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Apr 17, 2020
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Italy's firms shake lockdown using shortcut in coronavirus law

By
Reuters API
Published
Apr 17, 2020

Weeks into Italy's coronavirus lockdown, thousands of Italian entrepreneurs have been given a bureaucratic shortcut to market.


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The government last week extended non-essential business closures to May 3. But more than 100,000 mainly small- and medium-sized companies have applied to keep going or partially reopen.

In principle, a key hurdle for companies to do business should be that they can prove they are part of a supply chain to businesses that are deemed "essential" in a government decree, such as food, energy or pharmaceutical companies.

But the government, facing a backlog of applications, has clarified Italy's lockdown laws to say no companies need to wait for government approval to go ahead.

More than 105,000 firms have applied to be considered part of essential supply chains, the interior minister said on Wednesday, in a guideline on its website to clarify the lockdown rules.

Of those, just over 2,000 have been turned down and told to suspend their business. More than 38,000 are being investigated and the rest are waiting to be looked at.

The ministry said on Wednesday businesses that have previously submitted such requests can now "benefit from an immediate start" to their business.

So unless companies have been told they are not critical, all they need to do is to inform their local authority that they plan to reopen. Then, without waiting for an answer, they can go ahead.

The flood of notifications by Italian companies underscores the desperation of corporations to restart production. This is especially true in Italy where nearly 4 million companies employing fewer than 10 people make up the fabric of the economy. Italy's experience also highlights the challenge for governments across developed countries to oversee shutdowns that are crippling their economies.

The government will carry out inspections to make sure companies are not cheating the system, a spokesperson for the interior ministry told Reuters.

Big swathes of Italy's economy are unable to get back to work. Almost half of the country's businesses from fashion to autos generating 1.3 trillion euros ($1.41 trillion) in annual turnover remain paralysed - the fashion industry, for instance, unable to claim an "essential" role, has taken out newspaper adverts to plead for a chance to reopen.

COMPLEX PROCESS

More than 22,000 people in Italy have died with the virus, most in the wealthy north which makes up 45% of the country's economic output.

Last week, concerns that the disease could ravage Italy's poorer south, or afflict a new wave, led Prime Minister Giuseppe Conte to resist industrialists' pressure to ease restrictions.

Instead he extended the lockdown and said that a new committee of experts, chaired by former CEO of British phone company Vodafone Vittorio Colao, would advise his government on how to waive them.  Colao has made no public comment so far.

BIG BUSINESS CHAFES, MEDICS WORRY

Some big businesses are chafing. The fashion industry has said it has only a few days left to save its next season. Home to the likes of Prada, Armani and Moncler, Italy is second only to France among European countries for fashion and luxury goods sales. The business generated 90 billion euros ($98 billion) last year, or about 5% of GDP, according to the national fashion chamber, Camera Nazionale della Moda Italiana (CNMI).
It took out a full-page advert in the national press at the weekend to call for the government to allow it to resume business.

"If our factories do not reopen by April 20, we won't be able to deliver our Autumn/Winter collections which must be sent by July to our clients all over the world," CNMI head Carlo Capasa said in the advertisement. On Thursday, fashion lobby Confindustria Moda said it had signed an accord with unions over safety procedures to restart activity, when the government agrees.
 

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