Brussels – Real wages are falling and failing to return to pre-COVID levels, while the wealthy benefit from favourable tax treatment that exacerbates inequalities: welcome to contemporary Italy, as described in the 2026 edition of the ‘Employment and Social Developments in Europe’ report, published today (13 October) by the European Commission. The publication paints a picture of an Italy with growing inequalities, which ultimately reflects on the current government.
The Prime Minister, Giorgia Meloni, and the majority parties therefore stand accused of social policies that have led to the current situation, which is characterised, first and foremost, by widespread impoverishment of households.
Falling wages: Italy among the top countries for loss of purchasing power
The first significant figure in this comprehensive document concerns the wage index. It stresses, first and foremost, that “minimum wages have continued to rise sharply in most Member States.” Italy, however, is among that small group of Member States that do not have a minimum wage (the others are Austria, Denmark, Finland, and Sweden), and therefore a comparison is not possible.
However, looking at the overall wage index, the European Commission’s services forecast “for the whole year, real wage growth of 0.5 per cent in 2026,” with the highest growth rates expected in Hungary (5.9 per cent), Latvia (3.3 per cent), Poland (3 per cent) and Slovenia (3 per cent). The figure is expected to be negative in Austria (-0.6 per cent), Belgium (-0.7 per cent), France (-0.6 per cent), Italy (-0.4 per cent), Romania (-1.9 per cent) and Slovakia (-0.4 per cent).
This negative figure for Italy comes on top of the negative returns that began with the pandemic and have never been reversed: “For 2026, real wages are forecast to remain below 2019 levels in Greece (-0.1 per cent), Finland (-1.3 per cent), France (-2.4 per cent) and Italy (-3.9 per cent).” Five years of Fdi-League-Fi government have therefore failed to reverse the trend.
No action is being taken to tackle precarious employment, which remains a problem and is rising
The lack of action on labour market and wage policies is reflected in the phenomenon of involuntary temporary work, that is, fixed-term contracts entered into by people who would actually prefer permanent employment. “The incidence of involuntary temporary work is relatively high and rising” overall, notes the European Commission. “The issue is particularly pronounced in Finland (26.1 per cent), Italy (21.9 per cent), Spain (20.9 per cent), Greece (19.4 per cent) and Cyprus (18.6 per cent).”
As for fixed-term contracts and associated precarious employment, “the situation has worsened in most of these countries (except Cyprus), with a particularly marked deterioration in Italy (+11.0 percentage points), Austria (+9.4 percentage points) and Lithuania (+7.8 percentage points).”
Taxes tailored to the wealthy and grey areas
There is, however, a section that is even more critical for the country, and it concerns how fiscal decisions and tax policies are determined. “The evidence from Italy
shows that effective tax rates start to decline from around the top 5% of the income distribution,” the report states. “This largely reflects the mechanisms whereby billionaires report little taxable income. This low effective tax burden, the Commission warns, “further reinforces wealth concentration at the top, as it allows
a larger share of returns on already substantial wealth to be retained and reinvested rather than being
redistributed through taxation.”
In addition, “this growing concentration of wealth is not only a matter of rising
inequalities. It also translates into significant economic and, in some cases, political influence.” Meanwhile, in terms of the political agenda, “the revenue foregone from low effective tax rates could
otherwise help finance public investment in areas such as education, health, infrastructure, and the green
transition.”
