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Italy: Tax Incentives and Other Measures to Tackle Youth Unemployment

(Sept. 9, 2013) Italy adopted a Decree-Law in June 2013, which was amended in August 2013, that is designed to promote youth employment in the country. (DECRETO-LEGGE, 28 giugno 2013, n. 76 [Decree-Law No. 76, June 28, 2013], effective the same day, NORMATTIVA; LEGGE, 9 agosto 2013, n. 99, NORMATTIVA.) To meet its purpose, the amended Decree-Law creates different funds and establishes tax benefits for businesses promoting investments that increase the employment of young people. The beneficiaries are employers who permanently hire people 18 to 29 years of age who have been unemployed for at least six months and who have not graduated from high school or a community college. (Decree-Law No. 76, art. 1(2)(a) & (b).)

One incentive under the Decree-Law is a tax benefit equivalent to one-third of the gross monthly earnings of each eligible new employee that are taxable for social security purposes. The monthly amount of the incentive may not exceed €650 (about US$856) per hired worker and is granted for a one-year period per worker. (Decree-Law No. 76, arts. 1(4) & 1(5).) The Decree-Law also outlines the administrative procedure for the calculation of the fiscal incentives, which are managed and granted by the National Social Security Institute (INPS). (Istituto Nazionale Previdenza Sociale, INPS website (last visited Sept. 4, 2013).)

In addition, the Decree-Law contemplates measures for increased training opportunities for young people seeking to enter the job market. It directs the Permanent Conference for the Relationship Between the State, the Regions, and the Autonomous Provinces of Trento and Bolzano (Conferenze Stato Regioni ed Unificata (last visited Sept. 4, 2013)) to adopt, by September 30, 2013, guidelines regulating apprenticeship contracts and craft contracts that provide technical and specialized training to beneficiaries. These guidelines might eventually be applied throughout the national territory. (Decree-Law No. 76, art. 2.) The training offered to beneficiaries and the professional qualifications obtained through that training must be provided in accordance with a manual previously approved by the Ministry of Labor and Social Policies in 2005, entitled, Approval of the Training Model for the Citizen. (Approvazione del modello di libretto formativo del cittadino(2005), ALTATEX [scroll down page to view]; Decree-Law No. 76, art. 2(b).)

Other incentives include the “One Thousand Youth for Culture Fund,” to be administered by the Ministry of Culture and Tourism. This fund is established with an initial amount of €1 million (about US$1.32 million) and is designed to provide internships for young people in the areas of culture and tourism. (Decree-Law No. 76, art. 2(5-bis).) Another “experimental” fund of €2 million (i.e., €6 million in all) is established under the Ministry of Labor and Social Policies, with that amount to be disbursed for each of the years 2013, 2014, and 2015 to be disbursed to government and autonomous entities that provide internship opportunities when those entities lack funding. (Id. art. 2(6).) A third fund has been created to promote internships for students graduating during the academic years 2013 and 2014. (Id. art. 2(10).)

Furthermore, the Decree-Law contemplates other urgent incentives for remedying the situation of unemployed young people living in southern Italy, where youth unemployment is higher. (See, for example, La disoccupazione spacca in due l’Italia:Il Nord cresce, il Mezzogiorno affonda [Unemployment Splits Italy in Two: The North Grows, the South Sinks], LA REPUBBLICA (June 1, 2013).) These incentives comprise funds designed to reward self-employment and entrepreneurship among young unemployed persons, as well as to support their participation in public infrastructure projects and the improvement or betterment of public property. (Decreto Law No. 76, art. 3(1)(a).) Public funds are also contemplated for the creation of internships for youth who do not at present work, study, or participate in any training activities. (Id. art. 3(1)(c).)

The “Youth Guarantee” program relocates workers who benefitted from the “partial salary integration” plan. The program is administered by the Ministry of Labor and Social Policies and is expected to be in place until December 31, 2015. (Id. art. 5(1).) The “Youth Guarantee” program is based on a recommendation of the European Council issued on April 22, 2013 (O.J. C 120/1 (Apr. 26, 2013)) to remedy youth unemployment.

Finally, the Decree-Law lists measures aimed at eliminating government bureaucracy during the implementation of the employment-promoting programs it proscribes. (Id. art. 4.)