For the past 30 years, Grazia Santangelo has made a living selling books and jewellery from a stall at the Ballarò street market in Palermo.

It is one of the oldest and liveliest markets in southern Italy — but now it is almost deserted. Because of the coronavirus crisis, 62-year-old Ms Santangelo has lost almost all of her clients and is struggling to pay for basic necessities such as food and medicine.

Now that a second round of restrictions has come into force, she says she is lucky to earn €3 a day.

“I’m at my wits’ end,” Ms Santangelo said in a phone interview. “The vibrant atmosphere of the beating heart of our city is gone. Everyone is really anxious. There is no money left.”

About 30 per cent of Italy’s population have suffered a fall in their household income as a result of measures taken to contain the virus, recent research by the Bank of Italy found.

Household spending fell 11.5 per cent in the second quarter of 2020 compared with the previous three months, according to the national statistics office.

Almost half of the people who turned to Caritas — the charitable arm of the Italian Bishops’ Conference — between May and September did so for the first time.

The worst affected are those living in the country’s south, in particular the most vulnerable, those living on the outskirts of cities and in rural areas and those engaged in Italy’s vast informal and undocumented economy, according to economists.

Grazia Santangelo has lost almost all of her clients at her market stall and is struggling to pay for basic necessities © Benni Priolisi

Employment rates were already low before the pandemic, but the share of those employed has declined by more in southern Italy than in any other region. Just over two in five of the south’s working-age population were employed in the second quarter, in contrast with two in three in the north.

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The hit to households’ income, net of government support, was also larger in the south than in the north, data from the Bank of Italy published this summer showed.

Although southern Italy experienced a less severe health emergency than the north in the early stages of the pandemic, it has recently experienced a resurgence of the virus, which threatens renewed economic damage.

“Although the north is suffering greatly from production inactivity, in the medium term, when we come out of the crisis, there will be a stronger rebound in territories with most infrastructure and highly specialised jobs, while the most disastrous consequences will be in the more fragile territories where digital services and infrastructure are lacking,” said Valentina Meliciani of LUISS University in Rome.

Column chart of Employment rate, by region (%) showing Italy's south falls further behind

In Sicily, lockdown “was a catastrophe for many people who were already in a precarious economic situation, often forced to work without a regular contract and out of the institutional safety net, who found themselves without income overnight”, said Valeria Leonardi from SOS Ballarò, a neighbourhood committee in Palermo. She expected the new curbs would exacerbate the situation.

Even before the pandemic, southern Italy had a lower proportion of the population in employment than any other region in Europe, a larger informal sector and poor job prospects — especially for young people and women. As much as half the population in some areas was at high risk of poverty and social exclusion.

Southern Italy also has a prevalence of temporary and lower-paid work and jobs involving physical proximity, such as retail, hospitality and entertainment, which are bearing the brunt of the economic fallout. More than half of children from poor families in the south are without internet at home, so they cannot attend online classes during lockdowns.

Bar chart of % of people at risk of poverty or social exclusion (2018), by region showing More people at risk of poverty in Italy's south even before the virus

Massimo Rodà, a senior economist at Confindustria, warned that the “economic consequences of this situation could last for several years, especially in the south, and could be stronger for the younger and less qualified section of the population”.

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Rome has pumped billions of euros into the economy and launched a new poverty relief scheme, in addition to the citizens’ income programme, which was approved before the pandemic and is thought to have lowered the level of poverty for the first time in four years.

About 4.6m people, or 7.7 per cent of the population, lived in absolute poverty in 2019, compared with 8.4 per cent in 2018, Istat data show.

Bar chart of % of non-essential workers who could work remotely (March 2020) by area showing Remote working is less common in southern Italy

Despite receiving government benefits, Domenico Palaia, a 52-year-old unemployed baker in Satriano, a small town in Calabria, said that he could barely afford to feed his family. The region is one of the poorest regions in Europe.

Mr Palaia lives in an apartment with his wife, two children and his 84-year-old mother, who receives a small pension.

He was already discouraged by his search for a job before the crisis hit. Now, he said, he has lost hope. “I am not sure why I haven’t gone crazy yet,” he said. “Lockdown after lockdown, if this virus doesn’t give us a break, we are completely lost.”

Domenico Palaia and his family at home in Satriano, Calabria
Workers protest against new Covid-19 restrictions in Catania © Orietta Scardino/EPA-EFE

Unlike Mr Palaia, some people do not qualify for the citizens’ income or other government benefits, because they work in Italy’s informal sector.

“The main policies implemented by the government tend to favour the categories that are already partly protected, with a salary and a regular contract. But if a worker is self-employed he or she is more exposed, and if they are part of the black economy, they could be completely cut off,” Ms Meliciani said.

Maria Grazia Brighina, 51, is one such worker. She lives in a council house on the outskirts of the Sicilian town of Mirabella Imbaccari with her brother and parents. She is frustrated that the government is not doing enough to help them.

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“We’re in a desperate situation,” she said. “Stuck between the impossibility of finding any work and the fear of the virus, in a land that had already been forgotten way before the pandemic.”

Via Financial Times