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The IT revolution and southern Europe's two lost decades (voxeu.org)
91 points by hhs 13 days ago | hide | past | web | favorite | 99 comments

To me, the most relevant quote is:

> Subsidising IT adoption actually lowers southern productivity even further. Likewise, subsidising education has negative effects, as it is effectively becomes a transfer to the north through high-skilled migration. These surprising results are due to the fact that, in our model, low IT adoption and low education are a symptom, rather than the cause, of low productivity growth in southern Europe. Indeed, given management efficiency, southern workers and firms behave optimally. There is no further room for improvement.

As a citizen of a Southern EU country, this feels painfully true. Having worked a year in the Benelux, returning here just heightened that sense: the culture of hiding information, trading influence and promoting mediocrity. And I fear those EU funds for creating startups will just be consumed by the forces, being used by founders who have only known this reality. Working abroad beforehand should be, if not mandatory, at least strongly encouraged.

As a someone working in hardware development (PCBs & firmware) in Spain, from the 5 companies I worked:

- Only one used version control, the rest I had to introduce them (and fight management fears) to set it up.

- Only two had onsite backup using RAID or similar

- None had out-of-site backup

- Only one had a system that supported shared libraries (for hardware), the rest resorted to email or a shared drive and a LOT of back & forth to ensure no one overwrote past edits.

- I started working in 2010, yet I've managed to found "goto" statements (the "jump out of this function to some weird place in code" type) in the wild.

But by far, the most damaging practice that I see around is how pointless much of the work done is. Given the amount of investment required for developing your own hardware, knowing that less than 40% of the products I have worked on are on the market because they were pointless in the first place (and everyone knew it) is the most demoralizing.

EDIT: I always forget to double the break lines

To be fair, I see this in the US as well and IMO the problem is that we have many generations of managers that have learned about management based upon 20th century manufacturing and military (the biggest and best studies in management come from here).

My plea to management in all these stuck in time companies is to read about Deming and a reminder that even the US military has mostly abandoned the practice of command & control for missions that are more exploratory or back office related because they weren’t working when enemies were so fast moving and adopting new strategies quickly.

And in fairness to your experience of lack of useful projects, many of the products people work on even at the big tech companies never get deployed or are shuttered within months (Google Wave anyone?)

We need management to lead now, not... “manage.”

I would understand if projects were launched, didn’t caught up and were abandoned (like Google Wave).

What makes no sense to me is building something that everyone knows from the start there’s no market for it, Or getting something ready and then just not bothering to sell it.

> yet I've managed to found "goto" statements (the "jump out of this function to some weird place in code" type) in the wild.

I might just add that this is not wrong and actually expected in some places. Linux uses it. It helps with some error handling situations.

But yeah with the other points I agree.

While I've seen a few places where goto made sense (as in, "goto fail" in C), a goto that lead somewhere out of a function has never been one of them.

That’s what I’ve added the parens, I know there’s some very limited edge cases were it makes sense to tradeoff clarity for speed and use a goto.

To clarify, I’m talking about stuff that could be easily done with functions or loops being done by random goto statements.

to further nitpick and distract from the main conversation, it sounds like they are talking about non-local goto (setjmp etc in c), which, just like an actual goto statement, is useful for error handling, but is much more difficult to deal with that a normal goto.

That very much agrees with the "poor management" verdict. In the light of all this it's great that a famous hardware startup managed to come from Italy (Arduino).

The history of Arduino is pretty shady [1]; and from all accounts they’re barely treading water these days. There is a glut of well-documented microcontrollers targeted at hobbyists. Most are at similar price points with far more advanced capabilities.

They created the market, but have been largely unable to capitalize on it. Which is basically par for the course for Italian companies.

[1] https://arduinohistory.github.io/

> They created the market, but have been largely unable to capitalize on it.

There's a long history of this stuff happening in tech and other industries. It's often the 2nd or 3rd popular company that becomes dominant. Facebook is a classic example.

There was a great Harvard Business Review article critiquing the 'first mover advantage' which was the go-to strategy during the dotcom boom that highlighted this phenomenon. Most often the 'first mover' is just paving the way for the next guy.

Arduino has been a resounding success!

And Arduino is not hardware, it is the ecosystem, the community, etc..

Do a web search for "Basic Stamp", the closed-source progenitor of the Arduino. Then search for "Arduino". I get 142,000,000 results.

EU subsidies and funds can turn into a form of the resource curse ( https://en.wikipedia.org/wiki/Resource_curse ). When the biggest money is earned from writing grant applications, the best and the brightest are going to focus on that.

Why bother with writing, nowadays there are many grant-applications-as-a-service companies. "We provide a range of services, from defining your funding strategy to writing your funding proposal. " [1]

[1] https://www.zazventures.com/

Having some experience of living in one of those Southern countries, IMO consumer/infrastructure/gov IT is at least as good as the UK's.

Broadband is patchy, but where it exists it's often faster than the products available in the UK, and service call-out times are better. (I've had next-day engineer visits after reporting an outage, which would be unheard of in the UK.)

Major and minor services all have apps and web sites, and online shopping is very much a thing. There's also a single unified government-administered ID system that works with the major government portals, banks, and some other services.

Small biz sites are some way behind, but design agencies are growing at a healthy pace in the major cities.

There isn't much of a startup culture in the Bay Area sense, but that probably has more to do with lack of a strong investment culture than lack of talent or ability.

