A Report on the Impact of Unemployment on Businesses in Italy

This report delves into the impact of unemployment on businesses in Italy, exploring the economic challenges and providing a detailed analysis. It begins with an executive summary and introduction, setting the stage for an examination of the background of the topic and the chosen country, Italy. The methodology outlines the approach used to gather and analyze data, including key economic indicators like labor force, GDP, and inflation. The report examines the causes of unemployment, the effects of unemployment on businesses, and the role of the government in addressing these issues. It provides a comprehensive overview of the economic climate, including the effects of the pandemic and government policies. The report concludes with recommendations for addressing unemployment and promoting business growth in Italy, offering valuable insights for understanding the complex relationship between unemployment and economic performance. The report also references various articles and literature, providing supporting evidence for the findings and analysis.

THE IMPACT OF
UNEMPLOYMENT IN
ITALY ON BUSINESSES

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................3
INTRODUCTION ..........................................................................................................................4
MAIN BODY...................................................................................................................................4
Background of topic and chosen country ....................................................................................4
Methodology ...............................................................................................................................6
Impact of unemployment ............................................................................................................7
Role of Government in Unemployment ....................................................................................9
CONCLUSION .............................................................................................................................10
Recommendation ..........................................................................................................................11
REFERENCES..............................................................................................................................12

EXECUTIVE SUMMARY
The present report is about unemployment and its causes in Italy, and how it has affected
the business in a way that it accounts with hindering the growth of the business and has laid to
the understanding of what are the measures which can be taken by the government of Italy in
order to avoid the same and account with the growth of the company.
It has accounted with the brief introduction of the topic where the same has been
discussed in detail, with relevant research and being provided with the research with various
facts and figures which are in the forms of tables and charts and form the sources which are
being reliable where it has accounted with the impact of unemployment on the businesses of the
country.
The report has overviewed with comparing the findings with some of articles and
literature and discussed the same with findings in own term where the analysis was about the
economic indicators such as Labour force, GDP. Inflation that is consumer price index and has
lastly accounted with the role of government in relation to the unemployment and lastly
accounted with the conclusion.
It can be seen that increasing unemployment has decreasing purchasing power of people
and hence impacted on business of firm in long run. Most of business in country about to close
because of pandemic and multiple government policies which are not favouring industry and
report highlight about different area that has been affected from rising number unemployment
rate in the country.

INTRODUCTION
Unemployment refers to the the state where the jobs are being not being available to the
individuals of the country and who are willing and seeking to perform the job to ensure the
smooth flow of lives and not accounting to sit ideal. Italy is being accounting to unemployment
in unfavourable manner which has laid to various problems for the residents and citizens of the
country as a result has accounted with affecting the economic growth of the country (Korinek,
Stiglitz, 2017). Present report will analyse the reasons for unemployment in the country with
various fact and figures and measures taken by the country to avoid the same.
There are number of reasons which are responsible for lost of many jobs in Italy such as
Pandemic Lock down close most of business which provide work to large number of people and
report explain it in details. Italy one of developed country of European Union but improper
industrial policies and other macro environment factors impacted on different types industry and
hence large number of people lost their job for it. Pandemic, European Union regulation on
different type of work etc. and there are many other reasons which are responsible for rising
unemployment rate in the country. This topic chosen by scholar as it will help in giving better
idea the way in which growth of company effected and various industry closed such as in
Coronavirus tourism as well as hospitality workers lost their job.
MAIN BODY
Background of topic and chosen country
An economic activity is a process that, based on inputs, leads to the manufacture of a good or the
provision of a service, the concept of economy covers Supply, demand, unemployment,
purchasing etc.
Italy is a European country whereby the latest record it accounts with the population
which is being 6.04 cores where the unemployment rate is then expected to increase by 11.6
percent where the unemployment rate in Italy stood by 9.9 percent already in the year 2019,

which is being one of the lowest rate in the last years (Forecasted unemployment rate in Italy
from 2020 to 2022, 2020). Its capital is Rome which is the landmark art and ancient ruins where
its major cities include Florence, Venice the city of canals and others .
Unemployment refers to the term referring to the individual who are not being in the
state of self employment and paid employment but are being currently available for work during
the period of reference. It can also be referred as individuals who are being employable who are
being seeking out for a job but are unable to find the same. Adding to this it refers to the people
in the workforce or a pool of people who are being available to work but don't accounts to have
the job which is being appropriate. Impact of these accounts with the slowdown growth of the
country whereby it lacks with various opportunities of getting talented individuals who can
contribute in success of the company.
The unemployment term can be confusing and tricky but this concludes people who are
waiting for the return to the job, so they can earn money to satisfy their needs. Employment and
unemployment within the country depends on the economic condition of the particular country.
Negative growth can be reason for the unemployment within the country.
Aggregate demand theory
Change in aggregate demand , whether unanticipated or the Anticipated , have their
Greatest short run effect on the real outputs and employments, not on the prices. Aggregate
demand is important, however, there are may other type of unemployment which will not be
reduced through the demand management It can include -
Frictional unemployment
This covers people who are looking for the jobs after their eduction.
Structural unemployment
people without the skills for the labour market.
Geographical unemployment
Geographical unemployment a mismatch of skills throughout the country.
Real wage unemployment
caused by wages being above equilibrium levels.
Cause and effect of unemployment
There are various reason for the unemployment within the country. Most some reason can
conclude Occupational immobilities, Geographical Immobilities, technological Immobilities and

