Austerity and Public Law: Stefano Civitarese Matteucci: Austerity and Social Rights in Italy: A Long Standing Story

Editors’ note: During autumn 2015, the blog ran a series titled ‘Austerity and Public Law’. The theme explored the implications or impact of the austerity measures in the UK or any European or Commonwealth government have had on public law or the enjoyment of public law rights. You can read past posts in this series here.

Stefano CivitareseA research project carried out by myself and Simon Halliday and involving a number of European scholars aims at exploring the question of whether, how, and to what extent the narrative of rights and their enforcement affect (and should affect) social welfare policies in times of economic crisis.

The main strand of the project is represented by a comparison of social welfare policy of the five biggest economies in Europe (France, Germany, Italy, Spain and the UK) as a foundation for theoretical work on the fate of social rights in age of austerity.

Our work addresses the following basic issues: (1) what reforms to national social welfare law have been made as a response to the global financial crisis? (2) to what extent and in what ways have the courts been engaged in challenges to such reforms of social welfare law? (3) What have been the outcomes of such legal challenges; (4) what, if any, areas of social welfare policy have been protected from reform despite the economic crisis?

In an edited collection forthcoming next year we will discuss and elaborate on the findings of our investigation. Given the economic, social and political differences between such countries, not surprisingly – despite the shared ground represented by EU constraints and the austerity bracket – the emerging answers to the above mentioned questions are quite differentiated.

Against a backdrop of general reduction of welfare entitlements – which nobody seems to doubt in the literature – my conjecture is that until now the “public law of austerity” has developed in each country following paths that are well-rooted in their own legal traditions. In other words the financial crisis of 2008 has not determined a fracture, a special constitutional law of the crisis, for certain patterns and principles regarding the relationships between the main branches of the legal system were already well in place beforehand.

This seems particularly true for Italy, however, and it provides a useful case study to illustrate these general observations.

Welfare (Non)Reforms in Italy

Italy saw none of the vast programmes of welfare reform set up in the UK since 2010, except for in the pensions and the labour market. As to the latter, a recent major reforms, the so-called “Job’s Act” of 2014 inspired by liberal principles, has introduced significant change in the rules regarding the benefits for workers who lose their job in the direction of a strict behavioural conditionality. It has not changed, however, the traditional rule according to which jobseeker benefits are available only to those who were previously employed. (No such requirement exists in Britain, Germany, France and the Scandinavian countries).

The lack of any systematic reform agenda partly depends on the difficult political challenge of reforming the fragmented and underdeveloped Italian welfare system in spite of the presence in the Constitution of a somewhat ample list of social rights to protect – to work, healthcare, education, social assistance, etc.. According to a pattern which can be traced back to the years of the so called “economic boom” in the Sixties, welfare rules and relating budget choices are mainly driven by an adaptive logic, by which only interstitial changes are introduced without an overall strategy, contributing to a further fragmentation of social policies.

Hence, the massive cuts on public spending for social welfare have barely affected the Italian welfare model – which can be described, with the exception of healthcare, as Bismarckian, corporatist, selective and reliant on the social role of family.

The profound asymmetry between social security (contributory) and social welfare (means tested or universal), a long standing problematic feature of the Italian system, has possibly increased since 2008, dramatically unveiling the historical lack of policy for family/children, housing and social exclusion in general.

Along the border between social security (pensions, unemployment allowances) and social welfare runs the allocation of competences between the state and the regions – Italy’s form of devolution. Social assistance is a subject matter wholly devolved to the latter and one can plainly see here how the shrinking of funds to be transferred to the regions makes it virtually impossible for them to cope with the task of implementing social right constitutional commitments. Suffice it to say that the relevant fund for social policies (e.g. new families benefits, people in dire need of personal assistance, the homeless) reduced from €1.884.346.940 in 2004 to €262.618.000 in 2014.

It is against this backdrop that one has to assess the engagement of the courts in challenging austerity measures.

