Urban Welfare and Social Innovation in Italy

Lavinia Bifulco, University of Milano Bicocca

1       Introduction

In recent years the combined effects of the crisis and austerity measures have strongly affected the institutional infrastructure of European welfare systems and continue to do so.  This concerns primarily the local scale.  Generally speaking, due to a long phase of territorialization of policies, changes involving sub-national levels have strengthened the relationship between rights and territory, creating new forms of citizenship. Local governance arenas, in particular, are incubators for innovation in citizenship encouraged both by the dynamics of territorial reorganization and by the spread of territory-based policies. But this scenario is fraught with contradictions.  First of all,  there is a rise in the number of individuals, mainly migrant workers, who lack rights or are classifiable as “denizens”. Secondly, due to the politics of austerity, national and supranational powers of control have increased, giving rise to mechanisms of recentralization that are particularly restrictive in some countries.

Growing constraints and diminishing resources consequently affect local/urban welfare.  But the latter is a two-faced reality and, despite the problems it has to deal with, a certain number of initiatives have confirmed its innovatory value as an arena for new forms of social inclusion, or, in other words, as a laboratory of Social Innovation (Gerometta et al. 2005; Evers et al., Eds. 2014)

This article focuses on Social Innovation at the urban/local level in Italy, aiming to clarify the ambiguities, problems and opportunities involved in the current reorganizations of welfare. As we shall see, the theme is rather vague. This makes it malleable and adaptable to different points of view - its success lies precisely here - and at the same time elusive and ambiguous (Barbera and Parisi forthcoming). Social Innovation is rather like a meatloaf or "like tofu: tasteless, it goes well with everything: sweet and savory. A certain definition does not exist: it is like the search for the Holy Grail” (Ciccarelli, 2016, cit. in Barbera and Parisi, forthcoming, p. 12).

In the first part I briefly outline the Italian context focusing on the urban/local welfare. I then point to the main characteristics of Social Innovation at the theoretical and empirical level. Leading to an overview of Italian experiences, the final part highlights some factors and conditions of inclusive social innovation.

2         The Italian context

Normally included among the Mediterranean models, the Italian welfare system is historically characterized by fragmentation, familism, uncertainty of rights, discretionary interventions, prevalence of monetary transfers over services, territorial inequality.          

It is difficult to outline an organic picture of its current characteristics, following the crisis and European austerity politics. The reforms adopted in recent years by national government affect a wide range of fields - pensions, work, poverty - in response to requests for modernization from European decision-makers. As Moini (2015) points out, they are the expression of a process of neoliberalization that takes place not as the implementation of an explicit and organic political program but according to variegated, mimetic, hybridized, incremental logics, oscillating between temperate forms and radical forms of neoliberal reorganization of public action. 

As for social spending, Italy allocates 30% of its gross domestic product to social protection, i.e. more than the average for European countries (29% of GDP in the EU-28). The point is that the structure of this expenditure is unbalanced: Italy is in first place among the 34 OECD countries with regard to monetary transfers, but is amongst the last for social and health services, together with Portugal, Eastern European countries and Turkey (ISTAT 2017). Another interesting piece of data is the increase in local government spending on welfare - even though modest, less than 1% since 2014. In any case, the differences between the territorial areas remain extremely high. In the South, SI21 euros per inhabitant against a maximum of 508 euros in the North (ibidem). The distribution of resources among the categories of beneficiaries is also significant. Spending for families with children and more generally on childcare services has increased, as well as the weight of resources allocated to disability – from 20.4 % in 2005 to 25.4% in 2015. Yet services and economic support to poverty and homelessness have been reduced - from 7.4% in 2005 to 7% in 2015 (ibidem). It should be emphasized that the increase in expenditure is mainly linked to a cash increase (e.g. through vouchers: Barbera et al., eds. 2016). Another figure to be underlined is the increase in 2016 of funding provided by private foundations with an overall growth of 10% compared to 2015, after six years of uninterrupted contraction (Acri 2016).        

As for the social problems the Italian welfare system has to deal with, growing poverty should be stressed in particular. In 2016, 30% of Italians were at risk of poverty and social exclusion, compared to the 23.1% of the eurozone (Eurostat, 2018). Italians in a state of absolute poverty are on the increase. In 2017 the phenomenon affected about 5 million individuals, 8.3% of the resident population, an increase compared to the 7.9% in 2016 and 3.9% in 2008 (ISTAT 2018). The risk of falling into a condition of poverty affects both individuals and families. The territorial areas most exposed to the phenomenon are those in the South of the country.      
Among the most vulnerable social groups we find young people in particular. This is partly due to the problem of unemployment. In one month, between January and February of this year, youth unemployment (young people under 25) increased from 32.5% to 32.8% (Eurostat 2018). This means an increase of two thousand units in a single month. Overall, at the national level, the unemployment rate fell but mostly to the benefit of adults (from 11.1% to 10.9).           

