(Bloomberg) --
Italy needs to retrain workers and not just protect them if it wants to recover from the possible structural damage done to the labor market by the coronavirus pandemic, said Andrea Malacrida, who heads temporary employment company Adecco’s Italian unit.
Out of a labor force of approximately 23 million in Italy, about 3 million contracts were not renewed, particularly in sectors like tourism, entertainment and similar areas hard hit by the country’s strict lockdown of businesses and people, said Malacrida, whose company has 350 offices across the peninsula.
“It was a bloodbath for temporary contracts,” he said. “Now, the important thing is to move forward, it’s not enough to furlough or give handouts, we need to retrain people, to create new skills and growth to replace the jobs that aren’t coming back. So far, the government has not done enough on this front, and it could come back to haunt us in the future.”
Italy, one of the original epicenters of the virus in Europe, began a regional lockdown in late February before expanding to the whole country in early March. The government started to relax its restrictions from last month. The shuttering of businesses led to a 5.3% decline in gross domestic product in the first quarter, and a far deeper slump is anticipated the three months through June.
“There will be some new jobs available, for example people to manage the new normal with the virus, to take temperatures, to make sure people follow directions, to guarantee logistics in the new environment,” the Adecco (SIX:ADEN) Group Italy CEO said. “Some areas are growing like online and of course deliveries of all kinds.”
The Bank of Italy sees the economy shrinking between 9.2% and 13.1% this year, which could swell the country’s massive debt ratio to well over 150%. The government has passed two fiscal stimulus packages since March worth a total 75 billion euros ($85 billion) to support businesses and workers damaged by the pandemic and Italian leaders have acknowledged that more may be needed -- particularly to help keep furlough programs going.
Malacrida says the aid has helped soften the blow but there are many pitfalls, even as he anticipates a bounceback in the workforce.
“There are cases where digitalization has actually reduced the labor force, people have realized that activities done in offices can be done remotely, or that a class of 12 in person can become a class of 50 online, and they are cutting staff, or perhaps they no longer need to rent huge office spaces, they can only rent one floor,” he said. “These are changes that could be lasting.”
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