Since 2008 the economic crisis has reduced income and drastically brought down employment levels, and
the recovery promised in 2014 will not reabsorb unemployment, particularly in Europe. The ILO and IMF
have forecast a jobless recovery. Nevertheless, economic policy in Europe will remain in line with the past,
based on two mainstays: fiscal austerity and labour flexibility. Wage policy for European countries aims to
align wages to real productivity at firm level, and leaves little room for national-level bargaining. The effect
of this strategy is to increase the short-run cost competitiveness of European firms in external markets, at
the cost of decreasing the size of European internal markets which rely on domestic demand. A
consequence of this policy during the crisis is the reduced share of labour income in the economy. The
Italian Jobs Act will not help to improve the situation in Italy or the rest of Europe because a labour policy
based on nominal wage stagnation and real wage deflation does not change things; there is no sign of
industrial policy and innovation policy where relevant economic public resources should be invested. Only
the latter policy would open a way out of the expansionary austerity trap, but the Jobs Act will mark a
further step towards the stagnation trap of the Italian economy