Bank of Italy chief calls for minimum wage to improve social justice

Italian wages have recorded some of the weakest growth in Europe over the past 25 years in real terms, the head of the central bank said on Wednesday, backing the introduction of a minimum wage to address social inequalities.

In a high profile speech, Bank of Italy Governor Ignazio Visco, who steps down this year, also spoke of the role that well managed migration could play in helping to offset the impact of Italy's low birth rate on the economy over the next two decades. Visco's comments on the minimum wage contrast with the position of the right-wing administration of Prime Minister Giorgia Meloni who at the weekend said such a measure was only good in theory but could easily backfire in practice.

Visco, however, spoke at length of the problems of the jobs market in Italy, where short-term contracts have propped up employment levels but offer low wages. He noted that a fifth of young workers were still on temporary contracts even after being in a job for five years.

"Too many, not just the young, do not have official jobs or, if they do, are not offered adequate contractual conditions, as in the other major countries," Visco said. "Introducing a well-designed minimum wage system could be the response to non-trivial demands for social justice."

Visco also said the European Central Bank must tread a narrow path in avoiding either an insufficient monetary policy tightening that would cause inflation expectations to rise or an excessive restriction.

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