structural unemployment. It is necessary for the local government to focus on the unemployables
otherwise it can have some negative impact on the country. For examples- Pressure on the
government to provide jobs to the people, Increase in poverty within country and it will also
affect business because unemployment will decrease the capacity of the people to spend on
money to buy things.
Methodology
The problem of unemployment is being prevailing in the country which has resulted with
various implication in unfavourable manner which have affected the economic growth of the
country and significantly accounted with weakening the position of the country all across the
globe,
According to the recent data of 2018, Italy has the labour force of around 23.22 million
people where by it is being determined by number of persons who are being employed and
unemployed but looking for the job which is being determined by the total working age
population in Italy. This accounts with not including the jobless who are not looking for any kind
of work. This encompasses and comprises of all those individuals who work for gain which can
be in the form of employees, employers or can be self employed in Italy and include unemployed
who are being seeking for the job (Italy: Size of the labour force from 2010 to 2020, 2018) .

The analysis accounted with labour forces which comprises of all person who fulfil the
requirement for the inclusion among the employed ones as a result leads to removal of
unemployment in the country. It is being found that the high participation rate combined with
low unemployment rate is a sure sign of robust job markets, whereby the data indicates that there
needs to be taken lot of efforts remove the unemployment and make the figures more robust.
This have accounted to take various things in consideration whereby the first things
accounts with gross domestic product which refers to value of total market value of goods and
services which are being produced within a country per year. It is an important economic
indicator of the strength of a county, whereby according to data of 2019 the GDP in Italy has
accounted with 2.45 trillion US dollars where after increasing significantly over the past years ,
the GDP of the country has gone through various fluctuation whereby the major reason
accounted with the global crisis in the globe and recently the pandemic of corona virus has
shattered the businesses in the country (Italy: Gross domestic product (GDP) in current prices
from 1984 to 2021, 2019 ). The downturns were primarily due to inefficiency in regards with
spending and incompetent leadership. When analysing with the data of overall differences with
revenues and spending whereby the country has posted an unfavourable balance or deficit which
is over the past year accounting to increase in the national debt over the years.
The analysis has accounted with the link between the both is that more the GDP of the
country more will be the opportunity to remove the unemployment as result will lead to having
more opportunity in value production of goods and services and the findings of research that
country accounts to grow on constant pace in order to account to high GDP and removing
unemployment.
Another economic indicator, Inflation rate is calculated by using the increase in the
prices of a defined product basket which contains various services and products, on which the
consumer spends money throughout the year. According to the recent data of 2019 the average
inflation in Italy accounted with 0.63 percent as compared to the records of the previous years
(Italy: Inflation rate from 1985 to 2025, 2019).
According to the Vermeulen (2017), there is being inverse relationship which represents
low levels of unemployment accounts with high level of inflation and high unemployment
accounts with low inflation and said as deflation.

Impact of unemployment
Unemployment is an one of the biggest issues in the Italy and current unemplotyment
within the Italy
The unemployment has accounted with various negative impact on the businesses of the
Italy where it has accounted with inflation of wages where unemployment leads to hard time
filling up vacant position where there are not takers to fill the vacancy where the wage inflation
occurs when there is the increased demand for labour as the number of individual to perform the
same is too low as a result leads to increase in the wages to attract right talent and retain the
existing ones (Dvouletý, Lukeš, 2016).
It also accounts with the dig in the productivity where if the when employers in the
businesses of the the Italy are unable to find right workers for the vacant positions which
accounts with the company not affording for higher wages, settle for employees and workers
who are being less talented as a result accounts to less productivity and slow growth of the
businesses (Butkus,2020) .
(Source: Crisis Response Monitoring, 2019)

From the above graph it can be analysed that the unemployment has accounted to raise after the
pandemic which is because of the means the businesses has accounted with low margins and non
boosting up of sales as result has accounted with various lay off and accounted with condition of
unemployment in the country.
(Source: Unemployment In Italy,2019)
From the above graph it is being understood the major increase was in the year in
between 2007-2011 where by it is being understood that there was unemployment in the year
2020 after COVID 19 because most of the companies believe that younger workforce needs to be
hired as a result of having productivity in business operation and laying down old age people
where it accounted with the findings that company may lack 7effective leadership and accounts
with non experience in the operations of the company.
Role of Government in Unemployment
There are various role of government of Italy where it can account to have taking steps
towards Globalisation where it can take initiatives towards inviting foreign direct investment
which will leads to lots of opportunity of opening new businesses all across Italy as a result will
account to high employment generation and removal of unemployment as a result also will
account with high growth of economy and growth of the country (Afolayan, 2019).

