RIS 3 Sicily 2014-2020 SICILY IN PILLS FARO, Portugal, July 4th 2013
Sicily is the largest Italian region, with a surface of 8,5% of the whole national territory. It is the fourth most populated region in Italy, as its population, made of almost 5 million residents, is 8,4% of the Italian one. From the administrative point of view, its territory is divided into nine provinces and 390 municipalities, although a recent regional law, now coming into force, aims at abolishing provinces and creating associations of municipalities. Sicily represents one of the most southern part of Europe and has always been a natural and commercial crossroad to connect Europe to the Mediterranean most southern areas. In the most recent years, the Sicilian population has reached a broad balance in the natural process of outgoing and incoming flows. Yet the Sicilian population ageing rate is presently growing up faster than the national one and in 2009 for the first time in Sicily's history the mortality rate became higher than the birth rate. According to demographic forecasts, in 2030 the Sicilian population will suffer a strong decrease and will be mostly composed of elderly people. In the next decades resident foreigners will then give Sicily an important contribution to reduce the negative consequences of this progressive ageing process of the regional population. The number of resident foreigners, who are now 2,8% of the total population, will rise to about 6%. Traditionally the Sicilian families, like the Italian ones, are very inclined to money saving, having the property of their own house and running rarely into debt, and regional wealth differences in terms of per-capita income are smaller if compared to other European countries. However, in the last 5 years the crisis has increased social and geographical disparities and reduced low social mobility. Until 2009 this did not lead to a significant growth of poverty and deprivation, thanks to a strengthened supporting network by the households, which had to jeopardize their patrimonies, run into debt and reduce saving to fight against the progressive decrease of purchasing power. Afterwards the situation became even worst, the main material deprivation indicators grew higher as well as poverty and social disparities, so that Sicily is now the poorest region in Italy. In 2011 the people at risk of poverty in Sicily amounted to 44.3% compared to 19.6% in Italy, while people living in households with severe material deprivation are 24.5% compared to 11,1% at national level. The regional GDP, which in 2010 with a 0.1% growth had arrested the 2008-2009 decline (-6.3%), reached again at the end of 2011 a negative result (-1, 3%). The economic activity, according to the estimates currently available, has further reduced in 2012 (-2-3%), while some predictions for 2013 forecast the persistency of recessive crisis (-1, 3%) and depressing effects on GDP. Sicily appears to be locked into a recession even more severe than the national average situation, exacerbated by the fragile local production structure. Sicily Region Programming Department Evaluation Unit Pag. 2
Real GDP variations %% del PIL reale 2007 2008 2009 2010 2011 Estimates 2012 2013 Sicily 0,6-2,0-4,3 0,1-1,3-2,3-1,3 Southern Italy 1,1-1,4-5,1-0,1-0,3-2,5-1,3 Italy 1,7-1,2-5,5 1,8 0,4-2,1-0,6 Source: ISTAT-National Institute for Statistics (for the period 2007-2011); Prometeia (for 2012 and 2013) It is clear that the rearrangement of demand various components is concentrated in the crisis years, after a good growth recorded until 2007, thanks also to the spending of EU funds. In particular household consumption fell, between 2008 and 2011, by 4.8%, eliminating the improvement that had been recorded up to 2007. The other element of high incidence in the recent GDP reduction concerns the flow of gross fixed investments, decreased by 17% in recent years compared to the 2007 value. Sicily's per capita product, in relation to that of Italy, stood in 2011 at around 66% showing a fictitious upward trend, attributable to the decrease of residents. With regards to industry supply in the strict sense, in 2010 the island had recorded a "bounce" effect of activity (5.5%) compared to a value added collapse in 2009 (-15,4%), probably due to the recovery of foreign markets. The significant structural changes now in progress have an impact also on the labour market, which had shown in Sicily until 2007 a strong and progressive growth of all its rates, with a dramatic rapprochement to the levels observed in the rest of Italy and to Lisbon objectives. As reported for Italy as a whole, between 2007 and 2011 the crisis impact in Sicily has had heavy consequences on the employment rate, which in five years returned to decrease by 2.2% (from 44.6% in 2007 to 42.3% in 2011). Since when the crisis started, Sicily has shown a decrease in all its aggregates: in particular the employed people have reduced by 0.5% and those in search of employment by 2.8%. The latter result, however, is not attributable to the creation of new jobs, but mainly to an increase in concealed labour and in the number of the so-called "discouraged workers", i.e. people who, given the difficulty in finding jobs, decide to seek for it no more actively. For the same reason, the activity rate of population has shrunk as well from 51.3% in 2007 to 49.5% in 2011 (-1.8%). At the