CORRIERE DELLA SERA 05 FEB 2011 Passera: Countries should be judged on the jobs they create by NICOLA SALDUTTI

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Interview with the CEO of Intesa San Paolo: We need Ph.D. courses but also technical colleges

Growth? Italy can still be competitive. More resources? No, just reduced veto rights
Passera: Countries performance should also be measured in terms of jobs created. No to the it cant be done syndrome. The country is being held back by decisional gridlock. Discrepancy between the education systems output and market requirements. 1%: growth rate in Italy in 2010, following a fall of approximately 5% in 2009 29%: unemployment rate among young Italians, which is considerably higher than before, due to the economic crisis MILAN - Whats wrong with Italy?: this was the original title of the seminar on Italy held in Davos, subsequently changed to a more neutral-sounding Italy: special case. The aim of the meeting was to try and understand why Italy, one of the major European economies, one of the founders of Europe, a country that still boasts a strong identity in many different sectors, has gone off the radar, is increasingly irrelevant at the international negotiating table, and is increasingly absent from comparative international studies. Corrado Passera, Chief Executive Officer of Intesa Sanpaolo, remains optimistic: Im still convinced that Italy can still be competitive. What picture did the four international observers (Roubini, Elliot, Bishop and Joffe) paint of Italy? To different degrees, they all expressed opinions in keeping with the overall belief that Italy remains an important country with undoubted strengths. These currently make Italy one of the worlds major economies with a very high level of accumulated wealth still, and a nation that has coped with the global economic crisis better than many other countries, thanks to the fact that the banks and public accounts have withstood the crisis. It has introduced reforms such as that of pensions before, and better than, many other countries have, but it continues to be blighted by problems of governability, and thus its credibility and reputation have understandably suffered.

Its difficult to argue with that. Thats true, and it would be a mistake to deny the existence of objective problems, even though the debate revealed a number of positive factors, for example the opportunities granted to Italy by globalization. Did all the Italian participants defend their countrys position? In truth, its not only the rest of the world that considers us to be worth less than what we really are: we ourselves are often guilty of doing likewise and undervaluing our countrys potential. During the debate, the usual old argument also came out but in Italy nothing ever changeseverything is getting worse in Italyno political force has any intention to lead the way forwardthe tradeunionspublic debt. In other words, the same reasons given for justifying the status quo. Positions that surprise, first and foremost, foreign observers, who are well aware of the presence of other countries with much worse problems than ours, but which respond with far greater determination. All naysayers? No, of course not! Many of us produced concrete proof to the contrary. Exports are growing at a rate in double figures in many sectors, manufacturing districts and regions of Italy, despite international competition. And lets not forget the banking sector which, when the situation was positive, managed to transform itself completely thanks to the beneficial boost of increased competition. Even the countrys public administration has proven capable of change, and Poste Italiane, which I have had firsthand experience of, is a good example of such change. The major emergency at global level remains unemployment. The latest figures show that 29% of Italys young people are out of work. Yes, but we still havent seen that feeling of urgency that such figures merit, either at European level or in Italy itself. Europe has 20 to 25 million people who are officially unemployed, to which we ought to add perhaps a similar number of people unofficially unemployed or underemployed, thus constituting a veritable time-bomb waiting to go off. This is a problem that needs to be dealt with not only at the European level, using community instruments, but also at the national level. Italian situation is certainly not better than elsewhere, with dramatic levels of unemployment in certain regions of the South, especially among young people. What can we do to attract greater attention to this problem? Ive been saying for some time now that, apart from the question of GDP, the governing classes of all countries must be held accountable for their ability, or lack of ability, to create jobs. We are all aware that GDP is not the only indicator of a countrys performance: lets start to support it with an index of employment, which is a factor that affects everyone, and is the main indicator of substantial wellbeing. How can jobs be created in a country like ours? A couple of suggestions we could start from

