Despite warnings from its pension head, Italy cabinet members approved lowering the retirement age, among other things, for its 2019 budget.
Under the draft bill, the retirement age will drop to 62 from 66.7 for men and 65.7 for women if contributions were made for at least 38 years, a slight rollback from 2011’s increase. Other provisions under the bill are a basic income for the poor, a partial amnesty to help with tax issues, and a tax cut for the self-employed.
The basic poverty income, which will give unemployed Italians €780, or about $1,000 per month, will begin within 2019’s first quarter, Deputy Prime Minister Luigi Di Maio told reporters following Monday’s cabinet OK.
Last week, Tito Boeri, president of the Istituto Nazionale Previdenza Sociale, told members of parliament that the retirement decrease could cost the nation about 100 billion euros. The proposed pension laws are aimed at enabling a larger number of younger generation employees to enter the workforce.
Boeri faced criticism from Matteo Salvini, Italy’s deputy prime minister and minister of the interior, who told him to quit his job and run for office.
The International Monetary Fund also warned against Italy’s budget plans. The IMF want the Italians to cut public debt, which is only second to Greece’s in terms of gross domestic product proportion.
The proposal also looks to increase Italy’s budget deficit to 2.4% of GDP. The European Union’s Italian target is 0.8%. The bill is on its way to Brussels, where the commission will weigh in on its constituents over the next two weeks. If the EU officials don’t like Italy’s plans, they can request changes, and the whole process starts over.
Giovanni Tria, the nation’s economy minister, says he can convince Brussels to see things Italy’s way. “The idea that this budget will blow up Europe is totally unfounded,” he said.
Tria also denied rumored plans to resign after the budget’s finalization, saying it “would not make sense” to leave after going through the entire procedure.
“I am not disposed to masochism,” he said.