The 1992 crisis as a turning point

The turning point in the long post-war downward trend of the incidence of poverty was the devaluation of the Italian lira in 1992 and Italy's exit from the European Monetary System following speculative attacks. The public debt had jumped to 95.2% in 1990, almost tripling its weight in 20 years. This development brought about the 1992 crisis of the Italian lira, which was the first signal that the era of growth had stopped. From then on, the growth of the Italian economy was at best characterised as sluggish, increasingly exposing a structural weakness that rendered it particularly vulnerable to the global financial crisis of 2008−09, followed by the 2011 sovereign debt crisis in 2011−13 (Brandolini et al, 2018). The devaluation of the lira had a negative impact on employment rates and wage levels. The latter decreased faster than inflation thanks to the agreement signed between the government and trade unions cancelling any automatic alignment of wages to inflation (the so-called scala mobile), which had already been partly curtailed in 1984. In addition, the income distribution changed unfavourably for waged workers. The GDP share of wages declined by 5%, a sharper decrease than in other European countries at that time. Last but not least, a strong austerity policy was implemented, comprising radical cuts in public expenditure and increases in taxation (Sbarile, 2018).

Starting the following year, both relative poverty and absolute poverty began to increase (Commissione di Indagine, 1996; Amendola et al, 2011a). In particular, absolute poverty doubled in the South and almost tripled in the Centre-North (Amendola et al, 2011a: 310). During the following decade, the gradual recovery caused an − albeit slow − decrease in relative poverty in the North and Centre, but it did not improve the situation of the South, where poverty remained stable and high − at levels (around 15%) that the North had experienced over 30 years previously. In fact, the gap in the at-risk-of-poverty experience between those living in the South and those living in the North has more than doubled since 1961, with the increase becoming steeper in the last few decades.