Italy: Annual Review - 2010

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  • Published on: 17 November 2011



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In 2010, the government priority was to ensure the stability of public finances and measures to support economic recovery continued in the framework established in 2009. Important interventions were passed in the field of public employment, with the suspension of collective bargaining for a three-year period (2010-2012) and other provisions to reduce labour costs for public administrations. New rules on conciliation and arbitration were introduced. The implementation of Fiat’s new industrial plan triggered a wide debate on the possible transformations of the Italian bargaining system, as the company, in a context characterised by relevant contrasts between the metalworking federations and the opposition of Fiom-Cgil, opted for abandoning the traditional framework of the industry-wide agreement.

1. Political developments

In 2010, the centre-right government led by Silvio Berlusconi was in office. The government is supported by a coalition whose main parties are Il Popolo della Libertà (Pdl, The People of Freedom) and the Lega Nord per l’Indipendenza della Padania (Lega Nord, Northern League).

Differences of opinion within the Pdl on the party’s and Berlusconi’s positions, especially on a number of controversial initiatives in the field of judicial reform, caused a split in the second part of the year led by the President of the Chamber of Deputies, Gianfranco Fini, co-founder of party. A new party, Futuro e libertà (Fli, Future and Freedom) was formed which withdrew its support of the government. The government gained a majority in a critical ‘confidence vote’ in mid-December, with the support of MEPs who were formerly in the opposition’s ranks. According to President Berlusconi, the government has now a firm majority which, will ensure to remain in office until the end of term in 2013 and implement a number of important reforms, notably in the judicial and economic domains. Many observers and commentators consider that the government and Berlusconi’s leadership have been significantly weakened and remain sceptical about the government’s capacity to cope with a highly conflictual political environment and namely to proceed with important reforms.

In the spring of 2010, important administrative elections were held covering 13 Regions, 4 Provinces and 462 towns and involving more than 40 million voters. The overall results were mostly interpreted as confirming support for the centre-right parties in the national government.

In May 2011, administrative elections for nine provinces and nearly 1,200 towns, including Milano, Naples, Turin and Bologna, will be an important political test for both the government and the opposition parties, as they will involve nearly 13 million voters. In June 2011 four national referenda will be held to decide over the abrogation of norms on the contracting-out and management of economic services of general interest, the determination of tariffs for drinking water provision, the building of new nuclear power plants, and on the possibility to declare a ‘legitimate impediment’ in order to suspend judicial hearings in trials involving the President of the Council of Minister or the Ministers.

2. Legislative developments

In November 2010, new legislation on arbitration in individual disputes as well as on a number of other elements of the employment relation was passed (law 4 November 2010, no. 183, so-called ‘Collegato lavoro’, that is the bill on labour issues linked to the 2010 Budget law, (IT1012019I). This piece of legislation had a particularly long parliamentary examination because the President of the Republic refused to sign the bill in late March 2010. Instead it was sent back to Parliament for a second hearing and a new passing vote. The most critical elements in the bill concerned the new rules on conciliation and arbitration, which were partly revised during the second parliamentary discussion.

The present norms introduce the possibility to decide in advance whether the disputes originating in the employment relationship would be resolved through arbitration instead of by ordinary labour courts. The choice can be made after probation and not earlier than 30 days since the conclusion of the employment contract. This provision does not apply to individual disputes over unfair dismissals, which will continue to be decided by labour courts. Illegitimate dismissals should be reported to the courts within 60 days since reception of the written dismissal notice.

Other provisions concern actions to contrast irregular work, measures on redeployment and equal opportunities in the public administrations as well as delegations to the government to define new rules on retirement for workers performing particularly heavy jobs (lavori usuranti) and on leave periods for public and private employees.

In the field of public employment, important interventions were made in May 2010, with a view to limit public spending. Decree no. 78/2010, which was finally passed in July 2010 with partial amendments, among the other measures, provided for the suspension of collective bargaining in the public sector for 2010-2012 (see section on collective bargaining), a wage freeze for 2010-2013, a cut in salaries exceeding EUR 90,000 (-5%) and EUR 150,000 (-10%) in the 2011-2013 period, and limitations on hirings on both fixed-term (-50%) and open-ended contracts (20% of retirements) (IT1008019I).