So I'm certainly not seeing evidence of "low IT adoption" or generally poor performance. I'm not even seeing unusual evidence of corruption, nepotism, or incompetence. They certainly exist, but not at the scale the UK is currently experiencing.

Where is online shopping very much a thing? Eurostat reports the following percentages for the question "Have you purchased something online in 2018":

Greece: 36%, Italy: 36%, Spain: 53%, Portugal: 37%. For comparison, the UK is at 83% and the EU average is 60%.

In any case, my experience with consumer or government IT isn't bad either. And I don't disagree there's talent and ability - unfortunately, half of it leaves, and the other half is squandered. My beef is with poor management, not lack of talented people. And unfortunately here I can't say there is lack of corruption and nepotism either, but I acknowledge different Southern countries are different.

How on earth can this be changed, though? Culture is extremely resistant to being changed by fiat, and the governance and leadership of Italy isn't up to achieving a national transformation either.

I'm American but also an Italian citizen and have lived there for many years. I have zero hope that Italy will reform in the next few decades unless something incredibly radical like a war breaks out. Cultural apathy and corruption runs far too deep, and anyone who could reform simply leaves for Germany or the UK. Italy is a good place to live if you already have money. If you are a young enterprising person it's hell.

It's quite shocking to see that Italy and Spain will be overtaken in GDP PPP per capita by second-world countries like Czechia, Slovenia and Slovakia in the next ~5 years (all of them went through an economic collapse that set them 15 years back, followed by massive brain drain).

Czechia specifically is not to be underestimated. Czechia has a world class engineering tradition and is generally a fairly well-run country. So "even Czechia" doesn't make much sense to say.

yeah, it kinda makes this even more pessimistic. I recently spoke to someone about the quality his education at the TU Dresden back in the GDR. He wasn't very critical and said he enjoyed a good mechanical engineering education there. This means that even during communism and towards the collapse the good engineering culture persisted. A whole nation and their entire economic system could collapse and the good engineering tradition continues. If we assume that a bad tradition is equally persistent, then we have a problem in souther italy that even the collapse of the economic system and whole state would not necessarily change.

I rented a Fiat last week and the quality is way up from the old days. I gather the headquarters have moved to Holland. Maybe a bit of foreign control is the way forward. I think Lamborghinis are also now reliable since VW took over.

My opinion isn't really scientific, but I think this has primarily to do with the demographic pyramid in Italy and most of Southern Europe, not much with economic development. Kosovo is a clear example that economic development isn't important for IT development and adoption, it's how much youth you have.

Being over-simplistic: Southern Europe lacks good management.

Southern Europeans workers are wanted everywhere - they are productive when working in a different environment - so the problem must be extrinsic. It's very common that they are more educated than their bosses in their home country.

> they are productive when working in a different environment

As someone from the balkans... it's not the enviroment that makes people productive (it can make them unproductive though), but the productive people choose to change their enviroment to one, where they can be more productive. And this is true for both plumbers and engineers. Just take a successfull good worker (and a bad one if you want), and put them into a shitty low-paying government job, where it takes three weeks to order a replacement computers mouse... shitty workers stay there ("i'm waiting for a mouse, can't work now, but i'm still getting paid") and good ones try to find a better oportunity elsewhere (and for shitty locations, that means far away, in a different country).

I've been on this situation (except it was not a government job), I use my own mouse, keyboard, and I've had to upgrade myself the hdd and RAM on the laptop provided to get any job done.

BYOD is heavily frowned in Spain, but employers insist on giving me home-grade cheap laptops for CAD work. It's madness.

Government jobs are really really bad at this.

Small companies are a lot better at this (atleast here).. the last time i worked at an international one, they sent me an email two weeks before i started there, saying basically "we don't choose the devices, but we have a 5k(eur) budget for a work computer, and you pick everything yourself - we suggest two monitors and a 'real' (non laptop) keyboard and mouse + a docking station", I emailed them the list, and everything was waiting on my desk. There was also a policy of buying small stuff we needed ourselves and getting paid back (keyboard stopped working?, don't ask, just buy/order it, and sent the receipt to accounting to get reimbursed). And after two years, we were allowed to buy the written off equipment for 5-10eur/piece. It has a lot of potential for abuse, but in that setting it worked great.

I would kill for something like that.This is the setup I was given on January when I started in my current job:

- Lenovo Ideapad 520 (old version with i7-7500, I don't even know how they got their hands on one).

- BenQ BL2420 (24" inch monitor)

Total price according to Amazon ~ 700€

Comparing this to Altium Designer's Recommended Requirements is ludicrous, it barely met Minimum Requirements before I did the upgrades.

I've worked for a top-3 TV/Internet/mobile provider in Portugal, yet people had to snatch monitors from colleagues who left. Meanwhile my project was in its fifth year of development, and only barely starting to invite clients, after the third rewrite. It's insane.

I think the north and the south both have a lot to learn from each other, unfortunately the economic discrepancies make it less and less likely for this exchange to happen. It's a sad state of affairs, but just as the southerners can learn a lot from the northerners, vice versa should definitely be encouraged as well.

It's such a shame; having a work/management culture like in the northern Europe would make the south unstoppable -- it might even cause a north-to-south brain drain. I know I'd move, and the EU makes that easy.

Can't speak for all southern countries in EU but here are my impressions.

* At least from the people I know during the summer productivity drops because everyone is on a vacation to the seaside.

* People here seem to much more enjoy live. It is much more common to see young people just hanging around and socializing than doing anything productive.

