Italians abroad: young people are leaving the country in search of a stable economy and long-term job prospects. But what are the consequences of these losses faced by the country’s socio-economic fabric?
With contributions from:
In recent years, the phenomenon of expats – in this case, Italians who decide to leave the country to live and work permanently abroad – seems to have been constantly on the rise. The figures are certainly astonishing: according to the latest 2020 report on Italians in the world, by the Migrantes foundation, there were 5,486,081 members in the AIRE (Registry of Italians Residing Abroad) on 1 January 2020.
This, then, is a far from negligible mobility phenomenon. It affects over 9% of the total population of the country and seems to involve mainly youngsters and young adults: 22.3% are between 18-34 years old and 23.3% are between 35-49 years old.
However, it’s not just about the “brain-drain”: compared to 2006, the percentage of those expatriated abroad with a high-school diploma increased by 292.5%, compared to (an albeit very high) increase of 193.3% for those who moved abroad with a higher education qualification, i.e. degree or doctorate.
Therefore, the theory that the emigration phenomenon only affects groups of highly qualified young workers no longer holds water. These groups have been joined, with exponential growth, by the category of school leavers looking for non-highly specialized jobs.
The impact of the Expat phenomenon on the Italian socio-economic fabric
Italy, then, continues to lose its youngest, most creative and vital resources. It is missing out on the skills and expertise being made available to other, more attractive countries, which thus benefit from years of greater productivity in the workforce.
This is a massive loss for the nation. It can be quantified, according to Patrizia Fontana, president of Talents in Motion, at 14 billion euros a year, equivalent to one percentage point of GDP.
Indeed, it is human capital trained in Italy that is moving abroad, with the consequent dispersion of the resources invested in its education and specialization. Confindustria estimates that a family spends around 165,000 euros on raising and educating a child up to the age of 25, while the state spends 100,000 euros per capita on school and university education. All investments that end up benefiting those countries with greater appeal.
Not to mention the considerable costs to society, and the losses linked to the implicit missed investments by expats in the national economy. What weighs on the Italian socio-economic fabric, in fact, is both the departure of highly educated figures, but also those specialized professionals that are sometimes lacking in Italy.
In both cases, a pool of precious resources is being dispersed; resources that would otherwise help the country grow in various ways and would have the potential to innovate and help alleviate – with their own energy, skills and investments – the effects of the economic, demographic, educational and occupational crisis that is afflicting the country and has been aggravated by the recent COVID-19 pandemic.
Italian institutions are aware of this, as is clear from the continuous updates made to legislation that facilitates the return of expats to Italy. This legislation was recently extended to include different categories of workers, along with differences to the possible duration and amount of the financial incentives.
As such, the new bonus for returnees eliminates any reference to educational qualifications, managerial status or high specialization or qualifications in the eligibility requirements for new applicants. It therefore broadens the scope of this incentive enormously, opening up to applications from people in a wide variety of jobs and categories who can now benefit from it. This applies both to workers who would be willing to return to Italy, and to companies looking for tools to encourage the return of these sought-after professional figures.
We should also mention the interventions aimed at encouraging the return of researchers and teachers provided for in Article 44 of Legislative Decree n° 78/2010, which have also been boosted and extended with the latest version of the incentives.
Come home, Expat: the returnees’ bonus
If we observe the expat phenomenon from a different perspective, we can see a unique opportunity: Italy has a huge contingent of young people trained in different jobs who speak foreign languages and have gained work experience in international contexts. According to polls by the PWC study centre, this group would consider returning to Italy under the same working conditions (74% of respondents).
At national level, the tax regime that applies to “repatriated” workers (i.e. those workers who, after a period abroad, transfer their residence to Italy and mainly carry out their work here) is cyclically reinforced and expanded, as happened with the latest legislation to come into force.
Let’s look at the details, together with Angelo D’Ugo, chartered accountant and partner of the GDC Corporate & Tax consultancy in Milan.
The Legislative Decree n. 147/2015 introduced new legislation, aiming to attract individuals interested in moving to Italy from an EU or non-EU country, or to bring back Italian citizens who previously emigrated for work reasons and whose experience would benefit Italy’s economic, cultural and technological development.