3. Organisation and role of the social partners

Relationships between the trade unions remained characterised by contrasts between the main confederations over government actions, with Cgil critical of the measures taken to contrast the economic downturn (IT1002029I) and of labour law measures. Cgil held its 16th congress in Rimini from 5 to 8 May 2010. Guglielmo Epifani was re-elected General Secretary, but in November 2010, as he retired, Susanna Camusso was appointed General Secretary by Cgil’s executive board. It is the first time that a woman leads one of the three major Italian trade union confederations (IT1012029I).

According to trade union data, in 2010 there were some 6.2 million union members in the main three confederations Cgil, Cisl and Uil among employees. A substantially stable level which corresponds to around 36% of employees, a slight increase over 2009 due to the decrease in employment. Retired union members reached almost 5.8 million people in 2010.

In May 2010, Rete Imprese Italia was established as a coordination network between some of the major Italian employer association for crafts and SMEs. The five founding organisations are Casartigiani, Confartigianato and CNA – which represent craft firms – Confcommercio and Confesercenti – which represent SMES in the trade, service and tourism sectors. The mission of the new coordination network is to act as the collective voice of SMEs, especially vis-à-vis policy makers, and effectively contribute to modernise the Italian economy and society.

In the final part of 2010, a new initiative by the social partners was established to prepare proposals for reforms aimed to foster recovery from the economic recession and growth. The first proposals approved by the social partners concerned research and innovation, social emergency and shock-absorbers, the Mezzogiorno and the reduction of ‘red-tape’ (IT1011029I).

4. Collective bargaining developments

The National Statistics Institute (Istituto nazionale di statistica, Istat) systematically collects information on the renewal of 76 collective agreements (out of a total which has been recently indicated by Cnel, the National council for economy and labour, at 456, of which 40 in the public sector). Such a set of collective agreements covers practically all of the public sector and almost 90% of private employees, for a total of around 13 million workers.

According to this panel on wage bargaining (Retribuzioni contrattuali), at the end of December 2010 (Source: Istat, Contratti collettivi e retribuzioni contrattuali. Dicembre 2010, 28 January 2011), the 37 collective agreements in force covered 62.8% of the employees surveyed by Istat (some 8.2 million workers). Compared to December 2009, the hourly wage index was up by 1.7%. On average, in 2010, wage increases over 2009 amounted to 2.2%. The sectors benefiting of the highest pay rises over December 2009 were telecommunications (4.5%), army and defence (4.3%), information and communication services (3.1%), whereas the lowest increases were recorded in transport and postal services (0.3%), and education, ministries and fire brigades (all rose by 0.6%).

Bargaining on working time at sectoral level did not introduce significant changes in annual working time, which remain on average at some 1,540 hours. At decentralised level, collective agreements on restructuring covered typically working time flexibility, even if the most important measure has been the implementation of the working time reductions connected with the utilisation of the Wage Guarantee Fund (see section on restructuring).

Awaiting renewal were 41 agreements covering about 4.9 million employees. These were concentrated in private services (20 agreements for 1.6 million employees) and the public sector (all 16 surveyed agreements concerning some 3 million employees). It should be noted that law 122 of 30 July 2010 introduced a three-year stoppage of collective bargaining in the public sector for 2010-2012 in the framework of measures aimed to contain public expenses.

In 2010, 28 industry-wide agreements were signed out of the 76 surveyed, covering 3.5 million workers. Half were in the manufacturing sector (nearly 2 million employees) and 8 in the private services sector (about 750,000 workers). Also the agreement for agricultural workers was signed (350,000 employees). This latter was the only one which explicitly confirmed the four-year bargaining model introduced by the July 1993 tripartite agreement and recently reformed by the January 2009 protocol (IT0902059I).

It is interesting to note the presence of a marked difference in terms of the capacity to renew contracts rapidly across sectors. Data referring to the first 10 months of 2010 show a ‘waiting time’ of slightly less than 3 months in the manufacturing sector, nearly two years in the private services and more than three years in the public sector. Significantly, this ranking is rather stable and data since 2007 indicate a tendency to increase waiting times in both private services and the public sector (Source: Istat, Le relazioni industriali e la recente dinamica retributiva contrattuale, 28 December 2010).