* Tourism is usually the priority for those counties, not IT. This leads to high number of seasonal workers. Lots of people don't want to work in factories and offices. They just work a few months during the summer in the tourism and during the rest of the time they enjoy life and do nothing.

* EU allows everyone to work everywhere and smart people want to be part of the technological hubs of Europe which just happen not be here. It is the same as in USA. I haven't heard about any startup from Kansas, but plenty from Silicon Valley.

My two cents for the situation. EU has poured lots of money to these regions but very few productive things have come out. People just learned how to manipulate the system to get more funds. They are not thinking how to solve real problems and make people lives better, everyone is just trying to get money, spend them and then asks for more. The funds should be restructured to allow entrepreneurship grow. You cannot make inefficient system better by just giving it more money, you need to change the system.

Technological hubs don't "just happen" to not be in Southern Europe. I'm American but also hold Italian citizenship and have lived in Italy and Spain. The regulatory environment around finance, labor and business makes any kind of scalable technical hub impossible. Starting a business generally takes many months and thousands of Euros. Why would anyone opt for that instead of going to the UK where you can get started in days with a 50 pound fee.

Corruption and graft at every level of government is also an issue. Southern Italy still has businesses being bombed by Mafia affiliated gangs for example if they don't pay protection money (This happened to several places I frequent last year when I lived in Napoli). Until Southern Europe reforms culturally they will continue to lag further and further behind and all the smart young people will go to places more welcoming of their talents.

I agree with your overall arguments.

However, I did take issue with one point. It's unfair to use Mafia bombings in Napoli as a reflection of all Southern Italy when Napoli is a notoriously dangerous area and has been at times even considered the most dangerous city in all of Western Europe. I'm sure you understand this, having lived in Napoli, but I think it unfairly characterizes daily life in Southern Italy for unfamiliar readers.

That's a fair criticism, I certainly didn't mean to insinuate that this happens everywhere in Italy. Various mafia organizations are most definitely active outside of Napoli in various small Italian towns, though they may not be as violent. Tourists are incredibly unlikely to ever have an issue but locals are affected more.

The long vacations (often a whistle word for "laziness") is a common refrain, but as far as I know the numbers don't bear that out: the vacation days are not very different, and the working hours are actually longer.

That's correct. People proclaiming that it's about quality of life are mistaken, other nations have overwhelmingly demonstrated that you can have both in abundance.

Portugal works more hours (1,842) than the US does (1,783; average labor hours per worker per year). Yet US output per capita is nearly three times higher. Greece works far more hours than the US. The US is near the OECD average for hours worked, Greece is 15% higher than the OECD average. Spain works 4% fewer hours than the US, with 1/2 the output. Italy works 3% fewer hours with close to 1/2 the output.

Forget about the US though, it's nowhere near the best example of this in action.

Germany is at $48k GDP per capita, over double that of Portugal or Greece, while working 1363 hours per year. About 20% fewer hours than Spain and Italy. That's nearly 500 fewer hours of annual work versus Portugal. The Germans are averaging 26 hours per week across a year, Greek workers are at 39 (which in real terms means once you remove vacation time, the average worker in Greece is pulling well over 40 hours per work week).

The Greeks are among the worst off in hours worked, at 2035 hours. 672 more hours than the Germans. That's a strong indictment of the quality of life argument usually tossed about regarding countries like Spain, Portugal, Italy and Greece.

Some of the countries near the bottom in hours worked in the OECD: Germany, Belgium, Denmark, Netherlands, France, Austria, Sweden, Finland, Australia, UK.

They're all simultaneously very high output countries, working fewer hours than Spain, Portugal, Italy, Greece.

Norway and Switzerland are near the bottom in hours as well, however their context are rather unique.

In case anyone is interested, here's how the figures break out on an hourly basis, for output per capita and hours worked. The OECD average on hours worked per year is 1,763.

Country | Hours (year) | GDP Per Capita | Output Per Hour

--- Best results (low hours, high output) ---

Denmark | 1,410 | $60.7k | $43.05

Netherlands | 1,430 | $53.1k | $37.13

Germany | 1,363 | $48.3k | $35.44

--- Mid or mid-upper tier outcomes ---

Ireland | 1,879 | $76.1k | $40.50

United States | 1,783 | $62.6k | $35.11

Australia | 1,669 | $56.4k | $33.79

Sweden | 1,621 | $53.9k | $33.25

Austria | 1,601 | $51.5k | $32.17

Finland | 1,653 | $49.8k | $30.13

Belgium | 1,550 | $46.7k | $30.13

France | 1,472 | $42.9k | $29.14

Canada | 1,703 | $46.3k | $27.19

--- Underperforming (too many hours vs output) ---

UK | 1,676 | $42.6k | $25.42

New Zealand | 1,752 | $41.3k | $23.57

Japan | 1,713 | $39.3k | $22.94

Israel | 1,889 | $41.6k | $22.02

Italy | 1,730 | $34.3k | $19.83

Spain | 1,695 | $30.7k | $18.11

South Korea | 2,069 | $31.3k | $15.13

Portugal | 1,842 | $23.2k | $12.60

Greece | 2,035 | $20.4k | $10.02

--- Some other miscellaneous results of note ---

Norway | 1,424 | $81.7k | $57.37

Switzerland | 1,590 | $82.9k | $52.14

Iceland | 1,883 | $74.3k | $39.46

Chile | 1,974 | $16.1k | $8.16

Poland | 1,928 | $15.4k | $7.99

Russia | 1,974 | $11.3k | $5.72

Turkey | 1,800 | $9.3k | $5.17

Mexico | 2,255 | $9.8k | $4.35

Wow! this is an really interesting chart. I would not have expected the US to have the same Output Per Hour as germany. Switzerland is just killing it. Where's your source? The distribution of Output Per Hour per country would be even more interesting. I would expect countries like Italy to fairly multi-modal (north/south divide).

