Silvio Berlusconi really needs Italy to win the Rugby World Cup, or an equivalent miracle. While he faces prosecution for his personal misdeeds, his party’s popularity has hit rock bottom at home, with current opinion polls showing barely 20-22 % support. The 74 year old prime minister is therefore totally dependent for survival on his fascist, anti-immigrant and secessionist coalition partner, the Northern League – two members of which recently came out in support of the Norwegian mass murderer Anders Behring Brievik, as a brave defender of Western civilisation. This week, Berlusconi begins a two month campaign to enact a massive package of tax increases and spending cuts totaling $46 billion euro, which is the price the Eurozone is demanding for the financial support that Italy needs to stay afloat.

Despite its myriad problems, Italy is a useful model for any local politician wanting to grapple with the 58,000 New Zealanders aged between 15 and 24 who are neither employed, nor in education or training. Basically, Italy tells us exactly how not to go about fixing youth unemployment. In 2003, the Italian government passed a law meant to create jobs for the young by making it easier for companies to hire entry-level workers as trainees, or as temporary staff. Here’s what happened next, according to the Wall Street Journal:

“ The [2003 law] change was a boon to firms that had been reluctant to hire untested young workers on a traditional contract with full benefits and job protections. But the reform left baby boomers' job protections untouched, while their children ended up in second-class, temporary jobs with low pay and no security.

In the four years since finishing university, Benedetta Iacchia, 27, has had three internships in marketing—one unpaid and the others paying only €250 ($360) a month. Now she works at an advertising agency in Milan for €650 a month, but her contract runs out in November. With little cash to cover rent and no assurance that her contract will be renewed, she lives with relatives in the city. She constantly scans the market for a permanent job that pays more and would allow her to live independently. “I couldn't even dream of starting a family," she says. "My parents had a totally different experience. When they were young, they found jobs and could support themselves."

In sum, Italy proved with that 2003 law that you can’t enact job creation measures aimed only at young people, without considering the ripple effects elsewhere in the work force. What Italy demonstrates is that if you pass employment laws aimed at lowering the entry cost of hiring young people – say, by bringing back youth rates – all you create a two tier system that will leave vulnerable young workers open to exploitation.

Undaunted, Italy is now trying again. Next month, the Italian government will try to pass labour laws containing “voluntary” clauses that will enable unions and employers to opt out of workplace protections. Instead, the unions are proposing a special wealth tax, with some of the proceeds being used to subsidise employers who agree to take on young staff. Now there’s an idea….

For the past 150 years at least, Italian unity has been something of an illusion, like one of those beautiful bubbles that pop when you try to hold them. In the 19th century, Metternich described Italy as a useful geographical expression, but with less political meaning than meets the eye, and a tendency to endanger its constituent parts. Still, as illusions go, it has been a fiercely promoted one – Rome, Garibaldi indicated, is more of a concept than a place, but one that exists wherever Italians may be.

Right now though, fragmentation rather than unity, seems to be the name of the game. The core of the Northern League’s programme is for Lombardy to secede from Italy and become the republic of Padania, thereby freeing the affluent north from the deadweight of inefficiency, corruption, sloth and Mafiosism that – according to the Northern League – is all that southern Italy has to offer.

The Northern League’s support will be crucial to Berlusconi getting his austerity package passed. (Earlier this year, the Northern League also dictated Berlusconi’s policy of offering only a grudging and limited support for NATO’s actions in Libya.) So far, the League has vetoed any changes to Italy’s pensions, and is making an increase in sales tax and further moves on tax evasion part of its current price for throwing its support behind Berlusconi. Meanwhile, on the other side of the political fence, the trade union movement, is gearing up for a general strike.

To be fair, the tax increases on the wealthy that Berlusconi is proposing do look fairly substantial to New Zealanders and Americans conditioned by neo-liberal dogma to regard raising taxes as the work of the devil. On this subject, John Key is clearly well to the right of Silvio Berlusconi:

The [Berlusconi austerity package] tax increases included a “special levy” on income above €90,000 per year as well as tax increases on income from financial investments. More specifically, there would be a surcharge of 5 percent on incomes above €90,000 and a 10-percent surcharge on incomes above €150,000. The tax rate on financial income would increase from the current level of 12.5 percent to 20 percent. The government also pledged to crack down on tax evasion.

That aside, one reason for the mounting unrest is that much of the impact of the austerity package (in its current form) will fall on local government, and on the services it provides.

The spending cuts were directly largely at local government. Giuseppe Castiglione, head of the Union of Italian Provinces, almost immediately bemoaned the government cuts, which he said would fall most heavily on direct services to Italians: "When you talk about municipalities, you're talking about social services, when you talk about provinces, you're talking about schools, security at school, local roads."

If it makes it that far, the austerity package is supposed to clear the Chamber of Deputies in mid-October, just before the Rugby World Cup final. By then though, Berlusconi’s four pending court cases – for everything from fraud to interfering with the course of justice to paying for sex with an underage prostitute - may have finally removed the old lecherer from the political scene.

The state of Italian rugby: The Italian rugby team is known as the Azzurri, which roughly translates as “The Blues”. Its current coach is the former Springbok player/coach Nick Mallett, who has survived some very low points – such as the 2009 season – that were considered bad enough in the past to have sunk some of his predecessors. (After the team’s dire 2005 Six Nations tournament results, John Kirwan was sacked as the Azzurri coach.) Things have recently got better for Italy, but only gradually. In the 2010 Six Nations, Italy was thumped by Ireland and then lost narrowly to England and beat Scotland, yet still ended up in last place.

This year, there are encouraging signs that Mallett and the Italians may be getting things together at just the right time. In February, they were desperately unlucky to lose by 13-11 against Ireland, and then eked out a 22-21 victory over the current Six Nation champions, France – their first ever win against France in 31 games.

At the Rugby World Cup, Italy is drawn in Pool C, against Australia, Ireland, Russia and the USA. Italy, currently the 11th-ranked nation in the world, should beat both the Americans and the Russians – which means that the October 2 rematch in Dunedin against the 6th-ranked Irish team will probably decide who joins Australia in going onward. If so – and given the state of the Eurozone – the bankers in Brussels looking at the balance sheets for Ireland and Italy will appreciate the irony that it has come down to this.

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