1997 Annual Review for Italy
This record reviews 1997's main developments in industrial relations in Italy.
In 1997, Italy's GDP increased by 1.7%: although low, this rate of growth was higher than in 1996. The rate of inflation continued to decrease, falling to to 1.7% in 1997 (according to the National Institute of Statistics, Istat). The unemployment rate stood at an average of 12.3% (Istat), which represented a growth of 0.2 percentage points compared with 1996. However, the unemployment rate is very different depending on the area: it is particularly high in the South, where it reaches 22.2%, while it is lower in the Centre (10.2%) and in the North (7.3% in the North-West and 5.7% in the North-East). In 1997, the Government's deficit-reduction policies, which received a particular impetus after 1993, continued, and the public deficit stood at 2.7% of GDP in 1997.
The Government, led by Prime Minister Romano Prodi, consists of a centre-left coalition, the Ulivo- in which the Democratic Left (Partito Democratico della Sinistra, PDS) is the largest party - with the external support of the Communist Reconstruction Party (Partito della Rifondazione Comunista). In October 1997, a major political crisis took place, following Rifondazione Comunista's criticism of 1998 Budget law. This difficult situation was overcome thanks to an agreement between Rifondazione and the Government, in which the latter committed itself to present a bill on the reduction of the working week to 35 hours, to become law from 1 January 2001 (see below).
Key trends in collective bargaining and industrial action
February 1997 marked the renewal of the industry-wide agreement for the influential metalworking sector (IT9702202F). Negotiations were lengthy and were finally resolved through government mediation. The difficulties experienced in the negotiations reopened a debate about the current two-tier (sector and company) bargaining structure defined in the July 1993 central tripartite agreement on incomes policy and collective bargaining. Other notable events in sectoral and company bargaining in 1997 included the following:
- in banking, negotiations began on how to manage redundancies resulting from ongoing sectoral restructuring (IT9704304F and IT9706115N);
- three trade union representatives joined the board of directors following an agreement on the reorganisation of Alitalia, the national airline (IT9706306F);
- an agreement that envisages the use of early retirement as a means of avoiding redundancies was signed in the context of the restructuring of the state railways (IT9712316F); and
- the creation of supplementary occupational pension funds (IT9705205F), through collective bargaining, notably in chemicals and metalworking.
While industrial action declined in general, the transport sector experienced the majority of the conflict that occurred in 1997 (IT9707209F).
At national level, social dialogue focused on three main subjects:
- employment creation. The most prominent development in this area in 1997 was the transposition in law (law 196/97) of the "Pact for Employment" signed by the Government and social partners in September 1996 (IT9702201F and IT9707308F).
- reform of the welfare state. In November 1997, the Government and the three main trade union confederations - the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil), the Italian Confederation of Workers' Unions (Confederazione Italiana Sindacati Lavoratori, Cisl), and the Union of Italian Workers (Unione Italiana del Lavoro, Uil) - signed an agreement dealing mainly with state pension reform (IT9711315F).
- reduction of working time. This issue was at the centre of social partners' agenda and remains so. The Government's commitment to present a draft bill on the reduction of the working week to 35 hours, starting from 1 January 2001 (IT9710133N), was widely debated and criticised both by employers' organisations and trade unions, albeit for different reasons. In particular, trade unions and employers' associations opposed the use of legislation, since they consider that any working time reduction should be negotiated (IT9711216F)
In September 1997, a study committee was appointed by the Prime Minister to prepare a report assessing the July 1993 tripartite central agreement (subsequently issued in December - IT9803223F), prior to revision by the signatories. This occasion is of great importance, given the broad transformations that the July 1993 agreement brought to the Italian industrial relations system (IT9709212F).
Industrial relations, employment creation and new forms of work organisation
Employment creation became a central concern on the collective bargaining agenda, particularly in the regions of the South (or Mezzogiorno), which are characterised by high levels of unemployment. The social partners have pursued this objective through the use of a set of policy tools, among which the most relevant are "territorial pacts", "area contracts" and "gradual alignment agreements" (IT9704203F and IT9706207F). The trade unions' commitment to fostering employment creation led in December to an agreement between Cgil, Cisl and Uil on the "guidelines to follow in negotiations between the social partners to support the growth of investment and job creation in the Mezzogiorno" (IT9801219F). This document identifies the means which may be used at local level to sustain employment - "work-entry" policies, training, bargaining on working time and wage levels.
As far as legislative innovations in 1997 are concerned, as already mentioned above, law 196 of 24 June implemented the "Pact for Employment" of 24 September 1996, in terms of its chapter on employment creation. Together with the introduction of temporary agency work (see below), law 196/97 addressed fixed-term employment and included a set of incentives for part-time work and for the redefinition of working time schedules. This item of legislation also introduced new rules to relaunch the apprenticeship system and to sustain work/training contracts, training and continuing training. Other provisions concern the creation of traineeships and new provisions on so-called "socially useful jobs".
During 1997, the tendency towards a deregulation of the labour market continued. Above all, the abovementioned law 196/97 introduced temporary agency work in Italy. The law defined both the circumstances in which it is possible to resort to temporary work, and the requirements that temporary work agencies have to meet if they intend to carry out activities in this area (IT9707308F).