I threw it together. The source is the OECD hours worked data (public information), with IMF 2018 GDP figures (which are pretty similar to other major sources like the World Bank).

This isn't a perfect system, as it doesn't account for the variance in % of the population that is working. However, since the workers ultimately represent all or nearly all of the GDP output regardless, it's quite effective overall as a reference. Basically you just need to get to the broad view: how many hours are the people of a nation working and what kind of output does the nation have. You still get a lot of things in a given nation that impact GDP that isn't going to represent perfectly when just looking at labor.

A potentially even better approach would be to take how many workers a nation has, with the hours worked and the national GDP. So you look at GDP per worker, rather than GDP per capita, and then look at the average hours worked. The big question though is the accuracy of national worker count figures, and how that compares to the accuracy on GDP figures. Flip a coin perhaps.

However, this data does tell you some clear things. It tells you that Mexico is suffering pretty hard under those hours worked vs output (and as a share of output, it tells you what their compensation limits are). The Polish are working far too many hours, although it is producing a decent output figure. The people of Denmark, Germany and the Netherlands are generating incredible economic output with those very low hours figures.

It also tells you that while eg the French often get flack for supposedly being lazy when it comes to working hours, they have one of the best hourly output figures of any nation and match that up very well with low working hours (they have one of the better combinations of hours & output, well exceeding the UK).

However it obviously doesn't tell you what effect lowering or increasing hours worked would have exactly on a given nation. For example, can Germany push its export machine a lot further by increasing the hours worked to US levels (are there buyers for those additional exports), or is that already heavily optimized and so they're doing the logical thing and reducing hours while trying to maintain max exports & output generally. Nearly all of the OECD have been persistently reducing hours worked the past decade plus, while largely maintaining or increasing output. A nice combination when you can manage it.

Switzerland, Norway, Ireland and Iceland are freak outliers for the most part. Switzerland is a banking empire, with rather dramatic banking related output concentration as a share of their GDP; no doubt they're killing it though. Ireland's GDP moderately misrepresents what their individual income levels are, as their GDP figure is quite inflated by corporations that have moved there for tax purposes; Ireland's workers have done very well overall, just not quite as well as their incredibly high GDP figure implies. Norway's numbers as everyone understands are skewed by their exceptional oil output per capita. And Iceland only has 338,000 people (it's kind of like including Luxembourg), interesting to note non the less.

there should more granular data, at least in europe. Producing a map with GDP per working hour per worker on a district level would be quite cool (whatever the most precise avaiable statistic is)! I don't think just listing countries ist actually that interesting, because i would suspect some countries to be quite heterogenous and other quite homogenous.

When I think about it, GDP per working hour is actually quite the interesting metric.

These are not like for like, because they ignore the relative value of different market segments and of comparative advantage.

Germany produces high-value consumer and industrial engineering products, and financial services. Greece produces tourism and olive oil. Should Greece somehow be forced to produce lifts, yachts, and high-status cars, or is that actually an unworkable - not to mention unhelpful - idea?

This is a major flaw with the current set-up of the EU. Euro adoption has made it very hard for countries to balance imports and exports. Germany has a huge current account surplus, while Southern Europe has an equivalent deficit.

These are structural issues and nothing to do with working hours or even with bad management.

A completely homogenised EU - or international - economy would be a monster. There's no reason why countries should compete directly on GDP when they have such different products and services to offer. But there's nothing in current GDP accounting that supports diverse economic activity without attempting to penalise it.

The ideal would be wealth redistribution between countries. The EU does some of that, but in a slightly random way that seems to lack a coherent EU-wide long-term development strategy.

Edit: it would be interesting to break out the US figures on a state by state basis. I suspect we'd see some very large disparities between the most and least productive states.

Spain has 30 days required paid leave. In Denmark 25 is required, most IT workers have 30, some (e.g I) have 35.

Spain has a 40 hour work week, Denmark has a 37.5 hour work week.

Yes the numbers don't add up to OPs claim. Yes, it's a dog whistle.

This is a very simplistic and probably wrong assumption in my opinion. Let's counter it with California: It has Silicon Valley, the world-leading IT hub and it is not a cold place by any measure.

This argument is thrown a lot around the Mediterranean and I think it is the same argument that gets thrown to explain your mediocrity (Not getting a good job/wage, must be the immigrants!).

What the article is highlighting here is productivity. Productivity should be higher in Souther Europe exactly for the reasons you mentioned: There is less snow, more sunlight, less rain, less cold, less illness, and generally less troubles with the geography/weather.

I think GP's point is: productivity is not the priority of these societies. So they could be more productive but enjoying life is more important for people living there.

Workers are not responsible for productivity in the workplace; managers are. Enjoying life should increase the workers happiness and thus increase productivity. This is why these same workers are as productive when they move north.

