This is how shockingly messed up Italy’s economy is right now

Barbers, secretaries, aides and technicians working for the Italian parliament will take a huge pay cut as Prime Minister Matteo Renzi's government scrapes together money to revive the euro zone's third largest economy.

The involuntary belt-tightening by members of the 2,300-strong parliamentary staff was recently approved by both houses of parliament and is expected to save long-suffering Italian taxpayers about $123 million over four years.

That doesn’t sound like a lot of money, because it’s not. Here's why.

Renzi needs to find about $25 billion in savings next year to keep the country's budget deficit below the European Union's ceiling of 3 percent of gross domestic product. 

At the same time he needs to come up with tens of billions of dollars to fund his proposed package of tax cuts, infrastructure spending and universal unemployment benefits, which he desperately hopes will kickstart the dormant economy. 

On top of that, Italy is trying to service a public debt of more than $2.5 trillion, which is expected to push its debt-to-GDP ratio to a whopping 131.7 percent this year — the second worst in the single currency region after Greece.

The future looks bleak. 

Italian Prime Minister Matteo Renzi. (AFP)

So the announced pay cuts were more like a poor-taste publicity stunt. But that didn’t stop Italian politicians from giving themselves a big pat on the back anyway.

"Today we, the Senate and the Chamber, have taken an unprecedented decision together," Italian house speaker Laura Boldrini said.
  

"We have approved the reform of personnel salaries, which will bring a savings of 97 million euros over four years.

"We have done it to reinforce the institution (of parliament), also bringing the salaries in line with the country, in the light of the grave (economic) crisis we are going through."

In line with who exactly? 

Italian politicians are the highest paid in Europe and earn about five times the average wage in Italy. The unelected personnel working in the two houses of parliament — the Chamber of Deputies and Senate of the Republic — also enjoy insanely generous salaries compared with their counterparts in other parts of the world. That won’t change much even after the new pay scale is introduced.

For example, long-serving barbers have had their annual salary trimmed by $47,000 to a maximum $125,000. To put that salary into perspective, a top barber in London can expect to earn about $80,000 a year, according to the London School of Barbering. 

One Twitter user questioned the need to pay barbers such a high salary when "80%" of politicians don't have any hair. It's a good point.

Parliamentary aides have gone from earning as much as $454,000 a year to $304,000 — equal to the cap on public sector earnings announced by Renzi earlier this year. US President Barack Obama’s assistants might be wishing they spoke Italian and held a European passport. They earn a relatively paltry $172,200 a year for working for the leader of the most powerful country in the world.

The chamber’s deputy chief of staff will see their wage drop to around $456,000 from more than $600,000 previously, while secretaries will have to make do on $146,000 compared with their previous income of nearly $200,000. That’s still not bad when you consider an executive assistant in Australia can expect to earn around $70,000, according to salary database PayScale.

Technicians might be feeling the pinch after their salaries are reduced by about $58,000 to $134,000.

Barber Alessandro Migliacci, right, and his father, Piero, cut customers' hair in their barber shop Antica Barbieria Peppino 1956 in central Rome on July 12, 2013. (AFP)

Is it any wonder then that Italy’s economy is going down the proverbial toilet? Italy fell back into recession earlier this year — its third since 2008 — and it has been stagnating for nearly 15 years. And now there are signs of deflation.

Italy's crisis is considered one of the biggest threats to the future of the euro zone. 

“Put bluntly, Italy’s economic position is unsustainable and will result in eventual debt default unless there is a sudden and durable change in economic growth. At that point, Italy’s future in the euro zone would also be in doubt — and indeed the future of the euro itself,” Wolfgang Munchau, an expert on the European economy, wrote in the Financial Times.

Yes, it’s that bad.

Perhaps the most astounding part of the pay cut announcement is that it will be phased in over four years. Talk about fiddling while Rome burns.

That means parliamentary personnel will be able to continue living it up until 2018 — assuming the economy hasn't collapsed by then.