New Internationalist

The Art Of Arrangement

Issue 173

new internationalist
issue 173 - July 1987

Small shops, big fiddles: the tax authorities of Rome are trying to crack down.
Photo: Pepi Mensio / Camera Press
The art of arrangement
Italy wins, hands down, all the prizes for moonlighting and
tax evasion in Western Europe. Judy Gahagan delves underground
- and discovers the secret of the Italian 'economic miracle'.

'SI ARRANGIA,' says the Neapolitan, living precariously and unofficially as car-park attendant, porter, vendor, labourer, pimp, pickpocket on his city's chaotic streets. 'Si arrangia' says the lawyer whose double-doored apartment, three marble bathrooms, designer-dressed wife and powerful car bear no relation to his apparent income as an employee of the Comune. 'Si arrangia' - 'one makes out' - has a peculiarly Italian meaning: you think on your feet, don't miss a trick; make 'contacts'. It is an art, developed from historical necessity, perfectly adapted to the growing shift to deregulation, self-employment and the unofficial economy. It is a mentality much admired by the Right everywhere.

With the Italian economy apparently hitting the stars, and a submerged economy estimated at around 20-30 per cent of the gross national product, it is easy to use Italy as the shining example of leaving things to individual initiative. The mentality which is good at 'arrangiarsi' is also brilliant at taking risks, investing in 21st century technology and working at a tremendous metabolic rate. This accounts partly for the vast success of 'Made in Italy'. But behind the bravura lies another reality. That of fast-moving chaos, sweatshops, child labour, gross corruption and the galloping destruction of Italy itself.

Submerged economy and unofficial government have always been features of Italian life. The State did not exist until 120 years ago. Its struggle for existence has taken in 20 years of Fascism and six years of wartime occupation. From the beginning government was based on a system of representing 'client' interests and the bureaucracy which administered these was inefficient and corrupt. So the tradition of 'arrangiarsi', of having a network of 'contacts' ('He who has more saints gets to Paradise,' they say in Naples) and of having rock-like families to protect you if you didn't make out, grew as naturally as did the Mafia and the Camorra as systems of rough justice and violent 'government'. It made the achievement of the Left in pushing for reform and establishing responsibility and commitment, particularly in local government, all the more remarkable. That was until the new impulses of deregulation swept everywhere.

In Italy, as elsewhere, the modern industrial strategy has been that of fragmenting and dispersing labour. In the 1970s militant demands for improved conditions led to new laws which gave Italian labour higher job security than virtually anywhere else. However it applied only to firms with 15 or more on the payroll. Immediately thousands of firms employing 14 workers or fewer began to sprout. Such firms were able to avoid tax and welfare responsibility. Big firms like Fiat and Pirelli began dismantling and decentralizing labour forces. Some car parts are now assembled for Fiat by women working at home. All this is relatively new but represents the tip of the iceberg of unofficial work, which has a very broad base.

There is, for example, the vast moonlit world of 'double work'. State employees, and many others too, finish at 2pm. The rest of the day is free to do a second job, untaxed. Morning draughtsperson becomes afternoon psychotherapist. Lawyer becomes import-export trader after lunch.

Italy is a land of thousands of tiny shops, bars and restaurants. Until recently only part of the takings would go recorded. Then the tax authorities got tough. All transactions had to be recorded on government-provided fiscal receipts with special stamps. Result: a black market in official government receipts with special stamps. The authorities reacted by ruling that tamper-proof electronic cash registers must be used. Anyone, proprietor or customer alike, found without a receipt, even for a packet of chewing gum, could be instantly summonsed. But then all shopkeepers had to do was ring up less than the actual transaction.

Doctors, lawyers, accountants, consultants of all kinds whose vast fees can be lowered for cash with no receipt, are the 'elegant' tax evaders. But rapidly joining their ranks are those working with new mushrooming TV stations, local radios, courier services, fast-food, software firms and the like. This is the spaghetti-fun end of the Italian submerged economy. What about the skid-row end? It consists of four extremely unpleasant domains: the women and children working at home and in sweatshops; illegal building; the exploitation of illegal immigrants; and organized crime.