It isn't as simple as just motivating managers in a single company though, it's the whole life view of a society that would need to change. Earlier this year I was living in Southern Spain for a few months and here are a few of the issues we had:

- My wife (EU citizen) was studying there, so eventually got all the documentation needed to open a bank account (which involved waiting in a police station for a few hours), took it to the bank (BBVA, #2 bank in Spain), then after a few days they opened her account. A week later we went to make a deposit, but for some reason the account had been closed. The bank said they'd look into it and get back to us, but of course we heard nothing. We went back a few times over the course of a month, but eventually gave up as nothing ever happened.

- Because we didn't have a Spanish bank account, a lot of stuff was a lot harder than it should have been. One time we wanted to visit a agritourism site with some relatives who came to visit, but even though it was aimed at tourists (the website was in English), the only way to pay was with a Spanish debit or credit card.

- Getting internet at our apartment was fairly simple, until one day it stopped working. We went to the store (Orange) and they said that we had an outstanding bill. Ok great, so why didn't you email or SMS (my wife had a SIM from them too) us about it? They checked and had the correct details on file, so said it was probably just a one-off error. They said we needed to pay online not in-store, but of course that only works if you have a Spanish bank card, so we had to transfer money to a friend and get them to pay. We never received a bill via email or SMS the whole time we were there.

- Our apartment had a gas boiler for hot water, but for some reason there was no piped gas (supposedly it's more expensive to have a gas line installed, so this is quite common). We phoned up a few of the local delivery companies who passed us around via email, voicemail etc, but we never heard anything back. In the end I just lugged the gas cyclinder to the local petrol station once or twice a month.

- Our 50m2 (500sqft) apartment had zero insulation (again fairly common, even in builds from the past 10 years), so each month we were paying €150+ for electric heating, which barely kept it at 16C/60F. Because of the cold it always smelled damp and moudly.

Travelling back home to our Eastern/Northern European country was like going to a different world in comparison. Everything here is just so much easier.

Northern EU countries have just as much vacation (some even more). It's not unusual for major offices to be closed for the summer.

it sounds like the priority is to have quality life not just bust your butt to make company owners rich.

It is a very complicated issue because nobody has the perfect birds-eye view and objective moral standards needed to assess what trade-offs are truly optimal, all things considered.

But a key issue here is that the workers aren't busting their butts digging holes and filling them in again. Instead workers are generally working hard to provide goods and services that other people want.

There are real questions about whether it is the best way; but if someone is going to succeed in life they are better off succeeding in America because their success will be better rewarded; other people will work hard to make them comfortable and give them things they want. That is probably a contributing factor to why America has an easier time setting up a tech hub and attracting global talent.

I met many engineers here, in Germany, from Italy. There are a lot of them, young and educated. I heard their stories why they left.

* Salaries and status of software engineers are low, you'd want to switch to management asap,

* There are very few interesting tech companies,

* Corruption and bureaucracy doesn't help with innovation and starting your own businesses.

Yes, Italians abroad can all sure confirm, but add:

* Social security/pension: if you work on IT in Italy, and have any degree but an Engineer one, you must pay 26% (and is planned to rise to 33%!) of your income to a pension public fund called "Gestione Separata": add to this your income tax and see how you say goodbye more then 50% of your money.

That pension fund is a total robbery since it is well known not to be sustainable, so just a miserable pension will come just from that fund. Even the director of the national pension institute (to which the fund belongs) once stated in the press: "I don't even understand why all subscribers to the fund 'Gestione Separata' are not protesting on the street!" (btw: subscribers are millions!).

Even more:

* the fund does not give you anything if you are sick: are you sick? you have to work and pay your pension (no concession!): yes, seriously!

* until 2 years ago that fund did not even give a woman any contribution at all for maternity (!)

Angry with their embarrassing political scenery, many Italians give up and, as they have been doing for centuries, go abroad: "voting with their own feet"


* https://www.informazionefiscale.it/gestione-separata-INPS-al...

* https://books.google.com.tr/books?id=ZrI_6jPOiWEC&pg=PA431&l...

> and have any degree but an Engineer one, you must pay 26%

Why the degree constraint?

>Why the degree constraint?

There are some professions (among which Engineers and Architects) that have a separate (let's call them "guilds") pension and assistance fund, that is of a "private" nature and - generally speaking - better managed than public ones.

Traditionally the Engineers contributions (coming mainly from civil and mechanical engineers) were:

1)relatively high (since they had relatively high income) even if the percentage on income is lower (currently it is - I believe - 14.5%)

2)going on for a very long time, an engineer or architect used to work since the degree until well into their 70's or over

3) they had the (unfortunate but good for the fund) habit of dying shortly after retirement (or before retirement)

In recent years things changed:

1) the work (and thus the income and the contribution to the fund) has been more intermittent than before

2) many people are not (unlike before) entirely or mainly freelance, and when you are employed by a firm you pay a minimal annual fee to the guild, but the large part of pension/retirement funds go to the mentioned "Gestione Separata"

3) generally speaking contributions start later and people retir earlier (and live longer), and overall there was a flattening (to the bottom) in either rates of pay or amount of work, so income overall has lowered whilst expenditures have increased

The net effect is that until a few years ago the (medical) assistance was if not excellent very, very good and the retirement/pension monthly wage was relatively high, whilst in recent years everything has toned down a lot.

Same thing exists in Greece and many other countries. In the past specific parts of science would set up their own “welfare” systems. So you’ve got countries with retirement or health funds dedicated to specific professional groups like MDs, engineers or academics.

Well, taxes a certainly not a reason to go to Germany. We also have our own pyramid scheme pension system.

