The Economy: A Stained Ledger

"Non si tocca--il posto di lavoro!"

(Keep your hands off--my job!) That chant by demonstrators protesting dismissals by Montedison, Italy's giant chemical company, rang out ominously last week--a part of a Greek chorus that increasingly laments an economy gone sour. A glance at Italy's stained ledger:

> Unemployment stands at 7.4%, or 1.7 million out of a labor force of 23 million. Of the unemployed, more than 1 million are young. Parliament allocated $1.2 billion last year to provide between 500,000 and 600,000 jobs for unemployed youth, but the effort was an almost complete failure. Though 650,000 people signed up, there have been only 62,000 job openings thus far.

> The government reduced inflation from 22% in 1976 to 12% currently, but at the cost of lowering the economic growth rate to 2%, v. 5.6% in 1976. As a result of lessened business activity last year, tax revenues from 1977 are expected to be down $2 billion.

> The monumental 1976 trade deficit of $6 billion was more than halved last year, while the 1977 balance of payments produced a $2.3 billion surplus. But this was accomplished by imposing stiff credit restrictions and astronomic lending rates of up to 22%. The result: a further slowdown in business activity.

> Per-unit labor costs in manufacturing, which had risen 45% over the previous two years, increased even further because of automatic cost-of-living increases and social security obligations that have skyrocketed to 100% of a worker's basic salary. These gains, negotiated by militant trade unions, fail to touch a booming black-market labor force of some 8 million who work for low pay and no fringe benefits.

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