5. Responses to economic downturn

In 2010, the basic framework set up in 2009 to contrast the effects of the economic downturn in Italy (IT1003019I) remained in place. The stability of the state finances represented a priority for the government action, so that the scope for increasing public spending was very narrow. As illustrated below in the section on restructuring, the Wage Guarantee Fund (Cassa integrazione guadagni) confirmed its central role in cushioning the social impacts of recession (IT1005029I). Of particular importance were the integrations to the standard schemes, such as the so-called ‘exceptional Wage Guarantee Fund’ (Cassa integrazioneguadagni in deroga) covering firms and types of employees not covered by the ordinary and special Wage Guarantees Fund (Cassa integrazione guadagni ordinaria, CIGO and Cassa integrazioni guadagni straordinaria, CIGS), like SMEs and ‘atypical’ workers. Special incentives were also introduced to anticipate the end of the Wage Guarantee Fund support, in order to involve workers in training and requalification programmes. Another measure envisaged the possibility to demand, at any time, the advance payment of the whole already authorised Wage Guarantee Fund allowance, with a view to support the workers to start a new economic activity as self-employed. Moreover, the Wage Guarantee Fund, when the company closes down, can be prolonged for an extra 24 months.

The measures specifically aimed to support the companies include new provisions to ensure that the public administrations pay faster their suppliers, the exclusion from the tax base of investments, as well as the implementation of fiscal incentives for banks and financial firms. SMEs have also benefited from special schemes to ease the credit crunch, which has severely hit smaller companies.

6. Pensions

Pensions are certainly an important topic for social dialogue and have been at the centre of a wide and sometimes conflict-ridden debate since the early 1990s in Italy. However, it should be stressed that the Italian pension reform introduced after an agreement with the trade unions in 1995 (the so-called ‘Dini Reform’) is one of the most far-reaching and radical interventions in Europe. In fact, it marked a transition to a notional defined-contribution system (IT9711315F). The only weak point of the reform, from the point of view of financial sustainability, was later identified by experts and policy makers as the long transitory period (18 years) which apparently delayed the possibility to fully reap the benefits of the new system.

Indeed, the issue of ‘reforming the pension reform’ was high on the political agenda in the years following the Dini Reform and it spurred a number of disputes and controversies with the trade unions. In particular, the most controversial element in the Italian system has been the regulation of the so-called ‘seniority pension? (pensione di anzianità) as opposed to old-age pension (pensione di vecchiaia). While the former can be claimed when a worker reaches retirement age, the former becomes accessible when workers fulfil requirements in terms of length of service, which were traditionally set at 35 years as a minimum and 40 years for full pension entitlements. Many adjustments were introduced in different occasions for seniority pensions, especially on minimum retirement age and seniority requirements, which have been progressively raised.

Since the 1995 pension reform is believed to have significantly reduced replacement rates (that is the proportion of the last salary guaranteed by the pension cheque), another important area of intervention and social dialogue has been the integration of the mandatory pension schemes with supplementary contractual pension funds established by collective bargaining. A long debated issue was whether the end-of-service allowance could be used to integrate pension contributions.

A particularly important phase developed in 2003-2004 when the then centre-right government led by Silvio Berlusconi proposed a significant set of measures aimed at accelerating the implementation of the Dini Reform which met the harsh criticism of the trade unions (IT0309203F, IT0311102N). A ‘proxy law’ to enable the government to define the pension reform was eventually passed in summer 2004 to become effective in 2008 (IT0409101F, IT0510105F). However, the Prodi government in July 2007 concluded an agreement with the unions which repealed the most controversial elements of that reform (IT0712029I).

In 2010, within the measures implemented to stabilise public finance, further interventions on retirement age were introduced (IT1008019I). In particular, the retirement age for female public employees was raised from 60 to 65 years starting from 2012 to bring it in line with the threshold for males (also following a specific request by the European Commission) (IT1007039I); a postponement of retirement by one year after reaching pensionable age; the revision every three years of age limits for old-age pensions on the basis of trends in life expectancy since 2015.

