parmalat); sport and luxury vehicles (Ferrari, Maserati, Lamborghini, Pagani); yachts (Ferretti, Azimut). Italy's closest trade ties are with the other countries of the European Union, with whom it conducts about 59% of its total trade. Its largest EU trade partners, in order of market share, are Germany (12.9%), France (11.4%), and Spain (7.4%).

The automobile industry in Italy is a large employer in the country, with a labour force of over 196,000 in 2004, contributing to 8.5% of the Italian GDP.In 2006, Italy was the 5th largest automobile producer in Europe.

Tourism is one of the fastest growing and profitable sectors of the national economy: with 43.7 million international tourist arrivals and total receipts estimated at $42.7 billion, Italy is the fourth highest tourism earner and the fifth most visited country in the world. Despite a slump in the late-1980s and during the Gulf War, Italy has, since the mid-1990s, rebuilt a strong tourism industry. Italy's most popular tourist attractions are the Colosseum (4 million tourists per year, and the world's 39th most visited sight) and the ruins at Pompeii (48th in the world, with 2.5 million visitors).

Transport

 Transport in Italy

Rome-Fiumicino Airport in 2008 was the sixth busiest airport in Europe.

In 2004 the transport sector in Italy generated a turnover of about 119.4 billion euros, employing 935,700 persons in 153,700 enterprises. Regarding to the national road network, in 2002 there were 668,721 km (415,612 mi) of serviceable roads in Italy, including 6,487 km (4,031 mi) of motorways, state-owned but privately operated by Atlantia company. In 2005, about 34,667,000 passenger cars (equal to 590 cars per 1,000 people) and 4,015,000 road good vehicles circulated on the national road network.

The railway network in Italy totals 16,862 kilometres in 2008, ranking the country 15th in the world, and is operated by Ferrovie dello Stato, of which 69% electrified, and on which 4,937 locomotives and railcars circulated. High speed trains include ETR-class trains, of which the ETR 500 travels at 300 km/h (190 mph). Nowadays the rail tracks and infrastructure are currently managed by the Rete Ferroviaria Italiana In 1991 Treno Alta Velocità SpA was created, a special purpose entity owned by RFI (itself owned by Ferrovie dello Stato) for the planning and construction of high-speed rail lines along Italy's most important and saturated transport routes. These lines are often referred as "TAV" lines. The purpose of TAV construction is to aid travel along Italy's most saturated rail lines and to add tracks to these lines, namely the Milan-Naples and Turin-Milan-Venice corridors. One of the focuses of the project is to turn the rail network of Italy into a modern and high-tech passenger rail system in accordance with updated European rail standards. A secondary purpose is to introduce high-speed rail to the country and its high-priority corridors. When demand on regular lines is lessened with the opening of dedicated high-speed lines, those regular lines will be used primarily for low-speed regional rail service and freight trains. With these ideas realised, the Italian train network can be integrated with other European rail networks, particularly the French TGV, German ICE, and Spanish AVE systems.In 2005, about 34,667,000 passenger cars (equal to 590 cars per 1,000 people) and 4,015,000 road good vehicles circulated on the national road network. The national railway network, state-owned and operated by Ferrovie dello Stato, in 2003 totalled 16,287 km (10,122 mi) of which 69% electrified, and on which 4,937 locomotives and railcars circulated.

The national inland waterways network comprised 1,477 km (918 mi) of navigable rivers and channells in 2002. In 2004 there were approximately 30 main airports (including the two hubs of Malpensa International in Milan and Leonardo Da Vinci International in Rome) and 43 major seaports in Italy (including the seaport of Genoa, that is the country largest and the second largest in the Mediterranean Sea after Marseille). In 2005 Italy maintained a civilian air fleet of about 389,000 units and a merchant fleet of 581 ships.

Energy and natural resources

Nuclear power in Italy and Wind power in Italy

Wind turbines in Campania.

Italy has few natural resources. With much of the land unsuited for farming, it is a net food importer. There are no substantial deposits of iron, coal, or oil. Proven natural gas reserves, mainly in the Po Valley and offshore Adriatic, have grown in recent years and constitute the country's most important mineral resource. Most raw materials needed for manufacturing and more than 80% of the country's energy sources are imported.

The energy sector is highly dependent on imports from abroad: in 2006 the country imported more than 86% of its total energy consumption (99.7% of the solid fuels demand, 92.5% of oil, 91.2% of natural gas and 15% of electricity).

