The return of the euro crisis

Without stronger economic growth, Italy can’t generate jobs and the tax revenues to shave the debt. Even before the financial crisis, growth was dismal, averaging less than 1 percent [3] annually from 2001 to 2008. What obstructs it, many economists argue, are protections for firms and workers that provide privileges for some but discourage — or prevent — expansion. One example is Article 18 [4] of Italy’s labor law, which makes it hard for firms to fire workers. “If you can’t fire, you won’t hire,” says Matthew Melchiorre of the Competitive Enterprise Institute, a free-market think tank. Firms have an incentive to stay small. Italy has the largest share of employment in micro-firms (less than 10 workers) in the European Union, he says.