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Older, but Not Better, in Italy
Despite TV Show's Celebration of Aging, Pensions Draining System

By Daniel Williams, Washington Post Foreign Service
Sunday, September 21

MILAN -- "Velone," a hit summertime television show that featured geriatric women singing and kicking up their heels in a quest for a $270,000 grand prize, ended its run last week with the victor dancing a barefoot tarantella under a shower of confetti.

The creators of the series, the latest and wackiest version of the showgirl-heavy, shake-your-booty programming that is a staple of Italian television, hailed the event as a celebration of aging.

But Italy as a whole is not so much celebrating the elderly as ruefully trying to figure out how it is going to care for and feed a population that is Europe's oldest. With birthrates low and life spans growing longer, more and more people are entering Italy's generous pension system -- and money is running out. Already, more than 40 percent of income tax revenue is spent on supporting Italians in retirement.

It is a pan-European problem. The more money spent on pensions, the less is available for other social service outlays, not to mention defense and infrastructure. To try to make ends meet, France has raised the number of years government workers must stay on the job to receive a full pension from 35 years to 40, like most workers in private enterprise. By 2012, this number will rise to 42 years for everyone.

In Germany, Chancellor Gerhard Schroeder wants to increase the minimum retirement age from 65 for men and 60 for women to 67 for both sexes. Austria's parliament has passed a complex series of reforms that will raise both the minimum number of work years required to get a pension and the minimum age for pensioners. Austria is also gradually abolishing systems that permit workers to retire early; the average retirement age in Austria is 59 for men and 57 for women.

In the mid-1990s, Italy took a step toward lessening the pension burden by linking retirement benefits to yearly contributions by workers entering the labor force. But economists say that the change, which would not encompass the entire labor force until 2033, is insufficient and that more immediate remedies are needed. "Putting off the hard decisions is making decisions harder and harder," said Tito Boeri, an economist at Milan's Bocconi University.

Until a few months ago, the right-wing government of Prime Minister Silvio Berlusconi seemed generally unconcerned about the pension issue. When the cabinet issued a four-year economic plan in July, it omitted any reference to pension finances.

However, warnings quickly accumulated that the welfare state was in crisis, spurring the government into action this month, Economy Minister Giulio Tremonti told the Corriere della Sera newspaper a few days ago. "Today in Europe, pension reform is the political problem par excellence," he said.

"This is something that politicians have delayed fixing for too long. They should think a little bit about important things and stop the usual nonsense of doing nothing," said Tommasina Communara, 70, whose singing of Neapolitan ballads on "Velone" was not enough to wrest the prize from Carpina Zuccarina, 73, a mother of 11 who danced the tarantella.

These days, few parents in Italy are nurturing the large tribe of children that Italians often produced in Zuccarina's fecund days. Italy has an extremely low birthrate, only half what it was three decades ago, and the population is declining. As a result, too few young people are entering the workforce to pay for the legions of baby boomers leaving it.

"The welfare state, created to carry man from cradle to grave, is in crisis because it has functioned in an unbalanced way: It produces few cradles and few graves," Tremonti said.

Longer life spans in Italy have coincided with increased idleness among the middle-aged and elderly. Italy leads the continent in the percentage of unemployed people between the ages of 50 and 64, according to a recent report by the Organization for Security and Cooperation in Europe. Almost 60 percent of the middle-aged workforce is inactive, the OSCE said. The average retirement age in Italy is 57 because many workers can retire after 35 years on the job -- or even fewer in some cases.

Making changes is a delicate political problem. When Berlusconi first tried to reform pensions, during a brief reign as prime minister in 1994, tens of thousands of workers took to the streets in protest and he abandoned the plan. Unions consider the current proposals too severe, while business leaders consider them insufficient.

For now, there are two criteria for retirement in Italy. One is age -- by law it is 65 for men and 60 for women. But in addition, both men and women can become pensionabile -- qualified for a pension -- at the age of 57 after 35 years of labor. It is this system the government wants to alter by raising the years of labor to 40. The plan would go into effect in 2008. The government also wants to offer bonuses to workers due to retire before then, as an inducement to stay on the job.

Massimo Bagnariol, a public employee on the verge of retirement, is unhappy about the proposal. He will have completed 35 years on the job in April 2009. He considers the bonus, about 32 percent of his paycheck, an insufficient substitute for his expectations of leisure and travel.

"Here I am, just ready to taste retirement, and they want me to work another five years. Is this just?" said Bagnariol, who will be 58 by his scheduled retirement date. "I understand that something needs to be done, but five years' wait is too long for me. I would stay another year if that's possible, but not five."

Italy's pensions burden is compounded by the odd phenomenon known as baby-pensioners. These are privileged workers who, through various special programs, have retired at ages as young as 40.

Franca d'Agostino, 50, a former government print shop worker, retired at 47 after working for 30 years. In a layoff settlement, the government added five years to her years of service to qualify her for a full pension. "It was generous severance, maybe too generous," said d'Agostino, who favors reforming the system. "It cost Italy a lot of money, and I am bored." Pension rules penalize retirees who return to work with deductions from their monthly checks.

The gradual approach to changing Italy's pension system might have one unintended consequence, economists warn. Many Italians stay on the job voluntarily even though they have qualified for full pensions. With stricter rules on the horizon in 2008, up to 700,000 such eligible workers may be moved to retire in the next five years, economist Boeri advised.

The new spending on these pensioners will erode the savings anticipated by the government under its new reforms. "There is no economic reason for waiting until 2008 to make changes," Boeri said. "There are only political concerns. The problem is being dumped in the lap of future governments."

The government plans to present the new pensions proposal to Parliament this fall. The parliamentary drama will compete with yet another TV program featuring the white-haired. This one, a takeoff on the voyeuristic reality show "Big Brother," puts a dozen old-timers in a palace and follows their daily routines for 100 days.

 

 

 

 


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