Italy has built several nuclear reactors from 1963–1990, but after Chernobyl, the country stopped all work on its nuclear program. Currently, the majority of Italy’s electricity is produced gas, oil, coal, and hydro. Italy also imports about 16% of its electricity need from France for 6.5 GWe, which makes it the world’s biggest importer of electricity. Due to its reliance on expensive fossil fuels and imports, Italians pay approximately 45% more than the EU average for electricity.

In 2004, a new Energy Law brought the possibility of joint ventures with foreign companies to build nuclear power plants and import electricity. Public opinion on nuclear power was positive, as Italy’s younger generations embraced nuclear energy. In 2005, Italy’s power company, ENEL made an agreement with Electricite de France for 200 MWe from a nuclear reactor in France and potentially an additional 1,000 MWe from new construction. As part of the agreement, ENEL received a 12.5% stake in the project and direct involvement in design, construction, and operation of the plants. In another move, ENEL also bought 66% of the Slovak Electric utility that operates six nuclear reactors. As part of this agreement, ENEL will pay the Slovak government EUR 1.6 billion to complete a nuclear power plant in Mochovce, which has a gross output of 942 MWe. With these agreements, Italy has managed to access nuclear power without placing reactors on Italian territory.

There was a uranium enrichment facility in Bosco Marengo, but which is being decommissioned by Sogin, a spinoff of ENEL.

The country was also ranked ranked as the world’s seventh largest producer of wind power with a total installed capacity of 2,726 MWe in 2008, behind Germany, the United States, Spain, India, China and Denmark.

North-south divide

In Italy there is a considerable north-south divide, where Northern Italy is dominated by a highly-developed and capitalistic economy, whilst Southern Italy is far less advanced and more based on agriculture and tourism. Even though this is slowly changing, since Southern Italy has had a strong economic growth and organized crime (e.g. Mafia, 'Ndrangheta or Camorra) levels have decreased, Northern Italy still remains the most industrialised and advanced area in Italy.

Northern and Central Italy

Milan, Italy's main industrial and financial center.

 Northern Italy and Central Italy

Northern Italy is the wealthiest and most prosperous of Italian areas. Within its regions, Lombardy (GDP: € 311 billion (2006)), Veneto (GDP: € 140 billion (2006) Emilia-Romagna (GDP: € 129 billion (2006)) and Piedmont (GDP: € 120 billion (2006)) are Italy's wealthiest regions. The cities of Milan, Turin and Genoa together form Italy's famous "industrial triangle", which is characterized by heavy industry, machinery, production, commerce, communications, insurance and banking. Also, the Province of Bolzano-Bozen is Italy's richest province GDP per capita (€32,900; 135.5% of EU average), followed by Lombardy (€32,800; 135.1% of EU average) and Emilia-Romagna (€30,700; 126.6% of EU average). The Lazio regional (GDP, € 161 billion (2006)), is geographically in Central Italy and includes the capital Rome. It has the second largest GDP in the country. The cities of Milan and Rome are major European financial and political centres. The Milan metropolitan area has Europe's 4th highest city GDP (nominal), $312 (€241) billion, and the Rome metropolitan area has a GDP of €109 billion. Milan and Rome are also the world's 11th and 18th (respectively) most expensive cities in the world. Milan is Europe's 26th richest city by purchasing power in 2009, with a GDP of $115 billion. Milan has high GDP (per capita), about €35,137 (US$ 52,263), which is 161.6% of the EU average GDP per capita by country, whilst Rome had a 2003 GDP per capita of €29,153 (US$ 37,412), which was second in Italy, (after Milan), and is 134.1% of the EU average GDP per capita by country.

Southern Italy

Southern Italy and Cassa per il Mezzogiorno

Southern Italy is the country's less affluent and less prosperous area. Even though cities in the Southern part of the peninsula (such as Naples) have had a remarkable economic growth in the post-war period, there are problems such as high unemployment, corruption, inefficient levels of bureaucracy, tax evasion and organized crime (the Sicilian Mafia, Camorra and 'Ndrangheta are all based in regions of Southern Italy).

