The Bank of Italy Governor warns of the effects of demographic decline and urges the increase of employment of the young and women.
The European Union’s demographic decline could have “negative effects on pension systems, healthcare, business innovation, and public debt sustainability,” Bank of Italy Governor Fabio Panetta warned on Wednesday.
To counter this decline, “it is essential to boost human capital and increase the employment of the young and women,” Panetta said. He emphasised the importance of “measures favouring the arrival of regular foreign workers.”
These workers, he stated, “constitute a rational response on an economic level, regardless of evaluations of a different nature.” He delivered these remarks while addressing the Rimini Meeting.
This issue, Panetta continued, “needs to be managed in a coordinated manner within the Union,” while ensuring social stability and enhancing the integration of foreign citizens.
Panetta also pointed out that “Italy is the only country in the euro area where public spending on debt interest is “approximately equivalent to that on education.” This situation, he said, shows how “high debt is weighing on the future of young generations, limiting their opportunities.”
Need to continue with EU commitment to integration
Speaking at the event organised by the Catholic activist group Comunione e Liberazione (Communion and Liberation, CL), Panetta highlighted that the European project “is now confronted with internal and external challenges” that test its “solidity and cohesion.” He stressed European governments must ensure they “do not lose the EU’s commitment towards integration and continue the common path.”
In his speech, focused mainly on European integration, Panetta stated that “without a common market, per capita income in Europe today would be under one-fifth.”
He asserted that the idea the euro area can work effectively without a central fiscal capacity is “simply an illusion and must be overcome” with a common fiscal policy.
The new European legislature’s test, he concluded, “will be the ability to confirm the use of common expenditure projects” and to advance towards a “more complete and more integrated union” on financial and fiscal levels. This process should begin with “a reflection on the next steps” once the NextGeneration EU program expires in 2026.
