Collective agreements influenced by 2009 protocol

The renewals of industry-wide agreements in Italy since 2009, when a tripartite agreement revised procedures for collective bargaining, show that the new rules have been widely adopted at sectoral level. The shift to three-year long collective agreements is almost complete, with the sole exception of the agriculture sector. The majority of renewed agreements were signed by all trade unions, even the General Confederation of Labour (Cgil) which did not sign the 2009 protocol.

Background

In January 2009, a tripartite agreement was reached that revised the procedures for collective bargaining introduced in Italy in 1993.

The 1993 agreement was a tripartite protocol on economic growth and industrial relations. It represented a crucial landmark in Italian industrial relations because it introduced for the first time a number of coordinated rules for collective bargaining and industrial relations (IT9803223F, IT9709212F, IT9702102N).

It is agreed that its influence helped curb inflation through wage moderation, and to have contributed to Italian competitiveness. It has been regarded as crucial in helping Italy meet the requirement for entrance to the Euro.

However, in recent years there have been a number of criticisms of aspects of the 1993 agreement (IT0904029I).

  • Trade unions have claimed that the setting of the planned inflation rate, a crucial ingredient in the preparations for collective bargaining rounds, was a decision taken unilaterally by the government without real consultation with social partners, and was set deliberately low, eroding the real value of pay levels.
  • The unions claimed the bargaining structure was too centralised. In particular, the Italian Confederation of Workers' Unions (Cisl) considered decentralisation an essential step to make it possible for wages to rise beyond the purchasing power threshold guaranteed by industry-wide agreements;
  • Disunity among unions has led to the failure of some collective bargaining rounds in recent years, notably the refusal of the Italian Federation of Metalworkers, affiliated to the General Confederation of Italian Workers (Fiom-Cgil), to sign sectoral renewals three times in the last decade. This has highlighted issues of representativeness, and the need for collective agreements to be effective for all workers.

The 2009 tripartite agreement, signed on 22 January, was intended to tackle such criticisms and introduced a number of experimental measures to be tried out over a four-year period (IT0902059I).

These comprise:

  • changing the mechanism used to guarantee the purchasing power of wages by pegging it to the expected inflation rate rather than the planned rate, and excluding inflation linked to imported energy products, so ending any possibility of government-influenced income policy;
  • the possibility of introducing ‘hardship clauses’ in industry-wide bargaining to make decentralised bargaining more flexible, under the supervision of the signatories to the sectoral accord;
  • setting the duration of agreements at three years for both sectoral and second-level bargaining, with rules to prevent the overlapping of the two rounds of negotiations;
  • the confirmation of a two-tier bargaining structure and assigning particular issues to each of the two levels, with decentralised bargaining focusing on performance-related pay. An ‘equalising’ pay element is also introduced to integrate pay when no productivity gains are distributed at decentralised level. This is intended as both an instrument of redistribution and a promotional measure to support the diffusion of firm-level supplementary agreements;
  • a commitment to establish new rules about representativeness and the validity of contracts.

It is important to stress that the Italian General Confederation of Labour (Cgil) – the largest Italian trade union confederation – did not sign the 2009 tripartite agreement, claiming that the new rules would not guarantee real wage levels and would erode the key position of the industry-wide agreement in the Italian bargaining system.

Application of the new rules

In the second half of 2009, implementation agreements for both private and public sectors were concluded, opening the way for a progressive adoption of the new rules. The intersectoral agreement for the representation system of the major employer organisation, The Confederation of Italian Industry (Confindustria), was concluded on 15 April 2009, and an implementation agreement was signed for the public sector on 30 April 2009.

Rules for renewals

All renewals from this point on were valid for three-years. Double renewals for the normative and economic parts, which were formerly based on four-year and two-year cycles respectively, were discontinued. The only exception was agriculture, where the four-year duration had been introduced in 1995 and was confirmed by a protocol on collective bargaining in the agriculture sector on 22 September 2009.