Region PPP per capita income

(EU27 average = 100), (2007

Region	PPP per capita income (EU27 average = 100), (2007)	Unemployment rate (2009)
Abruzzo	85.3	9.7
Puglia	66.8	13.6
Basilicata	75.1	11.3
Calabria	65.8	11.7
Campania	65.9	13.4
Molise	77.9	9.9
Sardinia	78.4	14.1
Sicily	66.0	14.3
Italy	103.8	7.9

Although southern Italy was less affluent than northern Italy throughout modern history, at times southern Italy had prosperous and advanced areas, culturally and economically wealthier than northern or central Italy, mainly prior to the Renaissance. Southern Italy was a leader in European cultural and political affairs. The Norman Kingdom of Sicily was prosperous and politically powerful, becoming one of the wealthiest states in Europe.

In the 11th and 12th centuries, Sicily and the Kingdom of Naples played a major role in European affairs and exhibited many signs of prosperity. By the middle of the 13th century, due to fiscal policies that prevented the growth of a strong merchant class, the region became economically backward compared to the other Italian states. Unlike the rest of Italy, which experienced the rise of many small, independent and prosperous city states, all enterprise in the comparatively large kingdom centred on the capital city of Naples. The outlying areas, cursed with generally poor agricultural conditions, fell further behind. Sicily's trade fell primarily under Catalan control and by the 14th century finances of the kingdom fell primarily into Tuscan hands. With the Spanish conquest, the kingdom continued to be repressed and exploited by foreign rule until the late 18th century and even when Bourbon rule meant a native court and a time of enlightenment for some sectors of the society.

According to some historians, during the time of the Bourbons the area around Naples became relatively productive. It was the first place in Italy to build a railway, even though it was mainly for royal (not commercial) use, and the local manufacturing base was growing. Following unification with the rest of the Italian peninsula in 1861, factory technology (which the Kingdom of the Two Sicilies had gained from the British) was taken away to Piedmont, Lombardy and Liguria.

After unification southern Italy experienced a huge demographic expansion which provoked mass emigration, especially between 1892 and 1921. In addition, corruption was such a large problem that the prime-minister Giovanni Giolitti once conceded that places existed "where the law does not operate at all".

One study released in 1910 examined tax rates in north, central and southern Italy indicated that northern Italy with 48% of the nation's wealth paid 40% of the nation's taxes, while the south with 27% of the nation's wealth paid 32% of the nation's taxes.

After the rise of Fascism, Benito Mussolini set himself the task of defeating the already powerful criminal organizations flowering in Sicily and the South. Economically, Fascist policy aimed at the creation of an Italian empire and Southern Italian ports were strategic for all commerce towards the colonies. Naples enjoyed a demographic and economic rebirth, mainly thanks to the interest of the King Victor Emmanuel III who was born there.

During the 1950s, the regional policy the Cassa per il Mezzogiorno was set up to help raise the living standards in the South to those of the North. The Cassa aimed to do this in two ways: by land reforms creating 120,000 new small farms, and through the "Growth Pole Strategy" whereby 60% of all government investment would go to the South, thus boosting the Southern economy by attracting new capital, stimulating local firms, and providing employment. As a result the South became increasingly subsidized and dependent, incapable of generating growth itself.

Even today, regional disparities persist. Southern Italy continues to be the least prosperous area of Italy. Problems still include corruption, organized crime and high unemployment. Southern Italy includes 37% of Italy's population, occupies 40% of its land area, but only produces 24% of its gross domestic product. This does not, however, include the large underground black economy reported to be as high as 30% of GDP.

During the 1940s, 50s, 60s and 70s, the economy of southern Italy has had a remarkable growth. Unemployment has been decreasing, since the 2003 contreversial "Biagi law", as unemployment in Campania has fallen from 23.7% in 1999 to 11.2% in 2007, and in Sicily from 24.5% to 13%.

Today, Southern Italy has Italy's lowest GDP per capita, that of € 16,300-16,600 in 2006,and a 2003 GDP nominal of US$369 billion. The area's richest region, Campania, has a GDP nominal of € 94.3 billion in 2006, and a GDP per capita of € 16,294.

Banking in Italy

The Banca Commerciale in Milan.

 Banking in Italy

Banking in Italy has, as of the 11th October 2008, an average assets/liabilities ratio of 12 - 1, while the banks's short-term liabilities are equal to 86% of the Italian GDP or 43% of the Italian national debt.

This is a list of the top 10 Italian banks ranked by market capitalization.

