Cgil refuses to sign agreement on collective bargaining reform

In January 2009, the General Confederation of Italian Workers (Cgil) refused to sign the Italian social partner agreement on collective bargaining reform. The agreement introduces a new reference indicator to protect the purchasing power of collectively agreed pay, as well as the possibility to use ‘opening clauses’ in decentralised bargaining and the commitment to define new rules on assessing social partner representativeness. Cgil’s lack of support may be an important drawback.

On 22 January 2009, a number of employer associations signed an agreement on the reform of the Italian collective bargaining system, including the Confederation of Italian Industry (Confederazione Generale dell’Industria Italiana, Confindustria), the major Italian employer organisation. On the trade union side, signatories included the Italian Confederation of Workers’ Trade Unions (Confederazione italiana sindacati lavoratori, Cisl) and the Union of Italian Workers (Unione italiana del lavoro, Uil). However, the General Confederation of Italian Workers (Confederazione generale italiana del lavoro, Cgil) refused to sign the agreement. Some employer organisations that initially had not signed the agreement opted at a later stage to adhere to the accord, after internal consultations. The latter group included the Italian Banking Association (Associazione bancaria italiana, Abi) and the Italian Association of Insurance Companies (Associazione nazionale fra le imprese assicuratrici, Ania). The government, besides acting as ‘facilitator’ of the agreement, has also signed it to represent the state as an employer. Thus, the rules defined in the protocol should apply both to the private and the public sectors.

About the agreement

The agreement followed a lengthy and controversial debate on the revision of the bargaining system as defined by the tripartite incomes policy agreement of July 1993 (IT9803223F, IT9709212F, IT9702102N). It has also been reached somehow unexpectedly, since the social partners had in fact been convened by the government to discuss measures to cope with the current economic downturn (IT0812029I) and Cgil’s criticism of the existing proposals on the collective bargaining reform was well known. The agreement introduces a number of innovations in the rules set by the July 1993 tripartite agreement, which represented the first significant and comprehensive attempt to institutionalise Italian industrial relations. The 1993 agreement aimed to clearly define the respective roles and entitlements of the industry-wide and decentralised bargaining levels, regulating renewal negotiations and envisaging a new system of plant-level representation.

Content of agreement

The January 2009 agreement sets as overarching objectives economic growth, employment creation based on productivity gains, efficient wage developments and the improvement of the products and services delivered by the public administration. The protocol introduces new experimental rules on collective bargaining which are envisaged for the next four years. Moreover, the implementation of the framework rules included in the agreement will have to be completed through interconfederal agreements. The agreement contains the measures listed below.

  • The dual bargaining structure, based on sectoral and decentralised agreements, is confirmed.
  • The duration of industry-wide agreements will be set at three years, for both the economic and normative parts.
  • Industry-wide agreements will continue to set common economic and normative protections for workers in all sectors nationwide.
  • The protection of real wages will be pursued by way of a new indicator to replace the planned inflation rate. The new indicator will be calculated by a third party and will be based on the European Harmonised Indices of Consumer Prices (HICP), excluding imported energy. In order to set wage increases, the indicator will be applied to a wage base to be identified by industry-wide agreements.
  • The significance of the difference between the indicator and the actual inflation rate, calculated in the same manner, will be assessed at intersectoral level. Any recovery of differentials will be implemented during the term of the sectoral agreement.
  • New rules on the renewal of collective agreements will be introduced, including the possibility to resort to the intersectoral level for mediation and the strengthening of clauses on conflict-free periods.
  • Disputes over the implementation of agreements shall be treated through conciliation, mediation and arbitration procedures.
  • Decentralised agreements will last three years and will cover topics defined by sectoral agreements or legislation and which do not concern those already regulated at other bargaining levels. The agreement contains a specific request for the introduction of structural economic incentives, such as tax and social security relief, for decentralised bargaining on performance-related pay.
  • With a view to supporting the diffusion of decentralised bargaining, special conditions may be envisaged for small and medium-sized enterprises (SMEs), as well as the introduction of ‘equalising’ economic elements to be applied in companies where decentralised bargaining does not take place (as established in the metalworking collective agreement, IT0602301F), or similar measures.
  • The possibility to introduce ‘opening clauses’ to cope with restructuring or to foster economic growth and employment creation on both the economic and normative parts of sectoral agreements will be allowed.
  • The commitment to define within three months new rules on representativeness in collective bargaining will be made. Such rules on representativeness may also cover the possibility to call a strike at local level in essential public services during second-level negotiations.
  • The objective will be introduced to simplify and reduce the number of industry-wide agreements, which at present amounts to more than 400 agreements.

