Studi Umbri meets Mauro Agostini, director of Sviluppumbria, and professors Bruno Bracalente and Alessandro Montrone of the Department of Economics at the University of Perugia, the latter two the authors of a study on the economic and employment situation of the Region. They set out for us the findings of the survey and the possible strategies for the future. On 14 June 2019, at 3.30 p.m., Sviluppumbria will present the record of its last six years of activity with an event in the Salone d’Onore of Palazzo Donini.

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THE STUDY

“The work that has been done is without precedent. Leaving aside a similar survey carried out by Professor Bracalente himself in 2009, so precise and organic a survey of Umbria’s economic situation had never been undertaken before.” This is how Mauro Agostini, director of Sviluppumbria, explains the importance of the study directed by professors Bruno Bracalente and Alessandro Montrone, which came out of an agreement between the agency that supports regional competitiveness and economic growth and the Department of Economics of the University of Perugia. “I have no love for studies that fall on deaf ears and are ignored when concrete policies are drawn up,” Agostini points out, “and so I hope that the guidelines identified in the document put forward will be heeded by the coming regional governments and in the programming of the 2021-2027 structural funds.” This study [1], whose data will be constantly updated over time, rests, as Agostini explains, on a solid documentary base. Starting from the data contained in company financial statements, the survey built interpretative hypotheses, brought out lines of tendency and proposed improvement policies. In particular, Bracalente and Montrone’s research group studied, in the Orbis database (formerly Amadeus), all the financial statements of joint-stock companies with more than five employees, that is to say an entire corporate population. As Montrone, full professor of Business Economics, points out, the analysis did not “stop at the financial indicators alone, which represent the present, but looked at the indicators of profitability and, before that, of productivity. Because one has to reason in a systematic way, bringing out the interconnections and the links among all the factors that influence the life of companies.”

PRODUCTIVITY FIRST OF ALL

“The key word of our study,” explains Bracalente, full professor of Economic Statistics, “is productivity, which chimes with competitiveness and is fed by innovation. In this area a number of critical issues remain in Umbria, but there has been significant progress, above all on the part of manufacturing industry.” The latter, after posting very positive results in 2015, is now facing a more difficult scenario, one that remains fairly satisfactory thanks to its intrinsic capacity to produce added value. The service sector, by contrast, presents greater difficulties: the traditional part of it (commerce, transport and tourism) is oversized, while the advanced part, characterised by intellectual work (culture, consultancy, communication and so on), is undersized and has very low productivity.

INSIDE AND OUTSIDE THE REGION

The study of the Istat data, the interviewees explain, has yielded at least one further point of interest. As regards employment, in fact, the team examined the situation from two distinct points of view: what happens within the economic territory of the region (what firms do, the added value they produce and the labour they employ, regardless of where the workers reside); and what Umbrian households, that is, residents, do. Well, comparing the two aggregate figures, a clear difference in trend emerged between the amount of labour employed by Umbrian firms and the employment rate of the regional population. “The employment taken up by firms,” observe Bracalente and Montrone, “has been falling. The employment rates of the Umbrian population, on the other hand, are good; they have grown in recent years and are higher than the Italian average. So the labour market of Umbrian citizens is not too closely tied to the productive activity of the region, and it offers a fairly positive picture.” In short, the workers in Umbrian firms are fewer, while the Umbrians who work are more numerous than the national average. But why this gap? “For a number of reasons,” the lecturers explain. “Among the workers in firms there are also non-residents and foreigners. And in recent years there has been a decrease in immigration flows. Moreover, the economic crisis meant that the jobs held by non-residents were the first to be sacrificed. Lastly, it should not be forgotten that a not insignificant portion of the Umbrian population works outside the region.” But employment strategies have other effects too. “In the manufacturing sector, the reduction of jobs sometimes increases productivity, because if you produce more but employ fewer people, productivity rises. And we know how in recent years the regional productive system, partly because of the crisis, has employed fewer workers.”

An interesting difference, moreover, was noticed between GDP (the measure of what is produced within the regional territory) and the disposable income of households. “Here the two figures are quite different. In Umbria, both with respect to the Italian average and to the Tuscany-Umbria-Marche area under analysis, GDP is much lower than the national average, whereas disposable income is instead substantially in line with it.”

THE WEIGHT OF DEMOGRAPHICS

Another chapter of the study dwells on the composition of the population. “Demography,” Bracalente considers, “has important effects on the economy, effects that are almost always overlooked. When a population ages, innovation slows down as well.” Fewer young people also means fewer people of working age. “Exactly; today we are paying for the fall in the birth rate over recent decades, to which must be added the emigration of many young people.” And have restrictive immigration policies had, or will they have, effects on the economy? “The two things are undoubtedly connected,” Agostini states, “and Japan is a textbook case of this. It has kept its borders closed for historical and cultural reasons, and this too is why it has been living through a very severe economic stagnation for decades: today their firms are unable to meet the growing global demand for Japanese products. The blocking of migratory flows brings about a shortage of labour and a rise in the cost of labour, which is only partly made up for by the introduction of robotics. The idea is simple: if the demographic figure does not grow, neither does the economy.”