To escape that you probably would have to go to north america. Advantages and disadvantages of course, but if you have a good education and nobody to care for, I can't see why you shouldn't go abroad.

no, wait, I did not mean that Italians wants to skip pension contributions, I said that that specific fund ("Gestione Separata") is a scam.

In the UK the amount of money that you have to pay for your pension is almost nothing (of course you have nothing in exchange, as a pension, but you are free to choose your own pensione scheme, mainly private)

So, once again: if an Italian working on IT moves to the UK, he will save 27% of his income, and (most of all) does not feel to be abused. :)

They probably won't save too much, as the final tax is around ~50% as well in the UK. Maybe they will save a bit, but not 27%

Take home pay on a £100,000 income (top-end London senior dev salary) is £66,532, so a 33.5% tax rate. This includes income tax and national insurance (healthcare and basic state pension) but not optional private pension contributions.

For a £50k salary you are looking at 25% total tax rate.


Thanks I stand corrected. The "higher rate" is 40% (+ NI) https://www.gov.uk/income-tax-rates and the highest rate is 45%

If you want to compare with other countries, NI can't be an afterthought. You have to include it in the income tax rate. Just because the UK doesn't call it an additional income tax doesn't stop it from being so.

Edit: and along the same lines, you need to add the "employer's contribution" to the total tax bill. In all NI works out to an additional 15% or so for someone on ~£100000. So that's about 55% in total.

Yeah, to US or to Switzerland - the top destination if you want to stay in German-speaking area.

Well Switzerland has also the French-speaking parts and the super-nice Italian-speaking area around Lugano; I guess it's a rather expensive place though.

This (the amount of taxes, and shitty predictions for the failure of this system) is true for most european countries (although you get more and better stuff in some countries). When the system collapses in one country, the others will go down fast, and we'll have a huge problem then.

must say Tax in Italy are high, but that is not really the issue: as I wrote, if you are on that fund you just waste 27% or your income.

The problem with taxes maybe is just:

* you never really know how much you have to pay: you cannot handle it by yourself (you need an private adviser)

Yes, and in slovenia it's 25%, and in other countries its at mostly the same level. Then theres's health insurance (12.92% in slovenia). Only after that you get income taxes. And above that you get VAT (22% here) for your services. So basically, you charge your customers ~5k, and get ~2k of net payout (the rest goes to the government) ... and that's without any actual business expenses.

Denmark has even higher taxes, but the country still works better than italy.

Calculating taxes is pretty easy in most countries, especially if you have to do it yourself (eg. independent contractors, etc.).

The only problem here is, that once one country fails (eg. they stop paying out pensions), all the other ones will go into full panic mode, and the shit will hit the fan.

so in Slovenia the pension contributions are 25% + you have to add health insurance 13%?, plus income?

in the UK the above amount to almost nothig: but then, of course you need your own pension scheme and health insurance.

yes, it is a lot, but the point here is not just the amount, but what you get: with the Italian "Gestione Separata" pension fund you just waste your money (and is 27% of your income !).

The amount is split between you and your employer, but if you're self employed it doesn't really matter (and in any way, it's you who has to earn the company the whole amount).

Here's the calculator: https://data.si/izracun-place/

In "01 Plača" in "Plača" enter the gross monthly amount, and at the right side ("03 Izračun", there's "Strošek izplačevalca" (what the employer pays all together), and "Neto plača" (net pay you get).

Hah! Belgium, world tax champion, can do better than that!

You have a salaried job. You set up a side gig after working hours. After business expenses, you pay: * (depending on the province) ~100€/year of flat rate provincial tax, regardless of income * 22% of independent contractor "solidary contribution", for which you get _literally_ nothing in return * if you have a somewhat decent paying main job, ~53.5% federal and local tax

No wonder so many people's side gigs here either go unreported or show zero profit...

with VAT, it should not be a cost for you, is it? (I mean, it should be a cost just for the "value added")

VAT is a sales tax (or purchase tax). The "value added" bit is a neat scheme allowing tax authorities to collect efficiently - it's nothing to do with value, it's about price; the government taxes transactions (the vendor pays). Like all sales taxes, it's regressive: poor people spend more of their income on purchases than rich people, so they spend more on sales tax.

Income tax and wealth tax are much more progressive, but they're also much harder to assess and collect.

Just a small correction: as a business, you subtract the VAT on your suppliers’ invoices from the VAT invoiced to your customers. Effectively you remit the taxes only on the added value of your business, hence the name. This makes it also harder to avoid taxes. But in the end, the end user pays the tax on the full price, as you say.

You have to charge your customers the VAT, so if you're employed as a plumber, you actually have to charge the customers directly everything including the VAT. It's not the you who pays it directly, but you have to earn your company the amount including the vat.

> Salaries and status of software engineers are low, you'd want to switch to management asap

I wish we'd stop with these memes about how perfect Germany's work culture is.

Unless you work in a tech bubble or as a costly contractor, that statement is true for most of Europe, including Germany.

In my time working in wealthy southern Germany's top engineering companies, most of my colleagues were immigrants, usually from poorer countries while the managers were German without exception.

German culture values management (even poor quality one) way more as developers and engineers are seen as a plentiful resource that can easily be replaced, imported or outsourced if needed.

On a stint working for one of the TOP 3 German car makers I witnessed how they had to fire 3 sub par project managers before they could find a competent one, even thoug all the previous ones had impressive resumes.

In Germany you're not allowed to write negative things about the employee in a reference letter so all incompetent managers who had the luck to work at prestigious companies jump ship easily for big money to other prestigious organization once the shit hits the fan and no one's the wiser.

