Giuliano Radicchi, factory accountant. Photos by Sarah Hofman
Residents find recession another challenge
By Mary Deneen
Few people would think a small town in rural Italy could be affected by the global recession, but Cagli has struggled along with Italy and the rest of the world. Local businesses have watched sales drop over the past year; more citizens need government help; and people have become more frugal with their spending. Since 2008, more than 1,500 people have lost their jobs in Cagli and four nearby cities in the Marche region. This is the biggest loss of jobs for the area since the recession of 1975.
As Italy’s economy plunged into this recession, executives of the factories and other local businesses worried about how to stay in business. Factory heads, for example had to decide whether to lay off some workers or cut back every employee’s hours. For accountant Giuliano Radicchi, the decision was to cut every employee’s hours in an effort to keep them all on the payroll. This factory produces machinery that builds furniture, and since October 2008 orders have decreased 40 to 50%. As a result, Radicchi’s salary has been cut by 30%. But, everyone still has a job.
In Italy, the Cassa Integrazione, a state-run agency, will assist the factory in paying Radicchi’s salary. Since Radicchi is under “Cassa Integrazione,” he cannot come into work for a fixed number of days and receives no pay for those days. Radicchi says that he and other high-level employees suffer more because their salaries have been cut more than those of lower level workers. Cassa Integrazione will cover the basic salary of the low-level workers, but not Radicchi’s higher administrative salary. With this year’s paycut, Radicchi, 52, says that he has cut his personal budget by eliminating vacations and dinners with friends. The Cassa Intergrazione benefit payment usually only lasts 6 months, but the recession has caused the Italian government to pass a law extending the help for 12 months. The factory hopes that by next year the economy will be in better shape and that the Cassa Intergrazione will have been successful in helping the factory’s employees.
For those who lose their jobs, the Office of Unemployment in Cagli provides job training and assistance during the job search. Unemployed citizens meet with Giuseppe Moretti, a lifelong resident of Cagli, who helps them through the process.
Handmade Jewelry in Cagli, Italy.
Italy treats unemployment differently than the United States. Through the Italian offices of unemployment, cities like Cagli offer scholarships that finance job training. The businesses of Cagli see this training as a good business investment. What is now changing with the Office of Unemployment, Moretti says, is that once a citizen requests a scholarship for job training, they must work immediately with Moretti in a type of synergy to find and make something happen together. They are not allowed to wait around for something to happen.
The Office of Unemployment also works with small businesses run by young people and helps women with children because they are discriminated against in the Italian economy. In the past, Cagli was a major force in the fabrics industry along with the rest of the Marche region. Gradually the industry collapsed due to copied designs, outsourcing to China, and cheaper materials. Now Cagli’s steel industry is growing. But Moretti thinks Cagli would really flourish in the green technology industry. If a new business were to start in this area, Moretti thinks it would help people secure jobs and also help the town as a whole conserve energy. And the cleaner Cagli is, the more tourism it might draw.
Compared to the rest of Italy, Cagli is doing somewhat better economically because it has a lot of small businesses, according to Moretti. Small construction companies of about two to three people have been succeeding, especially after the recent earthquake. Also Italians tend to invest a considerable amount of money in their houses.
The food stores in Cagli are surviving, but orders have been down about 20% in consumption. Moretti says that the Cagliese were frivolous before with their spending at the marketplace. But since the recession people just buy the essentials. Even Moretti and his wife make lists of the food they need and stick to it.
Cutting Down Spending at the Grocery Store.
A local dairy storeowner, Pierpaola Ragni, adds that more people are buying their goods now in big supermarkets instead of the little shops like Ragni’s because the supermarket’s goods are cheaper. Ragni says she has not lost her customers, but the recession has caused her customers to buy fewer goods from her. She thinks that her customers are either buying some of the dairy at the supermarket or they just buy what that they need.
From the talk and news of the global recession, the people of Cagli have learned to be a bit more frugal with their money. Although from a national standpoint, Italy has been a sluggish economic performer for well over a decade, it has had a traditional low-risk, low-growth economic structure, which now seems to be somewhat of a strength compared to the current crisis in the United States and in the United Kingdom.
One reason could be that most Italian families have no mortgage and live in houses fully paid for at the time of purchase. This is why Italy has not experienced a housing bust. Many Italians are hopeful about the economic future because Italian banks have very conservative lending practices to households and businesses as opposed to the United States. Italian banks rely more heavily on retail deposits and bonds for their funding.
On the other hand, Italy has the largest public debt in the European Union. Many citizens favor Economy Minister Giulio Tremonti’s approach to small stimulus packages and continue to put their faith in the strong banks. In any event, whether the economy will continue to affect businesses and citizens, the saying in Italy is that Italians only work to live. Despite the recession, Cagli and the rest of Italy will continue their strong sense of living. No economic recession will take away the culture and pride they have for their lifestyle.
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