The Confindustria implementation agreement set a deadline for presenting industry-wide renewal proposals of at least six months before a deal expires. A no-strike clause covers this period and the month following the expiration of an agreement. Following the 2009 agreement, the no-strike clause was made clearer, extended in duration and also introduced for second-level negotiations. The no-strike period must now last for at least seven months after the presentation of renewal proposals. For second-level bargaining, negotiations must start two months before a deal expires and the no-strike period must be in force for at least three months.

In some Confindustria agreements, such as the energy and petrol agreement of March 2010 and the wooden products deal of May 2010, longer company-level negotiations were introduced and specific rules introduced to avoid an overlap between industry-wide and decentralised – or company level – bargaining. These changes affected deals for the toy production and rubber and plastics industries.

The ‘equalising economic element’

The 2009 protocol guidelines said that workers eligible for an ‘equalising economic element’ were those not covered by a second-level bargaining agreement or by minimum levels in the sectoral agreement. Many agreements since have confirmed these criteria.

However, in some of the renewals the second requirement – which is not related to industrial relations – has been eliminated.

In some cases, the equalising economic element can be paid at a ‘reduced’ rate to take into consideration individual pay above the contractual minimum. In practice, the equalising element is paid as long it is higher than an individual’s extra pay.

The equalising element rate varies considerably and ranges from €72 for brick makers to around €450 in the metalworking and rubber and plastics sectors.

‘Hardship’ or ‘opening’ clauses

One of the innovative aspects of the January 2009 protocol is the possibility for industry-wide bargaining to define ‘hardship’ or ‘opening’ clauses, so that particular companies or certain local circumstances – extensive restructuring, for example – can exempt enterprises from full compliance with an agreement.

In particular, signatories to industry agreements can stipulate at territorial levels that they want to modify specific contractual provisions of both their economic and normative contents. The sectoral agreement can identify the particular situations that allow such derogations, and the ‘hardship clauses’ need to be explicitly approved by signatories to the industry-wide deal.

To date, only two agreements have used the new ‘hardship’ clause rules. These are the goldsmiths’ agreement of September 2010 and a supplement to the metalworking sector agreement of ‘hardship’ clauses signed by Federmeccanica and the sectoral trade unions in September 2010.

The latter was signed in the early phases of a debate about the transformation of industrial relations at Fiat. Fiat was able to use ‘hardship’ clauses to negotiate special conditions as a way of confirming its commitment to increased investment and strengthened production capacity at its Italian plants. Fiat then followed the strategy of signing ‘first-level agreements’ outside the representational domain of Confindustria.

The Federmeccanica agreement allows the introduction of ‘hardship’ clauses at company level rather than territorial level, as envisaged by the interconfederal Confindustria agreement of 15 April 2009. Its derogations concern exclude minimum pay rates, seniority supplements, the equalising pay element and individual legal rights.

Any ‘hardship’ clause must state the goals, the duration and the subjects of derogations, and must also set out sanctions and how they can be enforced against both parties in case of non-compliance.

Commentary

Agreements renewed in the wake of the January 2009 protocol show a clear transposition of the new rules at sectoral level. The fact that the large majority of renewals have been signed by all sectoral unions, including those affiliated to Cgil, illustrate three important developments:

  • the provisions of the January 2009 protocol do not represent a disruption of the previous bargaining model, but rather introduce innovations ‘at the margin’, so that it has been possible to reach a broad consensus among trade unions;
  • the willingness of all social partners to find compromises that are acceptable to all.
  • the limited use of ‘hardship’ clauses suggests that the parties have avoided the most controversial elements of the new rules so as not to accentuate possible contrasts.

The downturn in the economy has put some pressure on collective bargaining, especially at decentralised level. In order to assess the full impact of the new rules, it will be necessary to wait until the full four-year bargaining cycle is complete.

Roberto Pedersini, Università degli Studi di Milano

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