Rank	Company	Market Capitalisation (€)
1	UniCredit	81.39 billion
2	Intesa Sanpaolo	69.2 billion
3	Mediobanca	12.38 billion
4	UBI Banca	11.5 billion
5	Banco Popolare	11.34 billion
6	Monte dei Paschi di Siena	11.32 billion
7	Banca CR Firenze	5.3 billion
8	Banca Popolare di Milano	4.3 billion
9	Banca Carige	3.9 billion
10	Credito Emiliano	2.8 billion

Agriculture

A vineyard in Trentino Alto-Adige. Italy is the world's top wine producer.

The northern part of Italy produces primarily maize corn, rice, sugar beets, soybeans, meat, fruits and dairy products, while the south specializes in wheat and citrus fruits. Italy is the first or the second largest producer of wine in the world, and one of the leading in olive oil, fruits (apples, oranges, lemons, pears, apricots, peaches, cherries, strawberries, kiwi), flowers and vegetables.

According to the Agriculture Census, there were 2.6 million farms in 2000 (down from 3 million in 1990,) covering 19.6 million hectares. The vast majority (94.7%) are family-operated and small, averaging only 5 hectares in size. Of the total surface area in agricultural use (forestry excluded,) grain fields take up 31%, olive tree orchards 8.2%, vineyards 5.4%, citrus orchards 1%, other orchards 3.8%, sugarbeets 1.7%, and horticulture 2.4%. The remainder is primarily dedicated to pastures (25.9%) and feed grains (11.6%.) Livestock includes 6 million head of cattle, 8.6 million head of swine, 6.8 million head of sheep, and 0.9 million head of goats.

The most famous Italian wines are probably the Tuscan Chianti and Piedmontese Pinot Grigio. Other famous wines are Barbaresco, Barolo and Barbera (Piedmont), Brunello di Montalcino (Tuscany), Montepulciano d'Abruzzo (Abruzzo) and Nero d'Avola (Sicily). Quality goods in which Italy specialises are often DOC or 'of controlled origin'. This DOC certificate, which is attributed by the European Union, ensures that the origins and work that goes into a product are recognised. This certification is considered important by producers and consumers alike, in order to avoid confusion with low-quality mass-produced ersatz products, such as Cambozola, a German copy of Gorgonzola.

Eni's headquarters in EUR, Rome's business district. Eni is Italy's biggest company and the world's 18th

Labour

Following the 2003 "Biagi law", a controversial labour reform, unemployment has been steadily decreasing, reaching 6.2% in 2007, the lowest rate since the 1970s. In the south the average unemployment rate is far higher than the national average, but, in recent years, progress was made nonetheless, with the unemployment rate falling from 23.7% in 1999 to 11.2% in 2007 for Campania, and from 24.5% to 13% for Sicily. There is a significant underground economy, especially in the south where it partially offsets the high official unemployment rate, absorbing substantial numbers of people, working for low wages and without standard social benefits and protections.

Unions claim to represent 40% of the work force. Most Italian unions are grouped in three major confederations: the CGIL, the CISL, and the UIL, which together claim 35% of the work force.[citation needed] These confederations formerly were associated with important political parties (respectively the Italian Communist Party, the Christian Democracy and the Italian Socialist Party), but they have formally terminated such ties. Nowadays, the three often coordinate their positions before confronting management or lobbying the government. The three major confederations have an important consultative role on national social and economic issues.[citation needed] Among their major agreements are a 4-year wage moderation agreement signed in 1993, a reform of the pension system in 1995, and an employment pact, introducing steps for labor market flexibility in economically depressed areas, in 1996. The CGIL, CISL, and UIL are affiliates of the International Trade Union Confederation. Of the three unions, CGIL is the strongest in numbers.[citation needed] CGIL once single-handedly organized a three-million people rally in Rome. Italy's employers are represented by Confindustria, the Italian Employers' Federation.

Billionaires and millionaires

 Italian billionaires

A quarterly report prepared by the Economist Intelligence Unit on behalf of Barclays Wealth in 2007 estimated that there were 280,000 dollar millionaires in Italy. The richest man in Italy is Michele Ferrero, who, according to Forbes, has a net worth of US$ 9.5 billion. Other billionaires include Giorgio Armani, Miuccia Prada, Ennio Doris, the Benetton family, the Agnelli family and Silvio Berlusconi, to name but a few. In total, Italy has Europe's fifth greatest number of billionaires (12), coming after Germany, Russia, the UK and Turkey, and surpassing Spain, France, Sweden and Switzerland.