4 - The form of the Italian economy

Summary

This chapter examines in more detail the nature of capitalism in Italy and its distinctive features, in particular its strong manufacturing specialization in hundreds of niche areas in which many Italian SMEs are world leaders. The “made in Italy” brand, a synonym for high quality and advanced design, does not comprise only of fashion, but also of other sectors of industry, mostly metal-engineering (see Table 4.1). Traditional industry (textiles, clothing and leather) declined from 31.4 per cent of the labour force in 1951 to 13 per cent in 2011, while over the same period metal and engineering products have risen from 30.1 per cent to 42.8 per cent. The impact of this shift on value added (VA) is even greater and, as we shall see, the impact on exports is overwhelming.

Big business in Italy is not widespread, and today is largely made up of the legacy of state-owned enterprises (SOEs), partly privatized. Table 4.2 shows the great “de-concentration” of Italian industry after 1971. In the years of the economic miracle, one quarter of the labour force worked in companies with more than 500 employees, while today it is only 10 per cent. There were 241 firms with more than 1,000 employees in 1991, with an average number of workers equivalent to 3,228; in 2011 that figure had reduced to 176 with an average of 2,438 workers, totalling only a little over 400,000 workers. The only two sizes of firm to have substantially enlarged over time are the 10–19 employees and 20–49 employees, while those between 50 and 499 have fluctuated at around 30 per cent of the total. Today, the average size of a manufacturing firm in Italy is around 10 workers. We should qualify this statement by recognizing that Italian entrepreneurs often prefer to build groups of smallish enterprises that are formally autonomous, rather than seek to merge their labour force into one single unit. This has only become apparent after the approval of legislation in 1991 that obliges companies to have a consolidated budget, but even after 1991, there are plenty of groups inside which there are companies that remain unconsolidated, making it difficult to produce a precise quantitative analysis.