Friday, March 20, 2009

Italians Turn to Priests for Loans When Unemployment Benefits Aren't Enough

Bloomberg reports that Europe’s most indebted country, Italy, faces its worst recession since 1975, the church is stepping in to help cash-strapped Italians, who receive the lowest unemployment benefits in the 30-member Organization for Economic Cooperation and Development.  The smallest of Italy’s 325 dioceses have earmarked a minimum of 15,000 euros to support bank loans for parishioners. The archdiocese of Milan has created a fund now totaling 3.2 million euros to which people may contribute to over the Internet.  Church officials will meet in Rome March 23-26 at the Italian Bishops Conference to commit more cash, according to Andrea La Regina, head of social projects at Caritas, a Catholic charity based in Rome.  

Caritas serves as the intermediary between parishes and Banca Etica, or Bank with Ethics, a lender started 10 years ago in Padua by a group of nonprofit organizations.  To obtain credit, Catholics must first make their case to their parish priest, who presents the appeal to a three-member council of the local branch of Caritas. If the charity decides with Banca Etica that there are grounds for a loan, the church acts as a guarantor.  “We examine case by case to ensure that people aren’t too indebted,” said Claudio Gasponi, who screens loan requests at the bank. About a third of applicants receive the funds, he said.  The current interest rate is 3% a year. That compares with personal-loan rates of between 8.9% and 9.3% at Intesa Sanpaolo SpA, Italy’s second-biggest bank.

Italy’s jobless rate climbed in the fourth quarter to 6.9%, its highest in more than two years, the national statistics office said today. Demand for unemployment benefits soared 46% in the first two months of 2009 from a year earlier, the country’s welfare and pension agency INPS said this week in its annual report.  Italy’s unemployment benefits are a fraction of what neighboring France pays.  Former workers get a maximum of 40% of their wages, capped at 1,000 euros a month, for a maximum of six months, according to labor law.  In France, benefits last for almost two years and equal a minimum of 57% of the person’s last paycheck.

Prime Minister Silvio Berlusconi turned down a proposal by the opposition Democratic Party to extend unemployment payments to former temporary workers, who now account for 10% of Italy’s workforce as the country introduced more flexible labor contracts to encourage companies to hire.  On March 1, he told reporters in Brussels the cost would be “unsustainable.”

Italy is hemmed in by debt 1.1 times its GDP, which costs 81.5 billion euros a year in interest payments. The country also has a European Union obligation to keep its deficit within 3% of GDP.  Italy’s $1.8 trillion economy will contract 2.6% this year after shrinking 1% in 2008, the most in three decades, according to Bank of Italy’s deputy director general, Ignazio Visco.


International | Permalink

TrackBack URL for this entry:

Listed below are links to weblogs that reference Italians Turn to Priests for Loans When Unemployment Benefits Aren't Enough:


Post a comment