Italy: Increase in migrants could lower public debts

Rome: Data from the Italian Ministry of Economy and Finance’s latest budget report suggests that an increase in migrants could have a positive effect on the Italian budget.

Just days after the Italian government declared a state of emergency regarding the numbers of migrants entering the country, data from the Italian Ministry of Economy and Finance suggests an increase in migrants could actually slash public debts.

“The government wants more migrants: They are useful for lowering the debt,” the front page of Italy’s center-left leaning La Stampa newspaper proclaimed on Friday.

The current right-wing coalition led by Brothers of Italy leader Giorgia Meloni has, until now, remained pretty consistent in its position on migration: it wants to keep the number of migrants entering Italy low.

But now, some experts seem to be suggesting that if immigration actually increased by 33% over the next 50 years, the public debt could be lowered by over 20 points.

A chart from the Ministry of Economy and Finance shows that if immigration rises, the national debt reduces, and if immigration sinks the national debt rises | Source: Screenshot from Italian Ministry of Finance and Economy DEF report

Italy is the most indebted country in the euro zone after Greece. One contributing factor is the country’s ageing population and a high pension burden. The birth rate sank below 400,000 in 2022, a historic low, according to the Italian national statistics bureau ISTAT.

The new economic data indicates that Italy could cut its public debt faster by taking in even greater numbers of migrants to work.

“Given the demographic structure of migrants entering Italy, the effect on the resident population of working age is significant,” Treasury officials reported in the department’s latest Economic and Financial Document (DEF) released Thursday (April 13).

The document explains how Italy’s finances should be managed in the coming years and will help determine the government’s financial course.

If immigration falls, public debt would rise, data predicts

By 2036, pension expenditure in Italy will reach a peak of about 17.4% of GDP (Gross Domestic Product), according to the Organization for Economic Cooperation and Development (OECD). Currently, it stands at 16%.

This year, Italy’s public debt stands at around 142.1% of the country’s GDP. The government is targeting it to fall to 140.4% of GDP by 2026, according to figures contained in the DEF.

The data contained in the DEF illustrates an even more interesting simulation: if immigration were to reduce by 33% in the next 50 years, public debt would rise 70 points.

In such a scenario, public debt would be expected to first dip below its current level, then slightly climb, before dropping significantly in the years following 2050.

According to the Italian online newspaper Fanpage.it, having a sufficient number of people in the workforce is of great concern within the country and will only grow more pressing.

“The drop in population, the ageing of the population and a series of other factors is taking Italy towards a crisis without precedent,” the newspaper wrote.

Fanpage adds an important clarification: the increase in immigration on which the DEF has based its figures is legal migration, with people coming in with papers and work visas.

Also read: Sicilian region works to stop gangmaster system for migrant workers

Every year, Italy sets quotas of the number of migrant jobs it can offer.

This year, almost as soon as the quotas had been set in January, companies reported they had filled the jobs “within minutes”, Fanpage reports.

Along with migration, increased life expectancy — which means people need care for longer — and a drop in fertility rates are also having a negative effect on Italy’s public debt.

The greater the size of Italy’s workforce, the greater the amount of taxes paid to Italy’s coffers, centrist Italian newspaper Corriere della Sera reports.

The paper cites a study by the Foundation Leone Moressa, founded in 2002 to study the economic impacts of immigration.

The study reported that, for the first time, the amount of taxes paid by people born abroad dropped.

The figure fell by 1.8%, while overall taxes declared fell 4.3% and the amount of taxes paid dropped 8.5%.

In fact, this is not the first time Italian economists have pointed out that a young migrant workforce can have positive benefits for an ageing country.

In 2018, the president of Italy’s National Institute for Social Security — which is publicly funded and provides ageing Italians with their pensions — also said immigrant workers were “crucial” to “maintain a sustainable balance between the those who get a pension and those who work,” Corriere reports.

Italy’s then-deputy prime minister Matteo Salvini, head of the League party, complained vocally about the statements.

The politician hasn’t yet commented on the DEF report released this week.

However, the Italian government has repeatedly underlined that it wants to promote regular migration and routes for those for whom jobs are waiting. It has also approved the DEF report.

Economists at DEF have predicted that over the next few years, the Italian population is expected to drop to about 55 million — it currently hovers just under 60 million — with 18.4 million eligible for pension. These changes would render the current levels of welfare “unsustainable,” Corriere reports.

The DEF said a managed increase in migration would also need to go hand-in-hand with other policies of integration, work and schools to ensure that the new arrivals and their families — the workers and citizens of the future — feel at home in Italy and continue to contribute to its survival and prosperity for years to come.