Downturn in company-level bargaining in smaller companies

A study by the National Council for Economic Affairs and Labour reports that the number of enterprises in which company-level bargaining takes place decreased substantially between 1998 and 2006. The decline mostly concerned smaller companies, while among large enterprises the overall situation appears more stable. Where present, bargaining continues to focus mainly on pay issues, while matters connected with organisational innovation receive little attention.

Study of collective bargaining trends

The National Council for Economic Affairs and Labour (Consiglio Nazionale dell’Economia e del Lavoro, Cnel) collects and archives collective agreements signed at all levels in Italy. On 30 November 2007, Cnel issued the results of the most recent updating of its archive on company-level bargaining in the private sector, Lineamenti della Contrattazione Aziendale nel Periodo 1998–2006 (in Italian, 707Kb PDF). The report concerned almost 3,000 agreements relative to a representative sample of over 1,000 companies employing more than 100 workers.

The study is supplemented with analysis of the texts of agreements and 13 case studies, selected for their innovative solutions in terms of organisational innovation, new forms of work organisation, direct and indirect participation, flexibility of working time and attention to non-standard forms of employment contract. The 13 companies analysed are the: food producers Barilla and Nestlé, petrol supplier Agip Petroli, pharmaceutical financial holding company Glaxo Wellcome Finanziaria Spa, ceramic tile manufacturer Ragno Ceramiche, motorcycle manufacturer Aprilia, power transmission equipment manufacturer Bonfiglioli, car manufacturers Lamborghini Holding Spa and Pininfarina, household appliances manufacturers Whirlpool Europe and Zanussi Electrolux, and clothing and accessories designers Fratelli Corneliani Spa and Gucci Italia Spa.

Intensity of bargaining

As the figure below shows, the report’s most significant finding during the period 1998–2006 is a general downturn in the intensity of bargaining – calculated as the percentage of companies signing agreements in each year relative to the total number of enterprises in the economic sector concerned. The figure also reveals significant differences in terms of bargaining intensity among important areas of economic activity in Italy; after 2004, these disparities tended to settle at very low values. The data for the most recent years, however, should be interpreted with caution due to the difficulties in updating the files in the Cnel archives.

Trends in bargaining intensity in key industries, 1998–2006

Trends in bargaining intensity in key industries, 1998–2006

Source: Cnel, 2007

Distinguishing by company size, the downward trend appears constant and most marked for the smallest companies included in the data – those employing 100–999 workers. Meanwhile, enterprises with more than 1,000 employees record peaks in intensity corresponding with periods of complementary agreement renewals, where the figures appear more aligned with those of previous years compared with those of smaller enterprises. Among large companies in the metalworking industry, for example, the intensity of bargaining declined from 51% in 2000 to 37% in 2004, while among the smaller companies it decreased from 50% to 22%.

Bargaining issues

The report’s examination of the content of company-level bargaining is restricted to the five largest areas of economic activity in Italy: food processing, metalworking, chemical, rubber and plastics manufacturing, textiles and services – the latter encompassing commerce, tourism and services to businesses and persons. The study concentrates on the bargaining coverage according to agreements on the various forms of labour flexibility, defined in pay, numerical and organisational terms.

Pay flexibility

Company-level bargaining in Italy is still strongly characterised by the pre-eminent role of bargaining on wages and pay flexibility, meaning variable payments. The only exception is the services sector, where bargaining on working time reaches levels similar to that concerned with wages.

Moreover, analysing the pay bonus elements reveals that agreements on performance indicators are widespread in all economic sectors, while the attendance bonus is of importance only in the textiles sector and, partly, in the metalworking industry. The other parameters, including the productivity payment, profit-related payment and quality payment, have varying degrees of importance.

Numerical flexibility

Flexibility of working hours is the second most important issue after pay, while contractual flexibility, despite its marked growth in the use of forms of non-standard labour in recent years, is still relatively rare.

Organisational flexibility

The Cnel report emphasises that collective bargaining in respect of organisational innovation should become more prevalent throughout the Italian industrial relations system. It repeatedly cites evidence on the positive results – in terms of corporate performance and quality of work – that can be achieved through the agreed adoption of so-called ‘new forms of work organisation’, such as teamwork, multi-tasking, job rotation, problem solving, total quality management and training. Despite this potential, the analysis shows that such matters are still treated only very partially within the bargaining framework, and that their presence in company agreements is less frequent than provisions on wages and work schedules. Nevertheless, in many sectors, organisational flexibility occurs more often than contractual flexibility in company-level bargaining.

Commentary

The scarcity of company-level bargaining has always been a distinctive characteristic of the Italian industrial relations system. This gap can be largely explained by structural aspects of the productive system, which consists primarily of small and medium-sized enterprises. In this regard, the further decline in such bargaining, as noted by the Cnel report, should also be considered in the context of the recent expansion of regional bargaining in some important branches of the Italian economy (IT0505307F).

In general, however, the trends described by the report support the opinion – widespread among scholars and experts – that the provisions of the Agreement of 23 July 1993 should be reformed. In particular, greater attention should be paid to the ability of decentralised bargaining to meet the needs of competitiveness for companies and of well-being for workers.

Edoardo Della Torre, Ires Lombardia

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