The Constitutional Court as a Deferential Judge of Social Rights

I shall focus on the constitutional court for the obvious reason it is the one which is supposed to play the main role in facing the legislature as regards fundamental rights.

The Italian Constitutional Court (ICC) has always been by and large a deferential court. It favours a conceptual and normative framework where the legislature enjoys a significant margin of discretion for the determination of how to implement constitutional provisions regarding social rights.

Stressing the adverb how in the last sentence signals that the Parliament would not have full discretion on whether to implement such rights. The practical relevance of this point should not be overestimated though.

Also due to the concrete and not abstract way of review which characterises the functioning of the ICC when dealing with fundamental rights, it is extremely unlikely that the Court engages with the Parliament in scrutinising a welfare statutory framework per se. The point is normally what services or benefits should each social welfare policy guarantee in order to fulfil the promise of social rights. This is always a matter of seeking a possible gap or omission in the implementation of the constitution.

In a nutshell, there are two main interrelated trends in the evolution of the ICC’s case law regarding social rights since the Eighties.

First, the Court acts proactively to secure the protection of certain rights directly modifying the legislation or delivering precise instructions to the legislature as to how to amend the law. Sometimes the Court came even to acknowledge the existence of certain constitutional social rights despite the lack of explicit mention in the constitution, as it is the case for social housing. Such decisions – about one hundred of them between 1984 and 1989 – often determined sensible budgetary consequences.

This could occur in three ways: because the decision added a specific benefit in kind or cash to the service as provided for by the law; because it expanded the range of beneficiaries of a benefit; because it quashed as unlawful provisions regarding obligatory contributions to enjoy certain benefits. The technical problem with this case law was the applicability to such decisions of Article 81 of the Constitution that establishes that every law which brings about new expenses must give evidence of the specific means to cover them, e.g. by levying new taxes. Literally speaking a decision of the ICC is not a (statute) law pursuant to article 81. On the other hand, from a substantive point of view, decisions which end up creating new rules which affect public finance should respond to the accountability rationale transparent in the mentioned constitutional provision. This objection caused no little embarrassment to the Court, up to the point to prompt it to institute an internal office to study the financial consequences of ICC’s judgments, which was actually dismantled after few years for meanwhile this trend was becoming to wane.

First, to soften the harshest effects of direct and ‘expensive’ intrusive rulings, the ICC developed in fact another particular type of judgment called ‘adding-principle’ (sentenza additiva di principio)  Such judgments involved the Court giving a directive, or, principled guidance, to the legislature on how to amend the law according to certain standards in order to make it constitutionally lawful. It is often in the interstices of such principles set up by the ICC that regular courts, in turn, adjudicate social rights as long as they adhere to the view that constitutional provisions about rights can be applied directly as parameters of judicial review and are not just directives to the legislature.

Especially since the Nineties, though, the proactive mode of the ICC has been progressively dwarfed by the growing necessity of keeping an eye on financial resources. Consequently the focus of judicial review rapidly and progressively moved from the completeness of the protection of social rights to the reasonableness of policies aimed at reducing social welfare entitlements against the backdrop of a sound budget.

To take two decisions from many examples, the court with the Decision no. 252 of 1989 stated, regarding social housing, that ‘as any other social right, the right to housing tends to be realised proportionally to collective resources; only the legislator … can sensibly decide how to relate means to goals and design concrete adjudicative rules expressive of such fundamental rights.’ In 2011 (Decision no. 248), this time dealing with healthcare, the ICC observed that ‘the need to secure universalism and completeness to the country’s welfare assistance clashed and still clashes with the amount of financial resources which it is possible to devote annually to the national health system, within the framework of a thorough programme of health and social care measures.’

Let us note that this approach involves more than merely taking into account the allocative consequences of a possible resource-intensive ruling.

The most prominent conceptual tool of this new trend became the doctrine of social rights as ontologically conditional (or, conceptually dependent) on finance, which still makes eyebrows rise among many constitutional law scholars both on conceptual and normative grounds.