I did not say the things are perfect or even good in Germany. I said they just seems to be better for those Italian engineers. To be honest, USA is an exception - the rest of the world is not on that level, maybe, only London, Zürich can compare.In other places you have to search hard and be lucky.

I do not like the state of German software industry and IT. Salary limits, preferring interns and juniors, lack of management and of organisational competence and culture in Berlin startups, avoidance of any risk, focusing on low risk boring stuff like web apps for fintech, adtech, travel, delivery, plain copy-pasting of businesses. So called flat structures in startups that are in fact just a mess. Founders who think they are new Steve Jobs, they do not listen to any advice and micromanage. There are a lot of problems, but there are a few good places and benefits as well.

My personal story is that I have 12+ years of experience, 5+ of them in leadership position with different ratio of tech / management. I still code and learn. A year ago I left a startup where I led engineering due to the reasons similar to what I mentioned above. I checked the market - I could not find or join anything interesting with a good impact and pay in Berlin. (I cannot relo for the next couple years - house, baby, etc.). I switched to contracting - now as a data tech lead for a large company. Good pay, no bullshit, I am not a part of management hierarchy, no strings attached, I can focus on doing my job. I hope to be able to land more contracts and eventually start my business - I have tech and management experience, but, unfortunately, no connections with domain specialists for good ideas.

Some of my friends left for US actually - for better pay and more technical job.

Having lived in Germany and Italy, I can confidently say that while German bureaucracy has room for improvement, it's miles ahead of anything Italy has to offer. Italian bureaucracy is so hopelessly inefficient, corrupt and useless that even third world countries are better for doing business.

Re the reference letter - I thought that this law caused a shift in how people interpreted the content. So instead of "was incompetent and lazy" you'd put "met expectations" - sort of damning the candidate with faint praise

Yes, but you're allowed to reject the reference letter you received if you do not like it and ask for a better one. Otherwise your ex employer might get a call from your lawyers.

Reference letters have no value anymore other than proving you worked somewhere.

You can leetcode an engineer to weed out the fakers but you can't leetmanage a manager so the bad ones slip in much easier.

Oh my I had no idea!

They didn't say anything about Germany being perfect, they said, well, implied, it was better than Italy for software developers.

True, but Barcelona has been improving the last few years.

The major reason in Italy is enormous fragmentation of capital. We lost most big concentrations in the years following the 1970s crisis because the direction the post-crisis restructuration took has been towards very small enterprises and not the consolidation of big groups. Reasons for this are complex, but I would call as the two most important

1. the way the urbanisation process during Les Trente Glorieuses didn't push people into working for big companies as much as in other European countries, leaving more room for small companies in later years (there are also historical reasons for this unusually stronger weight of small capital, of course, which go long back to the past);

2. how the political cadres didn't have enough, basically, courage, to push for the consolidation of bigger companies, if not in a way that amounted to stitching some smaller low-productivity companies together - pushing for an increased industrial productivity would have meant that many smaller enterprises would have gone out of business, that would have meant the loss of MANY votes from those social groups! Excuse me if I say something controversial, but just read up on the Reggio Calabria riots in 1970, especially the afternath.

The 1980s have been characterised by the widespread diffusion of the SME model (the meme was "piccolo è bello" - small is beautiful), also with remarkable examples like Veneto which saw a real facelift, turning from a somewhat still rural region into the homeland of the "capannone" (the small industrial shed) in little less than 10 years! Personally I think that all of this has been a major mistake, but maybe unavoidable due to the social structure and history of the country.

But in all of this, consider also that northern Italy is basically Europe's second most important industrial zone (we serve as component makers for the larger industries of northern Europe)

So.. it is very complicated.

One of the best explanations of the issues of Southern Europe, and Italy in specific, that I read about during my studies, can be found in the book “The Moral Basis of a Backward Society” (Banfield). It describes a village in southern Italy in which inhabitants are unwilling to contribute anything that does not immediately and directly benefit their own family. For example, they are unwilling to build a road to the next town, even given the large benefits the village overall would gain, because “only fools would do so” (paraphrasing here).

Seen with a game theoretic lens, and extending beyond Italy, it appears that there are low trust and high trust (or “social capital”) equilibria in societies, and it is especially difficult to go from the low trust to the high trust one. Secondly, these cultural norms and institutions (in a broad sense) are extremely persistent over time.

Of course, this is only one aspect of a multifaceted problem, but I find it particularly enlightening.

the game-theoretic aspect is certainly interesting. A more formal study would certainly be worth reading.

Turkey has now the biggest brain drainage ever in its history [0]. Most of them prefer western countries.

[0]: https://www.nytimes.com/2019/01/02/world/europe/turkey-emigr...

Yeah because everyone with a brain is being accused of being a Gulen terrorist, or knows someone who is being accused.

The downfall of the justice system as Erdogan makes himself a dictator causes everyone who can to vote with their feet. This especially includes foreign investors who were responsible for a large part of the economic rise of Turkey in the last decade - when investors cannot be sure that the government will randomly imprison their workers, they retract their investment.

Erdogan really sets up Turkey for doom.

His graphs all seem to start from the 90s and he assumes slower growth is down to IT but I think the phenomena has been going on much longer and predates IT. Back in the 60s say Germany and northern Italy had manufacturing industries and the like while southern Italy and places like Greece and Portugal remained doing mostly agriculture and tourism. For better or worse industries seem to concentrate in certain areas - I imagine California will have more tech industry than Nebraska say for a while yet.

