Feb 20, 2025
Italy faces significant hurdles in its efforts to address its low birthrate and female employment levels, challenges that Prime Minister Giorgia Meloni pledged to tackle upon taking office in 2022. A detailed report by Reuters outlines the setbacks encountered in utilizing the EU COVID recovery funds to address these issues. The funding, drawn from a pool of 194.4 billion euros ($203 billion), was intended to boost economic growth by creating more affordable childcare options. However, the plan has stalled due to bureaucratic delays.
According to data from IndexBox, the Italian economy experienced a meager growth of 0.5% last year, far below the government’s optimistic forecast of 1.9%. This lack of economic momentum is partly attributed to the slow allocation and utilization of the EU funds, a recurring issue that hinders Italy’s ambitions for economic recovery.
The situation is exacerbated by Italy’s demographic trend, which, according to Scope Ratings, poses significant risks to economic growth potential between 2023 and 2040. Birth rates in Italy have been declining for 15 consecutive years up to 2023, with the female employment rate stagnating at 56.5%, the lowest in the European Union. These factors emphasize the urgency for Italy to effectively invest in childcare infrastructure.
Meloni’s administration has faced criticism for cutting the target for new childcare places by over 100,000 and reducing funding to 3.2 billion euros. The state budget watchdog UPB has warned of further potential cuts, raising concerns over Italy’s capability to meet the EU fund allocation deadlines.
Local administrations have been burdened with managing approximately 40% more funds than usual, leading to difficulties in forming suitable projects and disbursing funds in adherence to the EU’s stringent timelines. This has led to anxiety among cities and towns, with some already revising initial nursery plans due to the complexity involved in fund management.
Economists highlight that increasing the number of nursery schools is critical for integrating more women into the labor force, a move deemed crucial for Italy’s economic growth and sustainability. With a growing demographic of pensioners, Italy faces the challenge of ensuring a sufficient workforce to support the demands of an aging population, while still providing necessary health services.