In brief, compared to the previous regulatory framework (Law no. 238 / 2010), the repatriation bonus for workers stipulates that:
- the tax base relating to income produced in Italy is reduced by 70% (instead of 50%) and even 90% for those who move their residence to the Southern regions and Islands;
- The required time of residence abroad prior to return (or first entry) in Italy is reduced from 5 to 2 years.
- For employees, there is no need for the activity to be carried out in a company resident in Italy.
- There is no mandatory registration with AIRE as proof of residence abroad. This is provided that the worker, in the two tax years prior to the transfer, has maintained residence in another state with which a double taxation agreement is in force.
- The duration of the benefit is still 5 years, but is now extended to 10 years for parents of at least one child under the age of 18, or for those who become owners of a residential property in Italy following their move or in the previous 12 months. In this specific case, the tax base is reduced by 50% in most cases and by 90% for some categories of workers: those who have at least 3 minor or dependent children, and those who move to the southern regions.
- For European Union citizens, there is no reference to educational qualifications, managerial duties or particular specialization or qualification requirements;
- For citizens from non-EU countries, the rule applies as long as they come from a state with which a double taxation agreement is in force and that they are workers with a university degree and who have continuously worked as an employee, self-employed or business owner outside of Italy in the last 2 years, or have continuously studied outside Italy in the last 2 years or more, obtaining a degree or post-graduate specialization;
As of 2020, the new regulations apply not only to employees and the self-employed, but also cover to business income produced by a person who has started a business in Italy.
From a practical point of view, accessing the incentives is not particularly complex in itself. In fact, a specific request must be submitted to one’s employer (in the case of employees) or directly through the tax return (for self-employed workers or entrepreneurs). Despite this, and considering the numerous regulatory changes that have been introduced over the years, applicants should take great care in checking their eligibility and completing their application – it might well be worth paying a trusted professional for assistance. Indeed, mistakes can be costly, and subject to penalties and interest should the application be rejected by the Revenue Agency.
Companies’ role in getting talents to return to italy
There is an important fact to reflect on: according to a survey conducted in 2018 by the Controesodo Group, only 21% of Italians abroad are aware of current legislation in terms of tax relief for repatriates, and about 40% are only vaguely aware of it.
According to Rob Brouwer, CEO of Jobrapido, “These are numbers that make you think and that make clear the need to communicate clearly and more incisively by the institutions, to make young people aware of their rights and opportunities on the field.
But also, the world of work and companies directly must be involved at the forefront of this process.
In fact, companies can play a strategic role in bringing resources closer to the country – and become sources of information and communication in the recruiting phase.
The selection process itself, in fact, can become the tool through which expats are made aware of the tax benefits they could enjoy by returning to Italy. This could effectively become a lever used by Italian companies for attracting the best candidates, as well as an opportunity for many categories of workers wishing to return to Italy but who, up to now, have not had the chance.
Enabled by new technologies, essential for refining the recruiting process and making it more effective in terms of time, cost and results, these incentives could therefore represent a further and decisive lever for companies looking for new talents”.
In this regard, Brouwer concludes: “The global scope of the health crisis, and its enormous impact on national and international economies and markets, have led to a structural change within the employment landscape too. Unemployment has started to rise again, which means that job searches are increasing while the number of vacancies is decreasing, or growing at a slower rate.
This certainly implies investing resources in employer branding activities: indeed, an effective match between company and employee, and between job vacancy and application, is also reached through making the right, most suitable information available, starting from the selection phase.
But this ideal matching must also be simplified and streamlined through the use of the latest tools and technologies available in the recruitment industry. For many sectors nowadays, the biggest challenge is not receiving enough applications, but extracting the right application from all those received: the use of the latest technologies – such as AI and Big Data and advanced programming techniques – is essential to make the recruitment process more effective and to perfect this ideal ‘meeting’ between job supply and demand”.
Are you a recruiter or a HR professional? Jobrapido can offer you the most competent targeted candidates on demand.