Territorial pacts - a new form of decentralised social dialogue

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"Territorial pacts" (patti territoriali) are an interesting and innovative form of social dialogue that could change the Italian experience of "social concertation", with important consequences. By developing the idea of these pacts, the consultative National Council for Economic Affairs and Labour (CNEL), which had not previously played an important role in this field, could assume a key position in social dialogue, particularly in the preparation of agreements for the economic development of crisis-hit areas in Southern Italy.

Territorial pacts

The idea of territorial pacts was devised during discussions within CNEL - which brings together representatives of the social partners - from 1993 onwards. The aim is to sustain and coordinate various economic development projects in a particular area (a province, city or large neighbourhood, for example) and to put them into an integrated framework, based on bargaining. In a territorial pact, the relevant social partners: define a set of development goals for the area concerned; select projects according to these goals; and agree on measures which could facilitate and support their realisation. Pacts, which are signed by employers' organisations, trade unions and local authorities: identify the financial resources that should be contributed, partly by companies and partly by the local authorities; define simplifications of administrative procedures and dispensations from legal provisions, aimed at helping speed up the implementation of the development projects; and set particular industrial relations rules to be applied within the areas covered by the pact, in order to lower labour costs and/or improve flexibility and thus provide incentives for companies to invest in the area.

The territorial pact is thus a means of gathering together all the resources present at local level and directing them towards the realisation of shared development objectives. As territorial pacts rely heavily on financial investments by private companies, an agreement between trade unions and employers to define an industrial relations framework that could attract firms into the areas covered by the pact is crucial

Government endorses territorial pacts

Territorial pacts, developed autonomously within CNEL, were not widely known until the Government recognised them through legislation in 1995. CIPE (the Interministerial Economic Planning Committee) then endorsed the territorial pacts and also granted them a degree of financial support through decisions adopted in May and November 1995. This allowed the pacts to become operational, and produced a sudden increase in the number of applications, which threatened to change the initial distinctive trait of territorial pacts as being self-sustaining development projects. This forced CNEL to establish a quite formalised procedure, in order to be able to cope with a high level of demand for assistance.

This "perverse effect" has been partially overcome by CIPE's latest decision on territorial pacts, dated 21 March 1997, which introduced a degree of coordination and differentiation between territorial pacts and "area agreements" (contratti d'area). Area agreements are another instrument for social concertation on local development programmes, which were defined by the tripartite national "Pact for Employment" signed in September 1996 (IT9702201F). In fact, the definition of area agreements was so influenced by the experience of territorial pacts that it became difficult to identify the differences between the two types of accord, and there was thus a need to clarify them.

This latest decision sanctions the possibility of signing territorial pacts for any area in the country, confirming their autonomous character in pulling together local resources. At the same time, however, CIPE limited the possibility of funding to areas marked by unemployment and deindustrialisation. The pacts can be promoted by local authorities, other public bodies operating at local level, local organisations of employers and trade unions and even private companies and associations. Further provisions establish that:

  • private enterprise must contribute at least 30% of the investment required for economic activities included in the projects;
  • infrastructural investment must not exceed 30% of total investment; and
  • the maximum contribution by CIPE to any pact is ITL 100 billion.

Furthermore, important simplifications of procedures for approval and funding have been introduced.

The main differences between territorial pacts and area agreements are as follows:

  • area agreements can cover only crisis-hit areas;
  • only trade unions and employers' organisations can conclude area agreements; and
  • area agreements must specifically mention the goals and the contents set out in the September 1996 Pact for Employment.

This CIPE decision giving all the necessary operational specifications should eventually speed up the process of evaluation and approval of the applications for territorial pacts, which already number more than 100. Two of them (for the Sicilian provinces of Enna and Siracusa) have already been approved by CIPE and have been awaiting implementation for a long time.

Commentary

Territorial pacts, and later area agreements, have introduced several innovative elements - in the European as well as the Italian context - that could change some important aspects of the Italian industrial relations system.

Firstly, they could introduce a new form of decentralised bargaining that might lead to a significant change in the bargaining structure in crisis-hit areas, and contribute to the creation of the territorial diversification which employers have long been demanding. Employers seek such diversification in order to obtain what they think would be a better representation of the socio-economic differences in Italy (in particular between North and South). In the case of territorial pacts and area agreements, the flexibility demanded by employers could be included in a general agreement on development projects and find a clear counterpart in the investment commitments made by companies, resulting in a level of employment creation, as has always emphasised by trade unions.

Secondly, the spread of territorial pacts and area agreements might lead to the decline of centralised development policies that have achieved very little in Italy. Development policies could be left to the commitment and concertation of social partners at local level. In this way, it may be possible to put resources present at local level to better use, thus avoiding the high levels of waste that occurred in the past.

Finally, the experience gained from territorial pacts has made it possible for CNEL to attain an important coordinating role in social dialogue on local development policy. In fact, CNEL has provided technical and bargaining support, giving assistance at all phases of the pacts' specifications and of the related operational development projects. In this way, though starting off with a consultative role, CNEL could acquire an "operational" one which, might lead to far-reaching results in term of development policies for crisis-hit areas and of social dialogue in Italy. In this way, territorial pacts constitute an important experience that could help in overcoming the" institutional weakness "which still characterises social dialogue and concertation, and to some extent the whole industrial relations system, in Italy. (Roberto Pedersini, Fondazione Regionale Pietro Seveso)

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