The reforms that have been adopted by national government in recent years to face these problems emerge in the form of a patchwork that combines heterogeneous elements and fragments.        

The following are particularly worth mentioning:   

·       the Jobs Act, approved in 2015 and based on the abrogation of the previous rules on layoffs and flexibility, aimed to overcome the fragmentation of contractual forms through a mechanism of increasing safeguards and new measures to protect workers (extension of maternity allowance and parental leave, creation of a standard unemployment benefit).     

·       the national law on Income for Inclusion, approved in 2017, is the first standard national instrument to combat poverty and social exclusion, subject to a means test. The inclusion income consists of two parts: a monthly allowance, with a variable amount according to the size of the family and other variables, and a personalized project of social and work reintegration. The access conditions have been changed recently. Until 30 June 2018, beneficiaries have to have specific conditions of need. From 1 July 2018 the measure will instead address all citizens regardless of their family status.           

·       the reform of the Third Sector, launched in 2016 and still underway, includes a new regulation of social enterprises abolishing the prohibition on distributing profits and introducing for the first time in Italy the possibility of low-profit social enterprises.

Consistency is not the main attribute of this patchwork. In a welfare system traditionally poor in terms of rights, significant doses of market and business-oriented strategies have been grafted into different fields, whilst at the same time strengthening arrangements and devices that, at least in theory, focus on the community, on solidarity networks, and on their generative capacities. The very few measures introduced according to the logic of universalism clash with the scarcity of resources and the persistence of a particularist, category-based and familistic approach. Moreover, despite the increased importance given to it by political and policy discourse, the Social Investment approach has been allowed only limited space, as evidenced by the national spending on family policy, education and active labor market policy (lower than the OECD average:  Kazepov and  Ranci, 2017).

3         Urban/local welfare

Starting from the 90s the process of rescaling in Italy has simultaneously involved politics, state structure and policies. The role played by politics concerns above all the “new mayors”, whose powers have increased decidedly since the changes made to the electoral system and the mechanisms of local representation. As regards state architecture, the de-centralization process has been of great importance, leading to a constitutional reform in 2001 undertaken in the name of devolution. This reform changed the forms of sub-national government and empowered the Regions to legislate on certain matters, including social services and territorial policies.      

Much has been written on subsidiarity, both vertical and horizontal, as a principle of reorganization of local welfare in Italy (Kazepov 2008, Bifulco 2017). It has strengthened two very important dynamics: the rescaling of institutional and political powers; the inclusion of a plurality of public and private actors in the local governance of social policies, in particular of the third sector. One of the main implications was a redefinition of the role of public institutions and of their relationship with social and economic actors, particularly at the local level. Consequently, social citizenship - its boundaries, the powers that respond to it and the entitlements that are included - has also been redefined: in a country with historically weak social rights such as Italy, the local scale seems a fairly promising catalyst of innovation.           
Actually, during the territorialization phase, room was made for responding to a demand for the state to open up and for citizen involvement in policy-making. The result is a flourishing of experiments in participative decision-making processes, especially local ones, and the spread of new forms of “democratic experimentalism” based on decentralization and mutual learning among actors (Sabel and Dorf 2006). But these dynamics are partial and controversial. Participation practices find it difficult to stabilize. The autonomy acquired by sub-national levels can favour institutional and social innovations but can also increase territorial inequalities. Furthermore, experimentation is fragile and closely dependent on local political initiative.          

However, starting from the second half of the 70s and up to the early 2000s, an expanding cycle of local welfare came about, in a fairly bi-partisan way considered (by many) an engine for the modernization of the national social protection system and (by some) an engine for democracy, too.

The changes in the national political cycles and subsequently the crisis and austerity, have led to a reversal of the trend. Spending is not the only significant variable. As we have seen, the last four years have recorded - on average - a modest increase in the social expenditure of the municipalities but after years of uninterrupted decline. Moreover, a twofold constraint is to be considered: the social problems which burden local administrations (in particular poverty, in its various forms) increase, while  the autonomy of local authorities decreases because of the tendency towards re-centralization mentioned above. In other words, more responsibility with less autonomy.    