As far as innovative forms of work are concerned, a number of new experiments on teleworking started in 1997 (IT9712218F). Two important company-level agreements were reached at Telecom Italia Mobile, covering maintenance technicians and sales staff, and at Zanussi, enhancing the work experience, professional development and career advancement of pregnant women and women with young children, in the framework of a broader commitment to equal opportunities. At sectoral level, the commerce collective agreement introduced a specific chapter on telework (IT9707118N).
Another important government initiative was the start of the reform of job placement services, which envisages the abolition of the state monopoly in this area (IT9710312F). Additionally, the European Court of Justice ruled in December 1997, that the Italian state monopoly of job placement services was contrary to EU law (IT9801317F).
With reference to working time- aside from the abovementioned government commitment to present a draft bill on the reduction of the working week to 35 hours starting from 1 January 2001 - in November 1997 the General Confederation of Italian Industry (Confindustria) and Cgil, Cisl and Uil signed an agreement for the implementation of the European Union Directive (93/104/EC) on working time (IT9711140N).
A 1997 report by the Equal Opportunities Committee of the Ministry of Labour, entitled Riprogettiamo il tempo("Let's redesign time"), analysed company-level bargaining during the past five years and showed a substantial increase in bargaining on working hours, as well as a continuing endeavour to reconcile working hours with the socio-familial commitments of both female and male workers (IT9710215F).
Finally, in the framework of the negotiations for the renewal of the industry-wide agreement for the chemicals sector that started in September 1997 (and continued beyond 1997), the bargaining platform prepared by Fulc, the federation that coordinates the three confederal unions in the sector, included some proposals for an innovative working time management scheme (IT9710313F). In order either to support employment creation or to preserve existing employment levels, the unions proposed: a new system to manage overtime through the creation of an "hours bank", whereby overtime hours are not paid for but credited to a personal "hours account" from which workers can later "draw" time off; and the introduction of "work-entry" hours for new recruits of 24 or 32 hours per week, with an equivalent reduction in pay.
Developments in representation and the role of the social partners
On 31 October 1997, the Government passed a legislative decree which regulates employee representation in the public administration sector (IT9709311F). The decree provides for the creation of unitary trade union representation bodies (Rsus) elected by all workers (IT9711138N). Only trade unions which receive at least 5% of votes in Rsu elections may participate in collective bargaining. This rule is intended to reduce the current fragmentation of representation due to the presence of numerous autonomous trade unions. Furthermore, agreements for particular sectors of the public administration will be binding if they are signed by trade unions which together represent at least 51% of union members, or which received at least 60% of votes in Rsu elections.
In 1997, the debate on trade union unity and a possible merger of the three main confederations went on (IT9707307F). The new strength that joint action among the unions has taken on since the second half of 1980s, after a period of confrontation on anti-inflationary policy (that reached its peak in 1984), the creation of Rsus - the joint employee representative body at company level - in 1993, and the weakening of ideological differences, have all helped create a positive attitude towards union unity. However, the issue of the definition of rules for measuring the representativeness of unions is still open.
As far as employers' organisations are concerned, the fragmentation of representation in the banking sector was reduced in 1997. In June, Assicredito, the association representing the majority of banks (excluding savings-banks and rural banks) in collective bargaining, merged into the Italian Banking Association (Associazione bancaria italiana, Abi), the organisation for the general interest representation of the banking sector.
Industrial relations and the impact of EMU
Preparations for EMU have had an impact on industrial relations in two important ways. Firstly, the social partners have respected their commitment to adhering to an incomes policy in order to keep inflation under control. 1997 was a decisive year in this respect, as inflation stabilised under 2%. Secondly, the year's negotiations concerning welfare and social security reform were also aimed at keeping the state deficit in line with the criteria set in the Maastricht Treaty, in particular through the agreement on pension reform.
Conclusions and outlook
Within a general context characterised by the Government's strong commitment to meeting the criteria set for EMU, in 1997 the main themes of social dialogue were employment creation, welfare reform and working time.
The following are likely to be particularly important industrial relations events in 1998.
- The revision of the July 1993 tripartite agreement. This could address: the issue of incomes policy in the light of the start of EMU; and the structure of bargaining, taking into consideration the demands for a certain regional differentiation of sectoral bargaining on wage levels, and for company-level bargaining on wages to take on a more distinct participatory and variable character. It could also be an important occasion to confirm the social partners' commitment to social dialogue and concertation which, following the success of incomes policy in fighting inflation, might be directed towards economic development and employment creation.
- The negotiations on how to implement the political commitment undertaken by the Government to reduce the working week to 35 hours, starting from 1 January 2001. Trade unions and Confindustria oppose the use of law, while Rifondazione Comunista insists on a full implementation of the Government's commitment. Despite the different positions, consultations are under way to find a compromise solution.
- The opening of negotiations for the renewal of the collective agreement for the metalworking sector, with its traditional pattern-setting role, will be an important occasion to test the agreements reached (or still under discussion) both on the revision of the July 1993 agreement, and on the 35-hour working week issue. With particular reference to bargaining on working time, it will be interesting to see whether metalworkers' unions will try to introduce innovations similar to those proposed in the chemicals sector, such as the "hours bank" and "work-entry hours".
(Roberto Pedersini, Fondazione Regionale Pietro Seveso, and Marco Trentini, Ires Lombardia)