Pay slip, the joke is served: after the increases come the cuts

The Meloni government has to face a problem of no small importance in the 2025 budget law: finding around 10 billion euros to confirm the cut in the tax wedge introduced last year – and confirmed with the latest budget law – which in this the last two years has served to give some respite to workers gripped by high inflation.
However, the latest rumors about the Def – where by Minister Giorgetti's own admission one shouldn't expect much – do not bode well.
As we had already anticipated immediately after the approval of the new Stability Pact by the European Union, which among many things requires Italy to reduce the accumulated debt as soon as possible (which obviously prevents it from resorting again to the extradeficit to finance the measures), under current conditions finding 10 billion to allocate to confirming the tax wedge appears somewhat complicated.
The Government therefore finds itself in an awkward position, with the risk of having to endorse a reduction in salaries starting from 2025 when at least inflation should have returned to a sustainable level.
Fiscal wedge, Meloni would like to confirm it but…
In this regard, the Prime Minister seems to have already started to get her hands on things.
During the interview given to Porta a Porta, which aired on the evening of Thursday 4 April, the prime minister explained that her intention is to maintain the tax wedge, adding however that "it won't be simple at all" (and immediately after blamed it on the Superbonus, a measure that has now become a scapegoat for most of the country's problems).
But what is needed to confirm the tax wedge and avoid a reduction in salaries in 2025? A lot, perhaps too much, money.
What the government must do to avoid the pay cut 7% (but not on the thirteenth) while for those that exceed this value but remain within 2,692 euros it is 6%.
A measure that alone guarantees a net increase of up to 100 euros per month; on the other, the new Irpef rates which go from 4 to 3 by merging the first with the second and setting a rate of 23% for everyone.
An operation which can result in an increase in the paycheck up to a maximum of 260 euros per year.
Added to these two measures is the mothers' bonus, which for workers with at least 2 children recognizes a total contribution relief of up to a maximum of 3,000 euros per year.
However, while for mothers of at least 3 children the bonus is guaranteed until 2026 (and in any case until the youngest turns 18), for those with only 2 children the benefit is limited to the whole of 2024.
Therefore, if we want to give continuity to the support of workers' incomes, we will have to put our hands into our wallets again with the next budget law, which will not be easy at all since it must be considered that around 10 billion euros were needed just for the confirmation of the contribution relief, while for the Irpef reform approximately 4.3 billion euros.
Just over 1.5 billion, however, would be needed to confirm the mothers' bonus.
The difficulties in keeping salaries unchanged What the government faces is a rather complicated challenge since, as anticipated, for the purposes of the new Stability Pact the government will not be able to resort to the extra deficit to finance the measures.
To understand the significance of this innovation, just think that with the 2024 budget law, 15.7 billion of extra deficits were used, more or less the amount spent overall for the three measures indicated above.
With the new agreement signed in Europe, Italy will have to undertake a process of structural reduction of the deficit of 0.5% per year, although there remains the possibility of agreeing with the Commission on a less severe technical trajectory that takes into account the increase in interest not limiting the possibility of making investments.
In this case, Italy would have to pay around 5 billion euros a year, which if added to the impossibility of making a further deficit, explaining the reason why there risks being a real salary alarm in 2025: without confirmation of the contribution relief, as well as the Irpef reform, there is a risk for workers of receiving up to 1,500 euros less (per year) in their paychecks.
To avoid this risk it will therefore be necessary to think of alternative solutions, such as cuts in public spending or increased taxes.
Which, obviously, is not the optimal solution as it would simply be a sort of decanting operation, where it will be removed from one part to give to the other.
The Meloni government, therefore, finds itself at a crossroads, a situation that we at Money.it had foreseen well in advance.
Although it was correct to intervene directly to support workers' incomes in a period characterized by strong inflation, in the meantime the government should have thought of alternative solutions – for example by pushing for contract renewals – to avoid a reduction in salaries once the expense necessary to maintain the contribution relief would have become unsustainable.
On the other hand, it was inevitable that sooner or later this moment would arrive.