It is in this framework that we need to place and interpret three more trends regarding local /urban welfare: the territorial differentiation persists, despite re-centralization (as shown by the data on social spending); the scope and the weight  of market actors and logics in the public-private mix grow, in line with the guidelines taken up by national governments; initiatives for Social Innovation are also growing. 
Before examining this picture in depth, the theme of Social Innovation needs further clarification.

4         Social Innovation: normative vagueness….

Although it cannot claim exclusivity, the EU context certainly has a lot to do with the roots and propagation of Social Innovation. Since it was launched almost twenty years ago, this theme has found its legitimacy, but also its most powerful source of vagueness, in the European policy framing it as a strategy of intervention. Some basic coordinates are however traceable. In the basic European sense of the term, social innovation refers to innovation and the ways in which it responds to the social needs of a community, by means of new products, services, organizational structures or activities. It is used to indicate: “innovations that are social both as to their ends and their means and in particular those which relate to the development and implementation of new ideas (concerning products, services and models), that simultaneously meet social needs and create new social relationships or collaborations, thereby benefiting society and boosting its capacity to act” (EU Regulation No 1296/2013 on a European Union Programme for Employment and Social Innovation).     

Defined in this way, Social Innovation refers to the inclusive qualification of growth, urban development and new technologies, as well as to the social economy and collaborative forms of providing services. It may intervene in a very wide range of sectors. In the Europe 2020 strategy, social innovation plays a key role in social policies, giving impetus to cooperative models of production and provision of services. In addition, it is the basis of numerous programs, including EaSI - Employment and Social Innovation - the program launched by the Union with the aim of supporting social innovation in the specific field of the fight against poverty and social exclusion. The relationship with the city is important, too, thanks to the perspective, highly accredited in the Union, which sees in the city both the space where the crisis is most keenly felt and a decisive reservoir of resources for the experimentation of innovative growth strategies and policies for inclusion. Social Innovation Europe (SIE), a platform that came into being in 2011 for initiatives relating to the General Division for Growth, is investing a good deal in spreading ideas and experiences of social innovation in cities - “a great landscape for social innovation”. It is important to remember that the boundaries with other key themes are undefined. In particular, we witness a very broad overlap with Social Investment, which is also strongly oriented towards emphasizing the capacity for self-organization and social entrepreneurship.       

This vagueness is linked to the fact that the concept in itself has a double soul: a reformist one, which emphasizes co-production and co-distribution of goods and services without questioning the social organization; and a radical one, that aims at a structural change (Barbera, and Parisi 2017).

For this reason, too, the theme tends to polarize the debate between supporters and critics. In general, supporters stress the relationship between Social Innovation and local/urban development (Vicari Haddock and Moulaert 2009), the reorganization of welfare systems (Evers et al, 2014; Brandsen et al., 2016; Ascoli and Pavolini 2017), the experimentation of forms of sharing economy (Polizzi and Bassoli 2016). Critical analyses focus instead on the neoliberal matrix of European social innovation discourse and its implications regarding the legitimization of public spending cuts, reduction of public responsibilities and more generally de-politicization dynamics (Swingedouw 2005, Fougère et al. 2017).

5         ... and empirical variety

On the empirical level, vagueness can be a resource because it brings greater autonomy and widens the spectrum of possible actions. This is evident precisely at the local / urban scale. The variety of agendas and local initiatives is remarkable but seems to converge on some common threads. The Singocom research (MacCallum et al., Eds. 2009; Moulaert et al., Eds. 2010), which analyzes some of the social innovations set in motion in nine European cities, sheds light on three main frames. Where social inclusion is mainly associated with the involvement of individuals and groups in decision-making processes, both as a requirement of the political system to open channels for citizen participation, and as a request formulated by local communities, interventions are based on the creation of spaces open to citizens. Economic development is the main objective of approaches that favor the creation of employment opportunities, often through the promotion of social markets. A third frame has culture as a nucleus and enhances the idea of the city as a space to produce and consume culture by improving the aesthetic quality of places, the construction of new infrastructures, the care of the artistic and architectural heritage of the city, the support of local artistic communities (Bifulco 2017).

Within the Wilco research, focusing on the welfare systems of 20 European cities, Evers et al. (2014) identify five types of recurrent social innovation approaches and tools: innovations in services and the ways in which they interact with users; innovations in regulations and rights; innovations in governance; innovations in terms of work and financing; innovations regarding the extent of local welfare systems.       

