Italy's shadow economy moves into political spotlight

Wed Nov 23, 2011 8:39am EST
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By Deepa Babington

NAPLES, Italy (Reuters) - In the busy Naples square where she works, 18-year-old Arianna is a familiar sight as she darts back and forth from a cafe bearing trays with espresso and pastries.

With a bright blue apron, lip stud and cheerful smile, she is known to all except the Italian taxman -- for whom the Neapolitan waitress has never existed and probably never will.

Paid 100 euros a week in cash, the high school dropout is one of hundreds of thousands toiling away in a parallel Italian economy where cash is king, contracts or receipts do not exist and the taxman is cut out of the equation altogether.

"Here in Naples, you've got to accept what you get," she said, recalling her start as an irregular worker in a bag factory where she was paid just 50 euros a week.

"They know you're young and need work, so they offer to pay you off the books without any benefits. I'm used to it by now. I don't really hope to ever get a job with a contract."

With Italy fighting to emerge from a debt crisis that could sink the euro zone, Prime Minister Mario Monti is taking aim at these practices in the hope of netting at least part of the 120 billion euros in unpaid taxes of which it deprives the state each year.

The new premier has already promised the state will closely monitor wealth accumulated by Italians to crack down on fraud and lower the limit of payments that can be made in cash.

History, however, is not on Monti's side. Successive governments in Italy have promised, tried and ultimately failed to cripple a flourishing grey economy in a country where dodging the system is often considered a necessity or even an art.   Continued...