same time, the unemployment rate rose again to values around 14.4% compared to a rate of 13% in 2007. The components of the population most affected by the crisis are the youth (between 15 and 24 years old), for whom we observe in 2011 an unemployment rate of 42.8% compared to a rate of 37.2% in 2007. In addition, the female component is heavily affected by the crisis with a youth unemployment rate in 2011 of 53.2%, while the male component figure stands at 36.4%, reversing the path toward a rate of 60% planned by the Lisbon agenda. Another negative factor is the rate of long-term unemployment (people who have looked for work for over 12 months) increased from 7.9% in 2007 to 8, 4% in 2011. The regional economic system is essentially based on the field of non-market services (29%), (services provided by the Public Administration), followed by "Financial intermediation, real estate and business" (21%) and Commerce (18%), while the productive sectors of "Construction" (5.5%), Industry (9.3%) and Agriculture (3.5%) give very slight contributions to regional product compared to the first ones, especially if we consider that, in Italy, the weight of Industry on national GDP is double (18.3%) than the one recorded in Sicily. Until 2007 the manufacturing base in Sicily seemed to start on a path of general growth, with a net increase in the enterprise birth rate of average 2.3% per year and with a positive trend of manufacturing enterprises more marked than the national average, together with an increase in the number of capital companies. Sicily Region Programming Department Evaluation Unit Pag. 3
However there were still some constraints on the growth of firms, i.e. an average profitability lower than the national one, a labour productivity below the national average (except in some top areas like the provinces of Siracusa in the manufacturing sector and Ragusa in the agricultural sector), a reluctance to join firm clusters and a modest boost to internationalization and innovation. These are the same constraints that led Sicily to suffer heavily from the effects of 2008 crisis, reversing drastically its positive trend and repositioning the whole productive structure. In particular, it has greatly reduced the weight of manufacturing industry, construction and commerce, being affected mainly the enterprises at the extreme segments, i.e. large and small. In absolute terms, about 380 thousand active enterprises still show a high incidence of low valueadded activities and insufficient competitiveness; more than half of the enterprises, in fact, work in the fields of agriculture (over 93 thousand) and commerce (over 123 thousand). Currently, the ability to export is the feature discriminating some companies which have survived the crisis, even reducing profits, from some others at the permanent risk of closing, because of the difficulties in the internal market and the collapse of household consumption. The analysis of total export flow in Sicily, valued at current prices for the period 2009-2012, shows a positive dynamic. In 2010, exports grew by a total of 48.7% over the previous year; in 2011 there was a decline in the growth rate which, although reduced, stood at 15.5%; in 2012 exports increased again reaching the value of + 21.2% compared to the second quarter of 2011. Until the beginning of 2007, Sicily was able to cope with the negative effects of a severe tourism crisis consequent to the terrorist events in 2001, recording ever since an overall increase in both arrivals and presences. Since the advent of the crisis instead, from 2008 onwards, it has been no more able to deal with a substantial decrease in tourist flows, recording in 2010 a whole reduction in both arrivals and presences by 1,9%, mainly caused by a strong domestic demand contraction. In 2011 however tourist flows, especially of foreigners, started again to increase, probably because Sicily is benefiting from a reduced competition by some Mediterranean countries, such as Egypt and Tunisia, affected by domestic political and social tensions. Yet, in this context, Sicily has failed to improve its attractiveness in the non-summer season, finding it difficult to meet the important objective of a seasonal balancing of tourist flows. It should be noted that all the main countries from which most of the tourists come from, that is France, Germany, United Kingdom and United States, have significantly reduced both the number of trips to Sicily and the duration of the stay. Among the major negative consequences there is a reduction in the spending of foreigners. Arrivals, presences and average stays in accommodation establishments by type and residence of customers Movements Hotel accomodation 2010 2011 Non-hotel accomodation Var. % 2010 2011 Total Var. % 2010 2011 Var. % Italians Arrivals 2.112.295 2.160.326 2,3 354.733 376.227 6,1 2.467.028 2.536.553 2,8 Presences 6.669.949 6.595.486-1,1 1.549.583 1.541.106-0,5 8.219.532 8.136.592-1,0 Average stay 3,2 3,1 --- 4,4 4,1 --- 3,3 3,2 --- Arrivals 1.334.944 1.458.439 9,3 197.199 220.906 12,0 1.532.143 1.679.345 9,6 Foreigners Presences 4.578.051 5.109.502 11,6 697.908 781.567 12,0 5.275.959 5.891.069 11,7 Average stay 3,4 3,5 --- 3,5 3,5 --- 3,4 3,5 --- Total Arrivals 3.447.239 3.618.765 5,0 551.932 597.133 8,2 3.999.171 4.215.898 5,4 Presences 11.248.000 11.704.988 4,1 2.247.491 2.322.673 3,3 13.495.491 14.027.661 3,9 Average stay 3,3 3,2 --- 4,1 3,9 --- 3,4 3,3 --- Source: ISTAT - National Institute for Statistics Sicily Region Programming Department Evaluation Unit Pag. 4
