By Donato Paolo Mancini
In the Tuscan town of Massarosa, Alessia Signorini pulls weeds
in a local park for tax discounts. Riccardo Porta barters the bread
he bakes in Sardinia for meat. Rome restaurant owner Fiorentina
Ceres buys and sells goods with a currency that doesn't touch a
bank.
Amid a long stretch of economic stagnation, some Italians are
finding novel ways to cope, embracing corporate barter, alternative
currencies and even deals to lower taxes by performing civic
duties.
Alternative means of trade have been employed throughout
history, especially during economic downturns, as a way to boost
local spending and help companies that aren't able to access bank
lending. Switzerland's WIR alternative currency has been trading
since 1934. And some U.S. businesses turned to corporate barter
during the Great Recession.
But few developed nations in recent memory have embraced such
measures to the extent of Italy -- or been able to test them over
such a prolonged period.
The country's economy shrunk by almost 5% over the past decade,
even as the wider developed world grew by 22%, according to the
World Bank. Its unemployment rate sits at 11.1%, compared with a
7.7% average across the European Union.
While it's difficult to measure how much of the economy these
alternatives account for, some measures show that in areas of Italy
their trade is worth hundreds of millions of euros.
In Massarosa, a town of around 22,000 north of Pisa, municipal
officials offer residents a 50% discount on their garbage
collection tax -- which can amount to a reduction of up to EUR450
($538) a year -- in exchange for community service such as cleaning
roads or gardening public spaces.
Three years ago, Ms. Signorini offered to help with street
cleaning before becoming the local "weed wacker."
"Our cities are penniless," said Ms. Signorini, who recently
lost her job as an accountant. Picking weeds wasn't something she
ever envisaged doing, but "with the discount we get, we -- a
single-income family -- can pay another bill [more comfortably],"
she said.
This so-called administrative barter began in 2014 after the
national government passed a law allowing citizens to receive a
markdown on their local tax rate if they perform a civic duty. A
court ruled last year, however, that this couldn't be done for debt
accrued in the past. Massarosa currently has some 200 people taking
part, said Mayor Franco Mungai, many of them either young and
unemployed or pensioners "with a lot of free time." The city calls
it an "active citizenship" program.
Businesspeople, meanwhile, are turning to corporate barter and
parallel currency systems. Mr. Porta, the co-owner of a baked goods
company in Gonnosfanadiga, Sardinia, barters with meat producers by
using a local alternative currency called Sardex. He receives
credits for his bread that he then redeems at local cured meat
factories.
Barter credits essentially act like a currency, gaining value
through their purchasing power. By swapping items they consider to
be of equal value, companies are able to buy goods without using or
having to borrow money -- something that has become increasingly
important for small-business owners as bank lending in Italy has
fallen.
Barter was worth EUR1.8 billion in the region of Lombardy alone
in 2014, according to latest figures available from the Chamber of
Commerce of Monza and Brianza.
Italy currently has at least 11 alternative currencies, which
moved the equivalent of about EUR90 million last year, according to
figures compiled by Sardex, Sardinia's parallel currency
system.
Ms. Ceres, the Rome restaurant owner, turned to one last year
after struggling to get credit from banks. The local parallel
currency Tibex, named after the city's river Tiber, a allows her to
barter goods and services, freeing up cash for other uses. "It has
been a lifesaver," she says.
Some businesses in Rome and Naples also use SCEC, a free voucher
system that lets customers buy goods at a discount at select
outlets, which in turn buy marked-down goods from participating
suppliers.
The success of these alternative means of trade remains
debatable, experts say. If uptake is low, it can be hard to find a
counterpart to accept the credit or currency. In the end,
economists say, the systems can only spread as far as members of
the local business community are willing to trust each other's
debts.
"It can stimulate a sense of belonging and solidarity," said
Giorgio di Giorgio, a professor in monetary theory at LUISS, a
university in Rome. "But its success very much depends on how
widespread [the currency] is."
Both former Prime Minister Silvio Berlusconi, who is running in
next year's national election, and the antiestablishment 5 Star
Movement have come out in favor of parallel currencies, which are
generally considered vote-getters.
Many Italians expect alternative currencies to have a lasting
legacy, even as the economy begins to improve. Growth was 0.4
percentage points in the second quarter, its best performance since
2010, according to the Organization for Economic Cooperation and
Development.
Mr. Porta joined Sardex when it started trading in 2009 -- even
using it to buy his car. Sardex is now among Italy's biggest
alternative currencies, with about 4,000 people using it regularly,
according to its latest figures.
"It is true that Sardex helped during this [downturn]," Mr.
Porta said. "But I don't think that if and when the recession is
over, Sardex will stop being used."
(END) Dow Jones Newswires
September 25, 2017 05:44 ET (09:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.