A QUESTION OF EFFICIENCY

The analysis took as its reference the Tuscany-Umbria-Marche macro-area, for which forms of integration or collaboration on many fronts have long been mooted. One fact that emerges at once is that of the size of firms. “Umbrian ones,” observe Bracalente and Montrone, “are on average larger than the others, but there is a reason: in the Marche and in Tuscany many firms are smaller yet highly specialised and integrated with one another, something that creates an efficient system. In Umbria firms are large but less specialised.” “As for Umbria itself, one notices a very strong heterogeneity of firms, in every sector. There are no good or bad sectors, but good and bad firms. And what we have brought out above all are the differences in productivity, our key concept.”

So, is the Umbrian economy in good health or not? “On the whole yes, but in Umbria production is skewed towards the low end, with firms that are less efficient and less innovative. A problem that comes from far back and that persists. And there is more: even the most efficient, or excellent, firms have a business model and an internal balance that tends to build profitability on the containment of costs, above all labour costs, rather than on productivity, efficiency and innovation. And this holds true for every sector.” So even the best companies tend to be timid on the investment front? “Yes,” Bracalente replies, “they bet far too little on the intangible, on research or on information technology.” And yet they still manage to be profitable, sometimes with big numbers. “Certainly, and this is precisely the point: our firms are not less profitable than those of the neighbouring regions. If profitability is the first yardstick of comparison, we are well placed; but when one analyses how this profitability is obtained, then the limit comes to light: it is obtained through a short-term economic logic, rather than through investments that look to the future.” “Profitability,” Agostini echoes, “raises the problem of its distribution, of the way income is distributed. Firms in the ‘lower’ bracket produce profitability all the same (and sometimes earn a great deal), but with a short-sighted model: a less well-paid workforce and less investment in research.”

SOME DIRECTIONS

A reasonable capacity to keep afloat on the market and to generate income, but a weak propensity to invest in the workforce and in research. This is how Umbrian firms appear from the Sviluppumbria-Unipg study. What should be done? “We believe,” observes Agostini, “that it is necessary to act on the question of managerial culture. In the private sector and in public administration alike, a lack of business education comes to light. In entrepreneurial activity this means an excess of family intrusiveness in decisions, and corporate structures that are at times inadequate.” Internationalisation needs to be pursued in greater depth and built upon: “Umbria does well on exports,” comments the director of Sviluppumbria, “and we were the top Italian region for performance in the first half of 2018. But if we analyse the ratio between exports and regional GDP, and between exports and national GDP, a great deal of room for improvement and for manoeuvre emerges. Our agency came into being partly for this, to cover this margin and to raise the overall quality of the Umbria system.”

INVESTING IN QUALITY

The question of the quality of the workforce is another key concept for Umbria’s future. “When firms with high productivity and an international bent,” Agostini states, “support a higher remuneration of the workforce and a higher quality, the horizon shifts towards innovation, development and research. The entrepreneur may earn less in the immediate term, but moves the firm forward.” “Productivity is a formidable measure of quality,” Bracalente and Montrone gloss. “Those with high productivity invest more and have a greater share of intangible capital (research, patents, information technology and so on). These firms pay more for labour because they have a better workforce, with more graduates. Firms that employ a workforce of lower quality, on the other hand, may perhaps reach the same level of profitability, but they keep for themselves a larger part of the wealth produced and do not benefit the territory as a whole.” And this is a very important distinction for Umbria, one of the most educated regions in Italy. “If companies do not invest in quality and innovation,” Agostini, Bracalente and Montrone agree, “it will be impossible to meet the growing demand for quality work. And those who pay the consequences of a ‘timid’ approach to investment in innovation are the workers more than the entrepreneurs. The latter, as we have seen, may have many ways to ‘make their books balance,’ but a Region has to grow for everyone.”

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Mauro Agostini

An economist and political scientist, he was elected for three parliamentary terms to the Chamber of Deputies (1994-2006) and for one to the Senate (2008-2013). In the Prodi Government (2006-2008) he was Undersecretary for International Trade. The author of articles and essays on economic and political themes, he is Director General of Sviluppumbria and a member of the Boards of Directors of the University of Perugia and of the management company of Umbria International Airport “San Francesco di Assisi”.

Bruno Bracalente

A full professor of Economic Statistics, he was President of the Regional Government of Umbria from 1995 to 2000, and Government Commissioner for the emergency and reconstruction after the earthquake of 1997. During his long university career he has coordinated ministerial and European research projects, and he is the author of publications on various themes of economics and economic statistics, in particular: infrastructure; regional development; territorial competitiveness; the quality and efficiency of public services; inequality; and the analysis of electoral flows.

Alessandro Montrone

A full professor of Economic Statistics and, since 2018, Deputy Rector of the University of Perugia, he carries on an intense activity of teaching and research at national and international level, with studies concerning the analysis and control of business management and the study of the financial statements and of the economic and social performance of the firm. He has served on numerous auditing and supervisory bodies of public institutions and agencies.

Giovanni Landi holds a PhD in Legal Sciences. He is currently a trainee journalist at the Centre for Radio and Television Journalism in Perugia.