The regional innovation capacity, after the full programming period 2000-2006 and five years of the current one, continues to remain modest with no signs of positive growth, whereas in a period of crisis like the present one it would be even more strategic to support the growth of an area by promoting research and innovation. More incisive policies for research and innovation could lead to a durable upgrading of the regional production structure towards more competitive sectors, employing locally as a consequence the human resources educated in Sicily, who are now forced to make use elsewhere of the high skills acquired. The regional production is still non-oriented mainly to the most value-added sectors, as most of local enterprises have an average small size and are chronically hardly inclined to network cooperation. Almost all the major national public research institutions are present in the region, including the National Research Council (CNR), the National Institute of Nuclear Physics (INFN), the National Institute of Geophysics and Volcanology (INGV), the 'National Agency for New Technologies, Energy and Sustainable Development (ENEA), the Council for Research and experimentation in Agriculture (CRA), the National Institute for Astrophysics (INAF) and the Institute for Environmental Research and Protection (ISPRA). There are also some regional public research centres such as the Zoo-prophylactic Institute of Sicily (IZSS) and a Science and Technology Park. In numerical terms, the main indicators have not experienced in recent years any kind of movement. The share of public spending as a percentage of GDP is still at 0,8%, while private spending is at 0.2%, which are both very low even compared to the national average (2% of GDP in which 0.7% is private). In absolute terms, domestic expenditure on R&D has been in Sicily of only 700 million about, compared to a national total expenditure slightly under 20,000 million, which was mainly due to regional Universities (58%), businesses (28%), public authorities and non-profit institutions (14%). The number of employees in the fields of research and development has decreased and reached values even more inadequate and inferior to those in all Convergence regions and in Italy. Compared to the latter, in Sicily the number of employees in R&D (per thousand inhabitants) is less than half. In terms of employment, it is in total about 8,300 work units, that is 1.7 employees per 1000 inhabitants, a figure that at national level reaches 2.8 compared to an European average of 5.1. At the same time there are instead increases in ICT and internet and broadband penetration, so the 46.6% of households have access to the Internet, compared to a national rate which has reached 54.6%, while businesses are still at 24.4% compared to a national rate of 33.6%. The number of patents, which expresses the ability of a system to translate the search results into innovative applications, has decreased to half the value registered in the previous four years, in line anyway with the trend observed nationally and in the other areas of Convergence regions. Sicily Region Programming Department Evaluation Unit Pag. 5
Sicilian companies belonging to highly dynamic sectors (chemistry, ICT, pharmaceutics, biotechnology, electronics, professional, scientific and technical activities) show high concentrations especially in the largest cities of Palermo, Messina and Catania. It appears interesting to focus on the capacity to develop a considerable amount of activities induced by the most dynamic sectors in all the municipalities surrounding Catania, forming the socalled Etna Valley. As further confirmation of how poor the regional competitiveness is at an international extent, the data of the technological balance of payments (Bank of Italy) confirm that Sicily in 2009 (latest year available) showed a negative balance of nearly 6 million euro, with a very low impact on the national total (0.4% for payments and 0.2% for revenues) and a further 25% decrease compared to the previous year's budget. More specifically, the negative balance comes from all the above mentioned specific sectors, with the result that our payments abroad are higher than our revenues for trade in technology (use of patents), for the use of trademarks and the technical assistance connected to the transfer and exploitation of rights. We have a credit balance only for exporting abroad skilled technicians and experts. In a comparison with Europe by means of the IUS (Innovation Union Scoreboard), a set of indicators that measures the innovative capacity of a region, Sicily places among the least innovative regions in Europe. However, in recent years the region has advanced from the category of modest innovator to moderate innovator. Since there are no yearly data available for a few regional indicators, it is possible to consider only 19 of the 25 total indicators, which show that Sicily in a less advanced position compared to other Italian regions. The following IUS indicator charts show the relative distance of Sicily s ranking with respect to all IUS indicators and to the ranking of the other Italian regions. Sicily Region Programming Department Evaluation Unit Pag. 6