principles of universalism and uniformity of services, and financed through taxes), it
offered citizens a wide diversity of services according to their profession. Second, it was
based on the principle of compulsory insurance, so that contributions by both employers
and employees represented its main source of financing. Third, it consisted almost
exclusively of social security (pensions and social insurance) and health services, while
unemployment and housing policies were always considered fringe sectors. Finally, like
other continental countries (namely France and Belgium), it provided mainly cash
incomes rather than public services.
Beginning in the 1950s, minimum pension levels were extended from state and private
employees to many non-wage and salary earning categories (farmers and sharecroppers,
craftsmen, shopkeepers and all the professions), with each category creating an
autonomous fund or pension board, mostly managed by INPS, the state body also
responsible for other social security. Crisis loomed after the pension reform of 1969,
which improved the benefit level of old age pensions (in part by linking it to the official
cost of living index), introduced the so-called ‘social pensions’ (granted to all over the
age of sixty-five with neither income nor sufficient contributions, irrespective of any
previous salary) and enlarged the disability insurance programme as a means of income
redistribution in underdeveloped regions, especially in the South, where unemployment
was higher and political consensus was largely based on clientelistic relationships (see
clientelism). Moreover, besides traditional old age pensions, the system spread to provide
many others, such as the so-called ‘seniority pensions’ (given mostly to civil servants or
employees of state-owned companies, who were allowed to retire early, after only twenty
years of service) and disability pensions (paid to workers with physical or psychological
handicaps). As a consequence, the pension system became an inextricable labyrinth of
privileges and disparities. Finally, in the 1970s the Cassa Integrazione Guadagni
(Earnings Integration Fund, a government-funded system of benefits to workers
temporarily dismissed by their employers) was used extensively to ease social tensions
which stemmed from the crisis of industrial firms. As the number of retired grew
enormously (in the early 1990s almost 40 per cent of working-age Italians were over
sixty years old, compared to just 23 per cent in the 1950s) employment shrank (in 1960
there were 2.6 employees for each pensioner; in 1990 this had diminished to 1.2
employees per pensioner), and contributions began to cover an ever-decreasing part of
social outlays with the resulting deficit financed at the expense of the national budget.
Thus, given the inability of both governments and Parliament to pass reform bills and the
fierce opposition to change from many categories of workers, social security became,
together with the wages of state employees, the main item of the recurrent state
expenditure and, as a result, in early 1990s the system approached collapse.
The increasing unsustainability of the national deficit and heavy pressures from both
European partners and international financial organizations eventually forced change.
After long negotiations, a reform was initiated in 1995–6 aimed at slowing down the
growth of pension expenditure by raising the retirement age, reintroducing a generalized
system of capitalization and increasingly integrating state pensions with private pension
funds.
In the 1990s, reform was also instituted in the health system, which was the second
main item of Italian social welfare. Since 1978 Italy had been one of the few countries of
continental Europe (along with Denmark, Spain and Portugal) to have a national health
Entries A–Z 773