To counterbalance the financial conditionality of social rights, the concept of a minimum or essential core inherent to each social right – which is to be guaranteed regardless of any budgetary constraint – was then elaborated by the ICC. In fact, this minimum core has never been defined and it is rather a rhetorical argument to assess welfare policies by means of what ultimately comes down to a typical ‘reasonableness review’ familiar to jurisdictions, like South Africa, which have shunned a minimum core approach to the adjudication of constitutional social rights.

This is why it is difficult to see a clear stance of the ICC in this field, except for the reliance on the directive it should interfere as less as possible on the public purse. On the other hand, this is also the reason why one can find cases where the ICC takes a bolder view and it is capable of decisions impinging on legislative discretion.

The financial crisis and the consequent harshening of austerity has possibly reinforced the pattern of a deferential attitude of the ICC to politics with some exceptions.

I confine myself to two sets of examples.

One of the most frequent battlefields of the past decade concerns the respective legislative competences of the state and the regions about social and healthcare policy.

With budget sustainability in mind, and explicitly referring to the exceptional circumstances determined by the financial crisis, the ICC has upheld a process of recentralisation of welfare policy often against the letter of the Constitution.

Interestingly in a number of cases this stance was instrumental to protect welfare entitlements. The Court ruled twice in 2010 that the creation by the state of exceptional funds to cope with poor people’s needs regarding food, health and energy supply or to assist young couples and mono-parental families in buying home, although infringing regional legislative powers on social assistance, was nonetheless lawful in the face of “imperious social demands, also induced by the present grave national and international economic crisis” (Decision no. 121).

Other times, though, the same circumstances led the Court to strike down regional measure aimed at enhancing the “basic level of social rights” – which the state is to establish pursuant to Article 117 of the Italian Constitution – thus reductively interpreting “basic” as a cap and not as an entrance threshold to the benefits to be awarded throughout the country (Decision no. 104 of 2013).

Secondly, there are cases where the Court is prepared to challenge rules which restrict social rights even though this risks creating financial trouble.

The right to education of disabled pupils, ruled the ICC in 2010 (Decision no. 80), cannot be impaired by providing a legislative cap on the number of special teachers based on a teacher-student ratio, thus excluding the chance to overcome such a limit by employing extra staff to assist particularly disadvantaged children.

In a recent and much disputed – apparently within the Court itself – decision (Decision no. 70 of 2015) the ICC held that a measure to freeze pension indexation for two years and affecting those who receive a benefit only three times above the minimum (approx. EUR 1217 per month) infringes the right to be assured adequate means for their subsistence needs provided for by article 38 of the Constitution. The Court pointed out that such a measure failed the reasonableness and proportionality test especially because the legislator had provided no evidence about such compelling budgetary reasons as to justify a blow on low pensions. Using Jeff King’s categories (Judging Social Rights (CUP 2012), ch.6), the ‘absence of legislative focus’ in a piece of legislation considerably affecting basic social rights lets us consider this ruling as democratically legitimised. It is true that the Court managed to have the government amend the budget, but it left a sufficient margin of flexibility as to how and to what extent to do so.

What does the whole picture teach us finally?

On the one hand, that courts cannot face problems arising from austerity policy when the legal and political background is both fragmented and confused. In such cases – as the Italian system of social assistance – by assuming an interventionist mode they would expose themselves to the range of objections revolving around the lack of democratic legitimacy and this would cause more harm than good in the long term. From this perspective the stance of the ICC looks like the right one. This sort of minimalist attitude insulates at times emergency measures protecting social rights of marginal groups, even at the price of sacrificing other values such as local autonomy.

On the other hand, dealing with more structured legislation (pensions and education) and facing clear morally hazardous situations, a serious commitment towards social rights on the part of the courts can still make a difference, alleviating some of the harshest consequences of austerity policy. Also from this perspective the ICC stance seems sensible.

Stefano Civitarese is Professor of public law at the University of Chieti-Pescara, Italy.

(Suggested citation: S. Civitarese, ‘Austerity and Social Rights in Italy: A Long Standing Story’ U.K. Const. L. Blog (17th Dec. 2015) (available at