Italy is an economist's puzzle - with a big growth rate and continuing high unemployment. However, this is because a large labour force - women and children - has been kept invisible. In fact a good part of the success of 'Made in Italy' - shoes, clothes, and knitwear - depends on women working at home without benefits and welded into their place by marital, familial and community ties. And in Naples, 25 per cent of school-age children are not enrolled and truancy rates of the rest are high. Children as young as six and seven work in textiles and leather, unprotected from fire-risk and exposed to poisonous substances which induce respiratory and central-nervous-system disorders. It has been suggested that were these children withdrawn from the 10,000 tiny workshops in the city, production would grind to a halt.

The illegal building industry is destroying vast tracts of Italy. A 1981 census showed that only half the new building constructed had planning permission. Along the Neapolitan coast, in Sicily and Calabria where the percentage of illegal building reaches 85 per cent, the beautiful sea is ringed by the blight of straggling concrete towns, without wads, water, sewage, lighting or social amenities of any sort.

Italy, once the land that produced work-hungry emigrants bearing cardboard boxes, is now a land of illegal immigrant labour, mostly from Africa, unprotected and grossly exploited. Even in Sicily, where unemployment is high, Tunisians come to work on the boats for low pay, no questions asked. The local jobless look on knowing it's unwise to protest as the Tunisians despatch fish.

Finally, there are the vast profits from heroin and cocaine industries and from illegal arms sales which are laundered, in part, through the Italian economy. Economists have estimated these may add 20 per cent to the non-criminal submerged sector.

Today, the battle to counter tax evasion, fight crime, and recognize the role of sweated labour in Italian success is vigorous. The tax system is getting more efficient. Scandals and crime are uncovered daily. The trouble is that the visibility of corruption - and in Italy people are not modest about displaying their wealth - makes tax evasion seem socially acceptable.

Whatever happens to the new wealth there are clear victims and irrevocable damage. There is the damage to human potential by fragmenting and deskilling work and to the children and women whose contribution remains invisible and soul-destroying. There is the damage to government systems of social responsibility which may slide back into selfish chaos. But the most visible victim of the unofficial economy is Italy itself. The desecration of some of the most beautiful landscape and cities in the world is a dreadful example of the new poverty which uncontrolled modern industrial wealth brings in its wake.

Italy-watcher Judy Gahagan is a freelance writer based in Florence.

AUSTRALIAN MOONLIGHTER

Mike was married twice by the time he was 20;
first to Jenny, then to a large mortgage.

Mike the moonlighter. He had intentions of studying to become an engineer, but found that a job as a cadet draughtsperson with the government would pay quite well and give him more free time. The substantial mortgage was by no means essential, but Mike's parents had always owned a large, well-appointed home on Sydney's prestigious North Shore and he didn't see why he should settle for less. His wife, Jenny, decided to stay at home with their young child and to become more involved with the area's social life.

'We married early,' Mike said, 'so I don't see why we should miss out on what life has to offer. We've worked hard enough.'

Mike took an evening job with his brother, cleaning in a nearby shopping centre. The hours weren't too awkward and the money was helpful for all those little essentials like clothes and records, their wine subscription and toys for their boy. Jenny had gone without a few things in her youth and was determined that their son would lack nothing.

Due to a few simple changes on employment records, the cleaning income was tax-free. 'I pay enough tax on my first job,' Mike said, and didn't accept the connection between taxes and help for the unemployed. 'There's enough work around if you're willing to look for it,' he added.

Mike finished his studies with the help of generous study leave (official and unofficial) from his government employer. Within a year he was earning A$24,000 and a further A$8,000 from his cleaning job. Jenny inherited a substantial sum from the estate of an aunt and used the funds to buy a second car and to establish a trust account for their child.

Mike left his cleaning job and through friends at his office started contract drafting work after hours for an agency. The pay was good - A$35 an hour - and he was able to use materials and equipment (particularly computer time) from his office unnoticed. It also gave him the excuse for being able to claim a whole series of 'expenditures' on his taxation forms, such as furnishings, heating, materials and travel. With the help of another friend, an accountant, he was able to net an additional $12 - $15,000 a year from this work.

By his mid 20s, Mike was earning around $40,000, but paying tax on far less. He was also quick to claim the government's dependents' allowance for his wife and the child endowment for their child.

'The allowance is a pittance,' Mike said, 'when you consider the cost of decent schooling'.

George Fisher

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