There are no short cuts, magic formulas or miraculous constitutional measures. We have to work hard on all the engines of sustainable growth in order to guarantee competitiveness and productivity at both company and systemic levels, and in order to guarantee social cohesion and dynamism. The key instruments of growth and employment throughout the world are innovation and the educational system. Innovation, you mean research? Research certainly underlies innovation, and the potential fragmentation of research we are currently faced with is enormous, probably much greater than you could imagine. Starting with biology, which may one day provide us with oil from genetically-modified algae, and going on to personalised medical treatment, to incredibly powerful computers, new web tools or new forms of social networking capable of disintermediating any other sector. Whoever proves capable of foreseeing or embracing such changes will have a great advantage over the rest, who will invariably be left behind. However, research in itself cannot guarantee innovation, can it? In order to be innovative, a system needs modern infrastructures, suitable regulations - we continue claiming we want venture capital, but we still havent put the rules in place that make this feasible - proper financial instruments and, above all, human capital, meaning education and training. Regardless of the major problem you talk about, you always end up in the same place, that is, you always come back to education and to the need to radically rethink the existing educational system. Thats precisely it. We know we have to deal with this question if we want to stop producing masses of unemployed, if we want to fill the millions of jobs throughout the world that have been left vacant as a result of the lack of suitably skilled and qualified workers. If we want to get social mobility moving once again. There are hundreds of thousands of vacant posts in Italy as well, due to the lack of suitable candidates: not only in the highly-sophisticated professions, but also in certain technical sectors and traditional crafts Theres a need for specialised Ph.D. courses, but theres also a need for technical colleges and good vocational schools. It is clear that present-day educational establishments throughout the world, from nursery schools to universities, are increasingly called on to provide something which is very different from what was required in the past. What exactly are you referring to? Im talking about, for example, the need to develop peoples creativity and inclination towards innovation much more. The need to develop more cooperative, interactive forms of learning, together with the propensity towards a more peaceful acceptance of the co-existence of different cultures. The need to teach people, first and foremost, why their skills become obsolete almost straight away. This is why young people must be made aware of, and capable of

learning, the thousand-and-one new professions and trades: this is not what happens right now, and very often educational choices are based on the past rather than on the future. But once again we come up against the same old problem, the scarcity of resources, right? Of course we cant reduce current resources, which are already threadbare. But what we are talking about here are measures that cost little or nothing compared to the huge public spending as a whole, some 800 billion euro. The efficacy of our educational establishments, of all kinds and levels, depends first and foremost on the quality and motivation of teaching staff. At present, a teachers remuneration or career prospects are little affected by the level of results obtained and by the teachers commitment to the job or to updating knowledge and skills. So we first need to reward good teachers. Another excellent idea would be to grant educational establishments greater autonomy. They can hardly be considered autonomous when their heads have virtually no say in the selection of the teaching staff or in the regular assessment of teachers performance. Very often, heads of schools dont even have a penny to spend on expanding or differentiating the range of subjects offered by the school. Schools are on the political agenda, but the real debate at present centres on the question of federalism. At the Davos Forum, as at many other such meetings, it clearly emerged that the statistics for Italy are often misleading. We are the EU member state with the greatest number of citizens earning above the European average, but unfortunately we are also the state with the greatest number of people earning less than the European average. We are plagued by such contradictions, and the average of such extremes fails to represent either of Italys two faces. Im saying this because federalism will have to prove capable of wisely handling a series of very different situations: Lombardy needs are not the same as Calabrias. Federalism represents an unmissable opportunity to reduce tax evasion and wastage, and to deal with two extremely urgent reforms: the reform of the decision-making processes and of the tax system. Are you talking about the decisional processes within the Public Administration? Im talking about institutional, legislative and administrative decision-making processes of both central and local Public Administration. The inability to create the necessary infrastructures in Italy is not so much due to a scarcity of funds, but to the gridlock of the decisional process. 20 years, or even only 10, to complete any public work means giving up any hope of growing, creating jobs and generating wealth. We must radically transform a system based on veto rights for everyone into one where each decision is clearly taken under the responsibility of specific individuals and by a given deadline. Such reform would cost nothing. As concerns fiscal reform, the plan of a wealth tax has now been reproposed. Do you support this idea?

No, I dont. True fiscal reform means total reorganisation, bearing in mind the countrys priorities. No one-off measure can be a good idea if there is no overall plan for growth, of which fiscal reform is just one part. We cant ask people to pay more taxes if we dont put a stop to wastage first. I think that a certain consensus is emerging with regard to the proposed new tax system: it needs to be less strict on employment, business enterprises and investments, to be less direct, less centralised and more delegated to local authorities; and above all, it needs to reward growth, employment and innovation.

Nicola Saldutti