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Understanding Italy’s many-sided economy, and catching investment opportunities.

By Ichino Brugnatelli e Associati
Posted: 31st October 2011 10:10

Although Italy is often considered as a peripheral Country, its economy is still one of the most developed in the world.  It employs millions of people across diverse industries: no need to list world famous Italian brands and products.

Thanks to its mild climate, natural beauty and rich history and culture, this Country is the fifth most visited Country in the world: it has become a primary tourist destination, not only for voyagers from other European Countries and North America, but increasingly from Asia, including Middle-East Countries, India, Japan, and China.  While many of the tourists continue to visit historical cities and art centers like Rome, Florence and Venice, there are more and more visitors attracted by shopping opportunities in fashion and luxury sectors.

Besides, Italy boasts a high standard of living, with a higher per capita GDP than EU average: although Italy's debt-to-GDP ratio is one of the highest among European Countries, Italy’s deficit as a proportion of GDP remains lower than average in Europe. Furthermore, Italy has lower private debt levels and a higher savings rate.

That being said, high fiscal burden and complex bureaucracy are still a hindrance to Italy's economic development, and may give some explanations for its economic growth being at the lowest level among industrial Countries.

The Italian industrial framework is characterized by the presence of a few very compelling niche operators that have very strong and trustworthy reputations and are competitively positioned. But there are a few big players making the domestic industrial structure more vulnerable in relation to the growing global marketplace.  Furthermore, there are still huge economic and cultural differences between the north and south of Italy.

As highlighted before, a sector offering good investment opportunities in Italy is in tourism and hospitality.  Both foreign visitors and the Italians themselves still choose Italy as a preferred vacation destination.  The attractions and facilities that are offered through a wide and varied choice of offers have allowed the tourism sector to maintain its leadership position.  Investing in tourism may include focusing on traditional facilities, and, alternatively, taking advantage from  investment in real estate, which can give great satisfaction to investors as a result of the steady and often rapid increase in values.  Investing in Italian properties that can be converted into "agri-tourism" facilities has gained great favour, even more so when owner families still live nearby, having been landowners there for generations.

There are still large numbers of properties for sale in Italy that are located in beautiful rural areas or in small hill towns that have been abandoned by the local residents who have moved to larger urban areas.  These abandoned properties are often sold at very modest prices, and with renovation can greatly increase their values.  Throughout most of Italy, particularly in the center and north, local administrations are awakening to the benefits of improving the attractiveness of their areas to encourage tourism and the expansion of local commercial and hospitality sectors.

Since restaurant industry in Italy is of great economic significance, profit from investing in restaurant facilities is easily foreseeable.  The restaurant sector in Italy is of great economic significance.  The culinary traditions in the Country continue to be appreciated by all, Italians and visitors.  A recent survey by "Osservatorio internazionale del turismo enogastronomico", an institute focusing its research on trends in tourism and gastronomy, found that Italian food and wines were determining factors of importance to both tourists from abroad, and to the Italians in their leisure or holiday time.  In these circumstances, the restaurant business is a good investment both in the short and in the long run, even though demanding in terms of personal management.

Italian constraining Employment Law is widely considered as one of the reasons for slow economic growth; but something is going to change on this side.  Employment contracts at every job position level are regulated by Italian Civil Code, as amended by several pieces of legislation; nevertheless, high importance has been given for decades to National Collective Agreements (NCAs).  The provisions of the latter are compulsory (neither can they be diverted from by company collective agreements, nor by individual employment contracts), and put heavy ties on medium or big sized employers, with regard to personnel costs on the whole, and especially with regard to individual and collective dismissals.

However, through 2011, steps have been taken in order to allow every Company to negotiate their own employment agreements with the respective Company Trade Unions, even if departing from NCAs with respect to some  provisions. This should make Italy an easier place for multinationals to do business.

Such evolution should also increase European Works Councils (EWCs) negotiation power. EWCs were introduced by Directive 94/45/EC, which was partially enforced in Italy in 1996 at first, by an agreement between three leading Trade Union Federations on one side, and Assicredito and Confindustria on the other side.

It was fully enacted afterwards by Italy Law Decree 2002/74; the policy was then amended by EC Directive 2009/48.

At the beginning, Unions and multinationals operating in Italy were not taking EWCs into great consideration.  Conversely, they were regarded duplicates of existing entities in charge of information and consultation.  But a deeper interest into EWCs has arisen in recent times – as they can facilitate cross-border communication, information sharing, and Europe-wide company negotiation.

In October 2011, Italy's plans were presented to the Presidents of the European Council and the Commission, entailing a commitment to reform labour legislation, in particular as regards dismissal rules and procedures in case of necessary downsizing or restructuring by Companies weakened by economic depression, and to review the currently fragmented unemployment benefit system.

In conclusion, significant steps have been taken to make Italy more appealing to foreign investors.  In fact, more and more successful stories can be mentioned of foreign Companies that have invested in Italy in different sectors, from logistics, to great distribution, to retailing.


Ichino Brugnatelli’s relationship with prime banks, institutions, and corporations in Italy dates back to the establishment of the firm in the 1890s. For more than a century, the firm has served corporate counsel across a wide range of economic sectors on a full spectrum of issues, included multinational or foreign companies operating in Italy, or interested in doing so (in the early 90’s Ichino Brugnatelli won the “Job Centre” case before European Community Court, which first allowed international temporary job agents and staff leasing suppliers to do business in Italy). Law firm culture is strongly client-oriented, but also dedicated to professional development, teamwork, and community support. At Ichino Brugnatelli, 30 experienced attorneys can count on the full participation of junior lawyers and qualified assistants to meet the expectations of domestic and international clients.


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