Later the article says it's due to management, not IT. I agree that in the 60s-70s there was a tremendous difference (hence the massive migrations from e.g. Portugal to France and Germany at the time), but I think there was also some convergence in the 90s. I fear the divergence has just been increasing from then on.

The Euro crisis didn't help of course. Many used cheap Euro loans to buy overpriced property in the bubble. That doesn't really go away till the mortgages are paid off in a decade or two.

I think that one very important factor, at least in Italy which is where I lived for a long time, is the culture about processes and organisation.

In Italy there are lots of very talented people, but very often they work best in a self organised/ad hoc way. "Just following the rules" is mostly thought of as something stupid people do.

It's very difficult to automate processes which were non standardised or haphazard in the first place.

This seems about spot on the related issues with Southern European Countries, although after the big debt crisis we can see that some, namely Portugal and Spain raised their bar on the IT revolution. They have seen a big startup boom in AI, ecommerce, SaaS, even blockchain.

Portugal: Farfetch (unicorn, IPO'd), Talkdesk (unicorn), Unbabel, Apptoide, UTRUST

Spain: Glovo, Typeform, Spotahome, Travelperk

They came late to the game, but now their tech scene is rising.

What about southern Europe's technology hubs (Milan, Barcelona, Madrid, Lisbon)? Are they evolving differently?

I don't remeber it exactly, but I spoke recenetly on a party with somebody who lived for a few years in Lisbon and he quite liked it (and didn't spoke negativly on the IT-enviroment there, be it management or other stuff like meetups). Their universities are also not to underestimated (at least what I've heard from barcelona and lisbon. I've heard bad things from the CS at one of the universities around madrid).

I find game development as a good proxy for the overall level of CS in a region. Can you name, from the top of your head, a Spanish game studio? or Italian? or Portugal? or even a single game? I could only come up with Commandos/Runaway series (Spanish) and Screamer/Assetto Corsa (Italian) on my own, plus knowledge Screamer developer is the only notable one still making racing games to this day. I couldnt remember a single game studio name :( and Im an avid current/retro gamer. Even looking up https://en.wikipedia.org/wiki/Category:Video_game_companies_... is not that helpful. You know its bad when you get results like https://en.wikipedia.org/wiki/Golden_age_of_Spanish_software. Thats really not that great compared to the rest of Europe.

> https://en.wikipedia.org/wiki/Golden_age_of_Spanish_software. Thats really not that great compared to the rest of Europe.

Wow, this is shocking. Every wikipedia article about the spanish companies mentioned is worded in the past. None survived. Crazy how they not only declined, but disappeared.

But I am not sure whether game dev is a good proxy for the overall CS level of a region.

All of those ideas are generalizations of complex realities.

For example saying that people in Spain or Portugal love living the good live and not working is a generalization.

Today, when most work is actually done by machines and not humans, you could actually be way more productive not burning yourself out than burning.

In Germany they have more machines, because they have more capital and because they forced the Southern countries to destroy its industries. That happened with Spain and specially Italy for entering the EU. 32-36% of the Spanish economy was industry before joining the UE, now it is 12% and going down.

For example, In Spain they put quotas(limits) in the milk that every milk producer could generate in the north of Spain, that has a wet climate, like France, UK, or Germany. Those countries of course had not quotas.

This way European companies(specially French companies) could enter the Spanish market and have bigger markets, but the Spanish companies could not compete because they had to reduce production.

With bigger markets, they had bigger mass scale productions, more efficiency and could put prices that put out of the market Spanish companies.

On the other hand, the South of Spain was benefited as it produces things that Europe do not.

They also flooded the real state market with easy money coming from European banks that will lend outrageous amount of money to anybody with a pulse.

That made year to year profits of 20-30% in real state in the bubble, further increasing the desinvestment in industry, that could only give moderate 3-4%.

Of course lending to people that could not pay back was a bad idea, and when the bubble burst lots of banks from Germany, UK, or France should have gone down.

But of course the governments of those countries forced the Spanish government to buy the bad debt, making the Spanish Government bankrupt itself.

Reality is complex, but we love simple arguments.

The milk quota system applied to every country, including the UK: https://www.bbc.co.uk/news/uk-32136218

(It's important to be accurate about what the EU actually does and does not do, otherwise you get Brexit)

productivity gains typically translate into greater profit and not much wage increase so from a worker's perspective: shrug

Southern European here have worked with Nothern European companies and southern European ones. I can attest that management is the greatest difference. It is part due to HR how the hire and check people for management position ( it is loosely a series of questions + his CV) while even for the Junior developer role you can have developer programming tests plus theory question. It is more reliable, and I have seen time and time again bad management that his hired due to the cv and it is just bad professional, can't organize anything doesn't take decisions etc etc and the problem is that it can't be fired.

But also Capital accumulation, when you start from a good starting point where you have the capital to invest in IT. The earnings are exponentially greater, so the effects on Germany from the IT revolution should be greater then in Southern Europe.


I’m with you in the hiring fallacies. From personal experience northern countries have proven much more “adventurous” regarding IT hiring. Still, even fixing that will probably only get you onto sinking ships.

Sure Spain and Portugal have some unicorns but missing VC and the heavily tourism-take-all-their-money-asap management mentality of big capital and administration seem to be setting up a bad environment.

But that’s only personal experience not a thorough analysis...

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