This local variety implies several problems for analysis. In any case, it is almost unanimously recognized that, although the local scale is their main breeding ground, local innovative experiences are fragile, fragmentary and have an uncertain future if they do not cross paths with wider scales, resources and powers (Cassiers and Kesteloot 2012). The need for an institutional infrastructure that supports upscaling processes - through regulations, policies, rights - is consequently one of the main indications emerging from the research on the topic (Vicari Haddock and Moulaert 2009; Oosterlynck et al. 2013; Mingione and Vicari Haddock 2015; Brandsen et al. 2016).    

More generally, regardless of the positions taken on the "top-down" or "bottom-up" logic of innovation, many scholars recognize the importance of institutions for the development and consolidation of innovations. As pointed out by Brandsen et al. (2016, p. 310) after discussing the results of their research into twenty European cities: "[...] it would be foolish to argue that new common rules and large-scale regulations are not needed. Social innovations [...] need a different kind of state intervention”.      

Therefore, the institutions are fully included among the factors that help to understand why and how innovation practices vary and which different contexts of conditions are able to hinder or support their development (Oosterlynck et al. 2013; 2015). At the meso and micro level, the relationships between the institutional and non-institutional actors, where governance models take shape, are crucial. At the macro level, welfare regimes are crucial (Oosterlynck et al. 2013). In fact, the potential for innovation seems high both in the universalistic welfare regimes of Northern Europe, and in the corporate ones of Central Europe, as well as the liberal ones of the Anglo-Saxon contexts (less in Mediterranean ones) but the former show greater solidity and stability of experience (ibidem) thanks to a higher level of stateness that combines the capacity for upscaling with robust social protection.

6         Social Innovation in Italy: the case of Milan

As for Italy, what should be remembered first and foremost is that social innovation does not involve only the domain of social policies. The second report on Social Innovation in Italy (Caroli 2015) identified 462 experiences and five main areas: the sharing economy, social assistance, social integration, the environment, vocational training, professional integration. The first three cover more than 50% of the initiatives.   

The actors of Social Innovation are mainly associations, cooperatives, companies, innovative start-ups, but there are also many local public administrations and private foundations. The growing importance of the banking Foundations as sources of funding and decision makers in some urban areas is to be underlined (de Leonardis et al. 2016). The largest number of initiatives involving them are to be found in the North but there is no lack of experiences in the South, too. In general, non-profit organizations emerge as the central actors of social innovation, both in the promotion and in the implementation of initiatives. Besides, relations between third-sector organizations and economic actors intensify especially in the social market areas, which entail greater convergence between social and economic goals (energy, the environment, new technologies, and culture). However, in 71% of cases the initiatives are in the hands of a subject with institutional weight, which supports the legitimacy of the initiative (Barbera and Parisi, forthcoming). 

One significant factor is the role that finance and financialization play in this area. Starting from 2017, some local welfare contexts are experimenting with tools of intervention that combine social objectives with business logic and financial intermediation: i.e. social impact bonds, launched as instruments of both social innovation and social investment. The debate that these tools have triggered in their main context of development - see in particular the English cases – highlights a number of risks and problems regarding in particular public accountability and inclusiveness (McHugh et al. 2013).

A specific case may help to gain a better understanding both of the configurations of the relationship between the actors involved in Social Innovation and of their effects with regard to inclusion / exclusion. The case in question is Milan, the economic and financial engine of Italy, whose welfare system is traditionally centred on (active) labour market policies, market-oriented approaches and a fairly important role by Catholic charitable associations. According to the National Association of Italian Municipalities, this city is a pioneer in the field of social innovation in Italy (Bifulco and Dodaro, forthcoming). The role of the local political institutions is crucial. The current city government - in continuity with the political administration set up in 2011- has actively encouraged Social Innovation and has created a special councilorship for “inclusive innovation”. The central idea is that Social Innovation consists in policy strategies and tools for supporting social and economic development, This implies, for example, supporting business incubators and start-ups or promoting collaborative work spaces (ibidem). It should not be forgotten that, in several social domains, such as the fight against exclusion, care for children and the elderly, services for families, a significant role is played by Cariplo, a banking foundation that in recent years has launched and financed programs for social housing, community welfare and the suburbs. As a consequence, while the Municipality does mobilise many resources in order to increase the inclusive effects of market-oriented initiatives, it is a private actor that invests - and decides - to a considerable extent on interventions regarding social protection.           