7 Developments in working conditions

Several contributions published in 2010 both at national and local level highlighted that nonpermanent contracts show a decline in their length during the crisis: according to the Ebitemp (the bilateral body fund for temporary agency workers) annual report (see EWCO IU IT1011039I), temporary agency contracts declined by 28% in 2009 over 2008 for shorter spells (-36.4% in full-time equivalent) , while the Annual Report of the Friuli-Venezia Giulia Work Agency (a region-owned institution monitoring labour market trends and policies) highlights that while fix-term, apprentices and temporary agency contracts decline on the one hand, while traineeships (+81.1%), ‘bogus’ self-employed (+ 24.4%) and on-call jobs (+164.2%) report a strong increase.

The slight recovery in 2010 favoured hirings on a nonpermanent basis, which increased up to 83% of all hirings. Several sources confirmed such trends. According to Istat, LFS annual average, the share of non-permanent employees increased from 12% in 2009 to 13% in 2010 while the share of collaborators remained steady at 1.7%, while the Ebitemp note on 2010 trends, published on April 2011, highlights a considerable increase of TAWs both in affected employees (+12.7%) and FTEs (+23%), thus displaying an increase in both number, contracts and length according a pro-cyclical trend.

According to the National Insurance Institute for Work Accidents (Inail) preliminary estimates, work accidents continued to decline, in a trend that started in 2002 (from 790,112 in 2009 to 775,250 in 2010, with a 1.9% decrease). The decline of fatal accidents is even stronger: from 1053 in 2009 to 980 in 2010 (-7.9%). However, according to Inail estimates, work accidents in the undeclared sector are about 165,000, 116,700 of them in the service sector.

According to the 2009 Institute for the Development of Vocational Training for Workers (Isfol) report on continuous vocational training, employees attending any form of training activities increased from 25.9% to 29.2% and the share of firms performing training activities greatly increased from 25.7% in 2008 to 32.1% since 2009. This performance is largely due to Law 2/2009, which extended on a temporary basis passive labour market policies (typically CIG, wage integration fund) to non covered sectors (enterprises with less than 15 employees and most service sectors, such as commerce ) provided that affected employees commit themselves to participate to training activities. However, most of training aims to reinforce their employability rather to better equip them to the new competitive factors of their enterprises. However, as the NQ of the “getting prepared for the upswing” shows, social partners promoted some good practices in this latter sense at company level and their numbers rapidly increased after the seminal case of Piaggio Aeroindustries.

Work life balance indicators are well summarised by the National Institute of Statistics (Istat) Dossier on family presented on November 2010 at the national conference on family. Finally, although the share of children benefitting of a formal childcare achieved 16%, the employment rate of women aged 25-44 with children is almost stable from 2004 (52.5%) to 2009 (52.9%) while the employment rate of single women declined from 86.1% in 2004 to 81.9% in 2009, while the share of children aged 1-2 taken in charge by a formal childcare (public or private) when their mother is at work increased from 22.4% in 2002 to 27.8% in 2005. However, these latter figures are not comparable with Barcelona indicator as it restricts only to working mothers and excludes children aged less than one.

8. Major conflicts and restructuring cases

The most important case of conflict and restructuring in 2010 involved Fiat and triggered a debate over the possible transformation of the Italian collective bargaining system. It is important to stress that conflict mainly occurred among trade unions on the position to be taken over the implementation of the Fiat’s five-year industrial plan presented in April 2010.

In particular, Part of the FGA 2010-2014 plan (FGA, Fiat Group Automobiles) was ‘Fabbrica Italia’ (Factory Italy), that is a thorough reorganisation and relaunch of Italian production sites to recover productivity and confirm Italian plants as the ‘core’ of FGA. Substantial investments were announced to support an increase of production levels to 1.65 million passenger cars and light commercial vehicles in 2014 (roughly the double of 2009 output), mostly intended for export markets, but specific requests in terms of work flexibility were put forward by the company management and notably full plant utilisation (18 shifts per week) and overhead and labour costs containment. In the absence of an agreement with the unions, Fiat threatened to shift production in other foreign sites, like those in Turkey and Serbia.

