Patrizio Papini stands outside the now-shuttered plant where he once helped make luxury yachts in Civitavecchia. He had thought the welding work would take him through retirement. (Chico Harlan/TWP)

For the thousands in this economically battered town who can’t find work, the local state-run employment center advertised one day last week just a single job: for a part-time social worker who could fill in during somebody’s six-month maternity leave.

Recently, though, people have started walking into the center asking about something else — the welfare benefits, aimed at struggling and jobless Italians, planned by the country’s populist government.

The center’s director, Enrico Caricaterra, said staffers field questions about the policy almost every day. When will it start? How can one apply? And will it make a difference?

“If people are desperate, they will look for anything,” Caricaterra said.

Those planned benefits are a core component of Italy’s controversial proposal to salve, and maybe jump-start, one of the world’s most troubled developed economies. The plan is an anti-austerity clarion call, and it has sparked a confrontation with the European Union.

Officials in Brussels say Italy is trying to defy European fiscal rules and recklessly spend money it doesn’t have. The E.U. cannot veto Italy’s plans, but in recent weeks Europe’s executive branch has applied as much pressure as it can, asking Italy to reconsider its spending at the risk of unprecedented financial sanctions.


Five Star Movement supporters rally in Rome. (Antonio Masiello/Getty Images)

Populist leaders in Rome counter that the norms of Europe haven’t worked for the euro zone’s third-largest economy — and that now is the time to upend them.

Italy’s new budget defies E.U. guidelines calling for heavily indebted countries to reduce their burden. The plan, which would pay for welfare programs, tax cuts and pension reforms, targets a budget deficit that is 2.4 percent of gross domestic product. Italian Prime Minister Giuseppe Conte has said that the needs of Italians, “for once,” will come first.

In the current political climate, Italian leaders stand to gain by adopting an anti-E.U. stance. But Italy’s populists are responding to one of the underlying forces that helped sweep them into power: potent frustration about an economy that has all but forgotten how to grow.

While other once-troubled economies across the continent have rebounded , Italy’s economy remains smaller than it was at the turn of the century — a result, analysts say, of an aging population, some onerous regulations and low productivity, among other factors. The country has the euro zone’s third-highest unemployment rate, and legions of young people flee for jobs elsewhere in Europe and beyond. During the past 10 years, according to government data, the number of Italians living in absolute poverty has nearly tripled.

The new spending measures have proved popular with voters. But the plan comes with significant peril. Italy is among the world’s most heavily indebted nations, analysts note. It is vowing to disregard a rule that was drawn up to prevent future European economic crises.

Markets have shown jitters. Bond yields have risen, though they haven’t spiked to crisis levels. Some economists say Italy has increased the risk of a dangerous spiral — especially if the new spending doesn’t stimulate growth.

In a worst-case scenario, investors would start to sell off Italian bonds at a greater clip, worried the loans might not be repaid. The bonds would lose value. Italy’s interest rates would rise. Italy would be forced to pay more and more to service its debt, sending ripples through banks across Europe and prompting lending, and growth, to shrivel.

If Italy’s debt becomes unsustainable, it’s unclear what would happen next, including whether Europe could marshal the political will to bail out a defiant member of the bloc. Any bailout deal would be tied to Italy accepting reforms — the very austerity measures that its government is now trying to spurn.

Italy has said it is committed to the common currency of the euro. The two parties that make up its government — the left-leaning Five Star Movement and the far-right League — have clashed over some aspects of running the country. But the parties’ leaders, Luigi Di Maio and Matteo Salvini, have spoken similarly about changing the nature of Europe from within and winning followers for their brands of populism.

Salvini, of the League, recently said that two top E.U. authorities had “ruined Europe and our country.” He said E.U. measures had “made Italy poor.”

“Salvini and Di Maio want to remain part of the euro zone without respecting the rules; that is the inherent contradiction in the position they are articulating,” said Mujtaba Rahman, the Eurasia Group’s managing director for Europe. “That is the contradiction at the heart of what the Italian government is doing today, and that is the fundamental problem for Europe.”

Europe has proved capable in the past of imposing its will on rebellious members, most notably Greece. The European Commission has asked Italy to resubmit a revised budget by Tuesday. In the meantime, its officials have said Italy is overestimating the growth that would stem from its spending.

A chunk of that spending would fund the “citizens’ income” plan, a welfare proposal that helped the Five Star Movement capture widespread support across the country’s poorer regions, particularly in the south, as its politicians railed against the inequities of capitalism. Since entering the government, Five Star has been overshadowed by Salvini’s anti-migrant League, losing its place as the country’s most popular party. Analysts say Five Star’s credibility, and much of its political future, depends on following through on a central campaign pledge.

Five Star officials say that Italy, at the moment, has an insufficient safety net and that many people in poverty don’t qualify for several versions of existing unemployment relief. That includes Italy’s growing number of part-time and temporary workers, and those taking off-the-books jobs. Di Maio’s economic adviser, Pasquale Tridico, said that for those who are unemployed, the citizens’ income would be tied to job-hunting and training requirements. The government is aiming to have it in place by April.

“This is why it’s the most important labor policy of the last 30 years,” Tridico said. “The ambitious goals are reducing or erasing poverty, attacking inactivity and helping reintegration.”

It remains to be seen whether such a policy would alter Italy’s labor market. In Civitavecchia, a town of 53,000 an hour’s drive outside Rome, Mayor Antonio Cozzolino, a member of the Five Star Movement, said the new welfare system could provide a “modicum of serenity to those who have lost their jobs.”

Some, like Patrizio Papini, 48, have in fact lost their careers. Until five years ago, he was a welder who helped build massive luxury yachts. He figured the work would take him through retirement. But his company shuttered.

Since then, Papini has been nothing and anything. He’s cleaned the hulls of boats. He’s cut grass. He’s filled potholes. He’s taken off-the-books jobs for wages he calls “humiliating,” as little as $17 per day. He and his family have moved into his mother-in-law’s ground-floor apartment, and on days he can’t find any work, Papini said he feels like “dead weight.”

“I feel despised,” he said. “All eyes are trained on you like rifles, and I keep thinking, ‘You haven’t brought anything home today.’ ”

Papini has exhausted his unemployment benefits, but he said he’s not excited by the planned welfare expansion; it’s a handout, not a job. Of the three-dozen people with whom he once worked at the port, some have stayed in Civitavecchia and scrounged for the same temporary work as he has. Others have left for energy jobs in Russia or the Middle East.

Papini, unwilling to leave his family, said he turned down a chance for employment in the United Arab Emirates. But he has started thinking more and more about what he’ll tell his own children, who are between 6 and 14, as they near working age.

“I am going to tell them: Study and get out of Italy,” he said.

Stefano Pitrelli contributed to this report.