MILAN — “These are mighty measures, nobody must feel left alone.” So said Prime Minister Giuseppe Conte, revealing on Monday that the Italian government will allocate 25 billion euros and take action to generate financing for 350 billion euros “to support and push” the economy as the country fights the coronavirus outbreak. The “Cure Italy” initiative he said, will allow the country to “contrast the flood not with mops and buckets,” but with concrete steps and “a solid dam.”
“We are confident that Europe and other states will follow us, we are aware that the decree will not be enough and we will have to rebuild the economic and social structure that is being impacted,” continued Conte.
The Minister of Economy Roberto Gualtieri said 3.5 billion euros will be channeled into the health system and civil protection.
With what was also called the March Decree, the government allocated 10 billion euros to support employment and 10 billion euros to help families with the suspension of mortgages. In particular, 3.3 billion euros will be used to extend the “cassa integrazione,” a wage support measure usually applied to manufacturing companies, to commercial activities and to all those entities with fewer than 15 employees. In this case it will be extended to those companies that have even only one employee.
A total of 1.2 billion euros will help guarantee a 15-day parental leave to all those employees unable to go to work to take care of their children with all the schools closed. Alternatively, each family will have the chance to get a voucher of 600 euros to pay for a babysitter.
The government also allocated 500 million euros to guarantee each employee 12 days of paid leave to assist family members, while those who have been quarantined because they are considered at risk will be entitled to a certain number of days of paid sick-leave. In addition, to support freelancers, the government designated a bonus of 600 euros a person for the month of March. The decree also postponed March’s tax deadlines to May 31 for both self-employed citizens and companies. Three billion euros have been allocated for self-employed citizens as a protection for inactivity.
A probable, additional decree will be issued in April.
Michele Norsa, vice chairman of Missoni and industrial partner of Italian fund FSI, said that all the “initiatives are sensible and welcome,” but said that it would be important to also focus on credit and how “companies in a few weeks will be facing cash problems,” impacted for example by the closure of stores. “The urgency is great and it is fundamental to have access to cash” and that interest rates be checked and cut, said Norsa, who praised the measures to protect employees and small and medium-sized companies. “Medium and big companies will be able to sustain this crisis, which will be long, but small companies won’t be able to manage this new problem on their own.”
Armando Branchini, deputy chairman of Milan-based InterCorporate, believes the measures are “sensible interventions” but cautioned against the “limits that could compromise the liability in the long term,” taking into consideration the country’s existing debt. That said, Ursula von der Leyen, president of the European Commission said last week that it would support Italy “whatever it takes.” Branchini said it was “likely the government is also keeping some additional ‘ammunition’ going forward. Who knows what will happen in the south of Italy for example?” referring to a part of the country that has so far been less impacted by the crisis. Branchini has also been advising companies to weather the storm by reducing fixed costs or in any case to avoid adding new ones, to review investments and halt new long-term hires.
Dondup president Matteo Marzotto said activities at the company were suspended to protect employees for at least two weeks, using “flexibility depending on how things evolve,” but complying with the government’s rules and “simply using common sense.” Marzotto praised the government’s “brave and determined position,” and was pleased that “the usual political squabbles have calmed down.” On the other hand, he was “scandalized” by the critiques and the “little or no coordination at a European level,” just as the outbreak was spreading throughout the continent, while “it is clear that the Italian response can be replicated in other countries.” He was disappointed by U.K. Prime Minister Boris Johnson’s “cynic” response to the health emergency, which he believes will have “negative ethical and economic repercussions,” and President Donald Trump’s sudden afterthoughts.
“Italy will not restart on its own, and the same will be for China, every country needs merchandise to transit and people to travel,” said Marzotto, lamenting the blocks made to goods coming from Italy. “This crisis will teach us to rethink the weakness of the system, including how pointless it is to negate the global climate change. Economy should serve man, not the other way around otherwise it’s not worth living. It can’t only all be about the strongest and richest lobbies, there should be more balance in the world. We are all connected and we should not take advantage of those parts of the world that are suffering,” he added, praising von der Leyen’s stance.
