UniCredit’s Financial Assistance
There is an impending financial crisis in Italy due to rising energy costs in Europe. Energy costs are causing rising prices and inflation rates, and the Italian bank UniCredit announced in early September that it was initiating up to €8 billion ($9.3 billion) in measures aimed at halting the economic downturn. Along with the promised measures, UniCredit’s financial assistance will offer 400,000 homeowners the opportunity to refinance mortgages.

Rising Energy Prices and Inflation in Italy

UniCredit has taken these steps because Italy is fighting soaring prices and climbing inflation rates. The rising prices are due to the energy crisis tearing through Europe as a result of Russia’s invasion of Ukraine. Italy is one of the more Russian gas-reliant nations in Europe, second only to Germany. By the end of 2022, it is estimated that Italy will be spending €100 billion ($99.5 billion) on its natural gas imports. Because Italy imports at least three-quarters of its power, the country is likely to suffer economically as the European energy crisis worsens.

The limits Russia has implemented on its oil and natural gas exports have forced nations to pay incredibly high prices for the resources. The limited exports are due to the conflict in Ukraine. Sanctions on Russian oil have caused an overwhelming increase in oil prices. The latest issue to add to the rising oil costs is the closure of Nord Stream 1, one of Russia’s primary pipelines throughout Europe. The reasoning has been that there was a potential leak in the pipeline, but there has been no progress in repairing the leak nor have any estimates been given on its reopening. The closure has left Russia downsizing its exports, resulting in gas prices in Europe increasing by 28%. These increased costs are causing many European currencies to lose value and inflation rates to rise.

Italy’s inflation rate in August had increased by 8.4% over the year before, which marked a 37-year high. Higher inflation tends to lead to less output and production, which Italians have witnessed already. A decrease in output results in a decrease in minimum wages, effectively sliding many workers into poverty. UniCredit is fighting to avoid any increase in Italian poverty, which is why UniCredit’s measures could not have come at a better time.

Mortgage Payments and Poverty in Italy

UniCredit’s financial assistance comes when Italian mortgage rates are rising, with recently established mortgages more expensive than in previous years. Mortgages with variable rates are suffering from the pressures on the housing market and are increasing so companies and banks are able to keep pace with inflation and the market. If homeowners cannot keep pace with the rising rates or high mortgages, they will likely default on their loans, and the banks could repossess their homes.

In 2020, economic activity dropped. As activity decreased, and before the government disbursed subsidies or the economy shifted to work-from-home economic activity, there were fears of being unable to pay one’s mortgage. According to a survey taken in the spring of 2020, 65% said they would probably be alright. However, a third of the respondents said they would definitely or most likely have difficulty paying their mortgages. This fear has not entirely gone away.

Extreme poverty followed many Italians like a shadow due to the COVID-19 pandemic. By mid-2022, 5.6 million Italian people were in absolute poverty. UniCredit’s measures may help to keep that number from increasing.

UniCredit’s Financial Assistance

UniCredit’s issuing of €8 billion in new loans to cover energy costs and pausing payments will allow millions to re-navigate their finances before surging energy bills and new force them into poverty. A three-month break means enough time to properly refinance a mortgage and get it back in order before payments re-commence. UniCredit’s goal is to help its Italian customers navigate the rising inflation and energy costs, keep customers unburdened from their mortgages and keep the economy working smoothly.

Pauses, more formally called “forbearances,” in mortgage payments have several upsides. The critical thing to remember is that even though the payments are temporarily suspended, there is still an obligation to pay the loans. The homeowner does not need to make mortgage payments during the window of the forbearance but must make them later – usually after the closure of the initial mortgage payment window.

UniCredit’s financial assistance is coming at a crucial time, as the limited gas exports and mounting energy bills are beginning to cause panic in Europe. The Italian government has responded by releasing its stimulus packages earlier in 2022 to generate financial stability for its citizens. In conjunction with UniCredit’s work, the two can help keep Italians out of poverty by creating an economic flow that Italy has struggled to achieve since the beginning of the COVID-19 pandemic.

– Clara Mulvihill
Photo: Flickr

Child Poverty in Italy 
In 2020, about 5.6 million people in Italy were living in absolute poverty, meaning they greatly struggled to obtain basic needs, including water, food and shelter. More than 20% of those people were children. Though Italy is not on the list of poor countries in the EU, its population of children in poverty has steadily grown over the last few years. Child poverty in Italy has become a worsening crisis. Here are three facts about child poverty in Italy.

The Link Between Child Labor and Child Poverty in Italy

In 2015, approximately 340,000 children had to work to financially support their families. The Italian government does not have a standardized system for measuring child labor, which is why no consistent data has been released in the last few years. Researchers are concerned that child labor has sharply risen amid this gap in data, especially due to the coronavirus pandemic.

Most of the children who had to work lived in Southern Italy, where there is significant segregation among social classes. Working kids typically come from impoverished multi-child households. An only child runs a 7% risk of living in poverty, whereas a child with siblings faces a 30% chance of poverty. These kids tend to work after school or miss school to work. In many areas of Italy, child labor is often culturally acceptable in workplaces like restaurants because customers think they are family businesses.

In the process of trying to make more money, some child workers fall into the hands of criminal organizations, such as the Mafia, according to Humanium. These organizations often pay kids higher than average wages in exchange for requiring them to sell drugs on the streets of low-income areas with high rates of violence. Criminal organizations often force young girls to make money through sex work.

How the EU and Italian Government are Eliminating Child Poverty in Italy

In 2021, the EU implemented the European Child Guarantee, under which member states create their own Child Guarantee National Action Plan (NAP) aimed at improving the lives of children and decreasing child poverty. The Italian government collaborated with local organizations and submitted its NAP to the EU in April 2021.

In its NAP, the Italian government focuses on early childhood education and childcare. Italy plans to provide more support to caregivers and further integrate children that are national citizens with immigrant children, especially those coming from Ukraine. The government is planning to ensure that all children have access to healthy meals at school and that more full-time schools are available for working parents. To help fight child poverty in Italy, the government has said that it will implement special support measures for children from underserved communities.

The Tree of Life Foundation is Helping Kids

The Tree of Life Foundation — or the L’Albero della Vita in Italian — focuses on providing children with proper nutrition, comprehensive health care and social and sports activities. The organization started in 1997 as a volunteer program, and about a decade later, the Tree of Life became an official Non-Governmental Organization (NGO) in Italy. Since becoming an NGO, the program has expanded to other countries across the world.

In its latest response to growing child poverty in Italy, the Tree of Life Foundation gave baskets of staples to families that included groceries, children’s clothing and educational materials. It also provided families with an education program to learn how to best manage their household budget. The Tree of Life offers individual counseling, parent-support programs, workshops for children and employment-guidance meetings. The organization has created a network where impoverished families can support and learn from one another, and it prioritizes supporting mothers and pregnant people.

Looking Ahead

Though poverty is worsening in Italy, and child poverty is no exception, community members work to protect kids. Local communities help children in need by volunteering, assisting families and mothers, donating meals and speaking up when they see signs of child abuse, homelessness or child labor. Multiple NGOs in Italy are fighting child poverty and asking the government to do more simultaneously. Hopefully, the country’s NAP will make important systemic changes that help alleviate child poverty in Italy.

– Delaney Murray
Photo: Flickr