Views of social partners

Reasons for Cgil’s refusal to sign agreement

Cgil, the major Italian trade union, did not sign the agreement, although it participated in the negotiations. According to the General Secretary of Cgil, Guglielmo Epifani, the conclusion of a separate agreement was a deliberate objective of the government, aiming to weaken the trade union front and industrial relations in general. In terms of the content of the agreement, Cgil believes that the new system would:

  • break the unity of the national bargaining structure, as it opens it up to diversification across sectors and confederations through intersectoral agreements;
  • determine both the erosion of real wages, as energy prices are excluded from the adjustment mechanism, and significantly reduce the autonomy of collective bargaining at sectoral level since the only possible pay rises would be those automatically linked to inflation;
  • make it easier to weaken worker protections through ‘opening clauses’, while at the same time failing to foster decentralised bargaining, as Cgil argues that the promotional rules are too vague and weak.

Position of signatories and government

The agreement’s signatories and the government have highlighted the importance of the new rules and regard the accord as a ‘historical agreement’. According to the Secretary General of Cisl, Raffaele Bonanni, the agreement will help to strengthen the national-level and decentralised bargaining at the same time, thereby promoting an increase in both productivity and wages. Moreover, Mr Bonanni expressed his appreciation of the agreement as the new system ‘is centred around participation’, one of the qualifying features of the Cisl trade union tradition. The Secretary General of Uil, Luigi Angeletti, has underlined the relevance of the termination of the reference to the planned inflation rate and the shift to a proper measure of inflation, which will lead to higher pay increases for workers.

The Vice-President of Confindustria, Alberto Bombassei, considers the agreement an important step in the modernisation of collective bargaining. In his view, the broader scope for decentralised bargaining is essential, as ‘at company level it is possible to respond more directly to the needs of workers and employers, thereby improving productivity and competitiveness, two crucial elements in this phase to cope with the economic situation’.

Commentary

The January 2009 agreement confirms the main objectives of the July 1993 protocol to regulate and provide some basic rules for Italian industrial relations. It also confirms some of its fundamental orientations: a commitment to wage moderation, the institutionalisation of agreement renewals, with a view to smoothing negotiations through conflict-free periods, the promotion of company bargaining on productivity and competitiveness, and the attention to representation and representativeness. Furthermore, it implements some of the main proposals that have been at the centre of the debate since the creation of the Giugni committee (IT9709212F) – such as the introduction of ‘opening clauses’.

However, some significant changes have also been introduced. Under the 2009 agreement, collective bargaining is no longer included in the process of macroeconomic policy. Certainly, this aspect, which was very important in helping to reduce inflation, put industrial relations under pressure, as it greatly contributed to wage restraint as a means to keep inflation under control. The new system relies to a greater extent on automatic pay increases, still with some degree of wage moderation, through the exclusion of the (possibly instable) energy price developments. This change may come at some cost for the involvement of the social partners in policymaking. The possibility to introduce derogations to the industry-wide agreements through opening clauses seems rather broad, as it can concern both company restructuring and development and could cover economic and normative provisions alike, and it probably goes beyond the cautious indications of the Giugni committee. In that case, the envisaged introduction of rules on representativeness would certainly have a relevant impact on Italian industrial relations, due to the plurality of trade unions, as well as the fragmentation of representation in certain economic sectors.

Undoubtedly, the main challenge to the agreement is the absence of Cgil among its signatories. For an agreement that leaves much of the implementation details to further intersectoral and industry-wide bargaining, the absence of Cgil is possibly a fundamental drawback. The definition of the regulation of representativeness may be the occasion to overcome the contrasts and eventually find shared general rules. Otherwise, a period of conflict-ridden relations at all levels of bargaining may be forthcoming. The latter would represent a rather paradoxical result for an agreement designed to set a framework for ‘modern’ industrial relations.

Roberto Pedersini, University of Milan

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