“Today’s decree marks undoubtedly a first step, issued in a short amount of time, to quick-fix the emergency’s most urgent and socially impactful aspects,” noted Marino Vago, president of Italian fashion industry association Sistema Moda Italia and chief executive officer of his family’s textile company Vago SpA.
While acknowledging the importance of the measures supporting the health-care system, the Protezione Civile, the country’s civil defense, and protecting the citizen’s jobs and salaries, Vago noted he “expects further interventions [to support] the companies. It’s obvious that we will need measures and solutions targeting the Italian businesses in their respective peculiarities, in order to safeguard the pipelines that represent the real patrimony of the Made in Italy manufacturing system.”
Vago underscored the importance for the Italian government to work in tandem with European institutions to “favor the markets’ and exports’ upswings, that are vital to our sector’s economy.” The executive said he looks forward to a new decree in April as “in the upcoming months it will be important to rely on resources for the relaunch of our country.”
There was also some discontent. “The government set the goal to grant liquidity to businesses of every size…the measure goes in the direction we hoped for but it seems not enough to help face the undergoing economic emergency as enterprises are shutting down, nor does it seem in line with the actions taken by other European countries that are supported by huge financial resources,” commented Andrea Calistri, vice president of Assopellettieri, Italy’s organization of leather goods manufacturers. In the January-to-October period last year, the sector’s trade balance amounted to 5.77 billion euros, up 39 percent compared to the same period in 2018.
“Also, the measure to support employees’ salaries for nine weeks represents a poor action, as it’s not true that employees wouldn’t lose their jobs because of COVID-19,” Calistri added, noting that not even the postponement of taxes and due deadlines is a sufficient measure.
The association’s president urged the government to suspend all taxes until the market bounces back and to later implement a 60-month repayment plan. “This is the only way to guarantee that entrepreneurs can bank on their businesses serenely.”
Calistri, who stressed the importance of promoting Made in Italy in this critical moment, also contended that retail would be strongly impacted by the health emergency not only because of the closure of stores but also as “when they will return to business, the effects on customers’ behavior — including a reduction of their purchasing power, an income reduction for those who applied for the ‘cassa Integrazione’ wage support and the psychological repercussions — will impact retail for months after the emergency ends.” As a sector highly dependent on exports, Calistri doesn’t expect business to thrive abroad either, as the COVID-19 pandemic is affecting foreign countries that are crucial to leather goods, including the U.S., Japan, South Korea, France and Germany.
Meanwhile, a group of Italian companies is concretely helping out as local entrepreneurs are leveraging their networks to overcome the shortage of personal protective equipment in the country. Giglio Group, the provider of e-commerce solutions listed on the Milan Bourse in the STAR segment, sourced through its Chinese platform one million face masks destined to Italy’s Liguria region. Alessandro Giglio, president and ceo of the group, has pledged to donate 10,000 masks of the supply to a range of Genoa-based hospitals.
Italian beauty company Davines Group, owner of the Davines hair-care label and Comfort Zone and Skin Regimen skin-care brands, implemented the production of hand sanitizers to distribute for free locally to those in need. In a week, the Parma-based company already delivered over 50,000 units to public retirement homes, to the city’s Red Cross and Yellow Cross associations and to social communities and host communities for immigrants, among others. Dubbed “Gel del buon auspicio” — or “Gel of good auspice” in English — an additional 60,000 hand sanitizers are under production in the company’s facility to be distributed within the next 10 days to the same local associations.
Based in Alba, in the Italian Piedmont region, Miroglio Group converted part of its fashion and textile production to manufacture sanitary masks in rewashable waterproof cotton to support the regional demand. The company said it will manufacture 600,000 masks in two weeks, with the first 15,000 masks already delivered over the weekend. In particular, Miroglio’s facility will supply from 75,000 to 100,000 masks a day to the Turin-based branch of the country’s civil defense, with whom the company agreed upon a minimum price just to cover the production costs of the pieces.
The firm — which comprises the Miroglio Fashion branch controlling labels such as Elena Mirò, Caractère, Motivi and Per te by Krizia, and the Miroglio Textile division producing for the house’s brand as well as for other groups — is also considering providing protective masks to other institutions across Italy that have reached out directly to the company.