Thus, the soul of social innovation in this city addresses economic/ entrepreneurial logics. But there is another – secondary – soul, oriented towards developing participation, aggregation and social integration. We can find it, for example, in the promotion of Social Streets, Facebook groups that bring together the inhabitants of neighbourhoods according to a logic of solidarity; and of Participatory Budgeting, with the financing of urban renewal projects (ibidem). To some degree these practices have made it possible to mobilize actors who are new to the Milanese decision-making scenario: individual citizens, as well as formal and informal organizations, gain new opportunities for participation.        

This coexistence between the main economic feature and the secondary social feature of Social Innovation is the fruit of the encounter between two factors regarding the urban government and governance context: the solidity of the local reformist tradition, which incorporates a strong political propensity for pragmatism, the aggregation and negotiation of interests and pluralism; and the pervasiveness of economic competitiveness as a reference for urban development models. In the current phase, this entails a tendency to govern through a compromise among the economic interests, social demands and requests to participate that confront each other in the city. From this point of view, Social Innovation is a powerful reservoir of legitimation on which the local government draws abundantly to consolidate otherwise unstable coalitions and aggregations.      

The main point, with respect to the issue of the social dimension of inclusion, is that these initiatives and these policies risk being irrelevant to the growing economic and social polarization - overshadowed by the latest electoral results. In fact, innovation, interpreted mainly in economic terms, seems to confirm the advantages enjoyed by certain central areas of the city, and of their inhabitants.

7         Conclusion

Social Innovation is fragile. Even more so in Italy, given the previously outlined characteristics of the more general context. An overview of the experiences reveals a variable geography facing two possible and opposing scenarios: a) social innovation as an expansion of the areas of market profitability and finance; b) social innovation as the experimentation of inclusion and aggregation strategies, also - partially - capable of triggering reconfigurations of the relationship between economy and society (in a Polanyan sense).       

Obviously, between these two scenarios there is a wide empirical variety of practices and situations Among the variables that should be kept in mind in this regard, four are particularly important specifically in the way they combine at the local level:

1.      the welfare and governance regime;

2.      the sources of funding and the role financing has in the decision-making arenas;

3.      the tools of intervention put in place, in particular those that convey hybridization between the social domain and the economic/financial domain;

4.      the role of local State - in the very general sense of intervention by the public authority.

The case of Milano highlights some relevant issues regarding in particular the fourth variable. Social Innovation appeals to the ability for self-organisation but does not equate with self-organisation. The literature has shown that initiatives stem from different origins (Moulaert, Martinelli and González 2007; Bifulco 2017). They may arise spontaneously or be the fruit of intentional planning by the political-administrative actors or, again, they may coincide with variable mixes of social self-organisation and institutional investments. In any case, even the most formalised initiatives, recognised as part of a strict institutional context, exist thanks to a local capacity for action and mobilisation. In this sense, overcoming the increasing inequalities and social problems affecting cities depends on the local capacity to put them high on the local government agenda as well as to discuss methods and instruments for addressing them.  

Institutions matter, therefore, as they can foster innovations and contribute to consolidating them and increasing their incisiveness and impact, supporting the spread of similar experiences. As many scholars point out, innovation requires enabling policies and institutions. Another type of State intervention, as we said before. But the concept of enabling does not escape the vagueness typical of all the key issues regarding changing public action over the last thirty years. Coined in opposition to the traditional state model, it limits itself to emphasizing the ability to mobilize social/economic interests /subjects by creating the conditions favorable for their activation. To clarify a little further, it can be added that what is at stake is the ability of the State to cope with the fragility of innovations. Fragility is part of their very nature, since attempting innovation means, by definition, exposing oneself to a high degree of uncertainty and to the risk of failure. Mazzucato (2011) reminds us of this, with regard to economic innovation, arguing that it is for this reason that the State plays a central role in growth. Indeed, the State, more than the private actor – only interested in risk because it is remunerable under the most favorable conditions - is able to bear the burden of uncertainty deriving from attempting innovation and of assuming the burden of the risk of failure.   

We might therefore assume that what is valid in the economic field also applies in the social field, that is, an innovative State is needed, capable of taking on the risks and uncertainties involved in innovation. This is a precise confirmation that Social Innovation means not less State but different intervention by the State.



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Author’s Address:
Lavinia Bifulco, Prof.
University of Milano Bicocca, Italy
Department of Sociology and Social Research