The taxation system is much better and fair (although PM Monti's new tax regulations for new small businesses have helped, but they have their share of shortcomings) and the market and average salary for a software engineer is at least 2x compared to the Italian average:
- Good luck earning more than €24000 after taxes in a non-management position.
- Good luck finding full time positions: here in the UK I have the opposite problem, as a consultant I'm often looking for part-time offers and everybody's looking for full-time engineers. You may actually work full time for a company, but more often than not you get a short term contract with much lower benefits that gets renewed until you quit.
- Good luck if you're looking for remote work: nobody likes or trust remote workers here.
- I've quit my job after learning that my salary was filtered through 2 levels of outsourcing agencies, and my take-out pay was 16% (or 1/6th) of what the client was actually paying.
That's my personal 7 year experience in Milan, arguably the best Italian city for service-related work.
I think with all the good things Italy has, it doesn't have to be run perfectly, or have the best laws: it just has to suck less. If you think about it, California is similar in some ways. It is not the most "business friendly" state in the US - but it does have a lot of other things going for it, so people go there anyway.
There are exceptions, but you can count them on the fingers of one hand.