This will account to individuals to learn various challenging task and will account with
opportunity of getting better chances even if the situations in the economy are uncertain related
with the labour market.
It can also account with providing educational and training and development programs
to unemployed individuals as result will lead to enhancing skills and talents as a result will
account to more job opportunity and helps individuals with lessor chance to be laid off and
increase the chance of unemployment.
It can account with fiscal policy which can decrease unemployment in Italy by helping to
increase the aggregate demand and rate of growth of economy. Whereby the increase in
aggregate demand there will be inclination in real GDP where the firm will produce more which
will increase the demand of employees and workers and account to lower down the
unemployment rate and also with higher the aggregate demand, lessor will be lead to companies
in Italy to get bankrupt as a result will increase the job market and reduce unemployment and
will lead to the economic growth (Rochman, 2020).
There are number of ways which can adopted by government in order to increase
employment rate and positively impact on market such as it has to increase speed of vaccination.
Government has to provide free vaccine as after immunity develop more people will attract
towards different product as well as services for example: Tourism business of country improve
as people will be health and hence it will lead to decrease in unemployment rate. It also has to
change in industrial policy such as reducing corporate and other taxes will attract other
organisation to invest in it and impact on growth of country in long term.
Loans must be given to SMEs as well as other business on minimal interest so that they
can smoothly run business and hence employment in the country can be increased. Government
also has to pay to people who lost their job and it will rotate money and hence improve financial
condition of country in long run.
CONCLUSION
From the above report it is being understood that Unemployment in the country can serve
as major problem and hinders the economic growth of the country as a result can lead to various
uncertain activities in the country. The report has made to the understanding that there are
various factors which accounts to unemployment in the country and its negative effect on the
operations of the business and what are the steps and action plan decided by the government of

the country to overcome the same and accounting with the growth of the company. The report
has identified and supported with various facts, figures and chart and lead to understanding
analysis well.
Recommendation
 Government has to introduce policy that are favourable to business such as it has to
reduce taxes which help in different business to grow as well as expand business in
different sector.
 Framing policy related to loans which help to exist as well as new business to run their
operation smoothly, and they are able to give employment to people and save the job of
workers that are already working in the organization.

REFERENCES
Books and Journals
Afolayan, O.T., and et.al ., 2019. Reducing unemployment malaise in Nigeria: The role of
electricity consumption and human capital development. International Journal of
Energy Economics and Policy.9(4). pp.63-73.
Butkus, M.,and et.al., 2020. Does Unemployment Responsiveness to Output Change Depend on
Age, Gender, Education, and the Phase of the Business Cycle?. Economies. 8(4). p.98.
Dvouletý, O. and Lukeš, M., 2016. Review of empirical studies on self-employment out of
unemployment: do self-employment policies make a positive impact?. International
Review of Entrepreneurship. 14(3).
Korinek, A. and Stiglitz, J.E., 2017. Artificial intelligence and its implications for income
distribution and unemployment (No. w24174). National Bureau of Economic Research.
Rochman, A., 2020. How does the government reduce unemployment? Legal Policy Analysis of
the Government's Role in Strengthening SMEs in Indonesia. Unnes Law Journal. 6(2).
Vermeulen, J.C., 2017. Inflation and unemployment in South Africa: Is the Phillips curve still
dead?. Southern African Business Review.21(1).pp.20-54.
Online
Italy: Gross domestic product (GDP) in current prices from 1984 to 2021,2019[Online].
Available through<>https://www.statista.com/statistics/263577/gross-domestic-product-
gdp-in-italy/
Italy: Size of the labor force from 2010 to 2020.2018[Online]. Available
through<https://www.statista.com/statistics/275312/labor-force-in-italy/>
Italy: Inflation rate from 1985 to 2025.2019[Online]. Available
through<https://www.statista.com/statistics/270489/inflation-rate-in-italy/>
Crisis Response Monitoring. 2019 [Online]. Available
through<https://www.businessinsider.in/stock-market/news/these-7-charts-show-how-
brutal-the-march-jobs-report-was-and-signal-further-economic-pain-ahead/articleshow/
74985310.cms>
Unemployment In Italy. 2019 [Online]. Available through<https://covid-19.iza.org/crisis-
monitor/italy/>

Forecasted unemployment rate in Italy from 2020 to 2022. 2020[Online]. Available
through<https://www.statista.com/statistics/1109090/forecasted-unemployment-rate-in-italy/>