Negotiations over the implementation of the industrial plan started from the Pomigliano plant, near Naples, but Fiom-Cgil openly criticised the measures proposed by the company management, especially those aimed to introduce a no-strike clause and reduce absenteeism because Fiom-Cgil maintained they were restricting individual rights. Fiom-Cgil did not sign the agreement and campaigned against it in the employee referendum which was held over the draft deal. The agreement passed with the support of some 65% of the votes cast.

However, since the effectiveness of the agreement was uncertain, due to the split among the unions and the fact that Fiom-Cgil had not signed the 2009 metalworking industry-wide agreement, Fiat decided in autumn to develop a different strategy: establish new companies for each of its Italian plants, which would not join employer associations and would sign new first-level collective agreements which would regulate employment outside the traditional framework of the metalworking sectoral agreement. If Fiom-Cgil would confirm its disagreement and fail to sing the accords, following the Italian laws on union representation, it would not have the possibility to set up a workplace representation structure in the new companies. This new strategy was first applied in the negotiations concerning the Turin Mirafiori plant, but it was immediately extended to Pomigliano, where a first-level agreement was signed at the end of December. Fiom maintained its strong criticism of the content and nature of the new agreements, so that conflict continued both among trade unions and with Fiat. This move to abandon the traditional framework of employer associations and industry-wide bargaining was seen by many commentators as a weakening of the Italian bargaining system. Despite the importance of the debate and the interest for the case within the business community, there do not seem to be any significant spill-over or imitation effects so far.

The recent economic slowdown has had an important impact on the Italian production structure. The most evident impact has been on the utilisation of the Wage Guarantee Fund (Cassa integrazione guadagni, CIG), the major social shock absorber in Italy. In particular, the special Wage Guarantee Fund (CIGS) provides relief from labour costs to firms and income support measures to workers in cases of reorganisation and restructuring, as well as in the event of bankruptcy, liquidation or extraordinary administration. For this reason, it can be considered as an useful proxy indicator to monitor restructuring processes. According to the National Social Security Institute (Istituto nazionale di previdenza sociale, Inps), in 2010 a 31.68% increase in recourse to the CIG was recorded compared with 2009 (1,203,638,249 hours were authorised in 2010). In particular, authorised hours of the CIGS grew by 126.4% compared with the previous year. Also authorised hours of the CIG ‘in derogation’ – which provisionally extends the CIGS schemes to companies and workers previously excluded from them – increased in 2010: specifically the CIG ‘in derogation’ CIGO grew by 206.48% compared with 2009 (488,790,424 hours were authorised in 2010).

In general, the economic recession has promoted restructuring processes in several firms in order to improve their efficiency and reduce their costs. In 2010 various large companies operating in Italy announced restructuring plans, which often envisaged job-cuts. According to the European Restructuring Monitor (ERM), in 2010 49 companies announced restructuring plans which envisaged around 23,000 job-cuts. In particular, most part of job-losses was planned in the financial services (around 6,700 job-cuts), communication (around 5,300 job-cuts) and manufacturing (around 4,000 job-cuts) sectors (please see the ERM website to be aware of limitations due to the methodology used to collect the information).

In many cases, in order to reduce the negative social effects of job-cuts, companies and trade unions reached agreements which provide for the recourse to traditional social shock absorber measures (basically CIG and mobility schemes), but, in some cases, also the recourse to innovative measures (for instance, re-employment services, training initiatives, and measures aimed to attract new investors to the areas affected by restructuring processes). Moreover, some agreements provided for the direct involvement of external stakeholders (such as local authorities and public and private employment agencies).

In 2010 two of the main manufacturers of domestic appliances – Electrolux and Indesit - announced restructuring plans. Indesit announced the closure of two plants, located in Brembate (in province of Bergamo) and Refrontolo (in province of Treviso), with the consequent loss of around 500 jobs. After some months of negotiations, the company and the trade unions reached an agreement on the reorganisation process. The agreement, beyond the recourse to CIG measures and economic incentives for voluntary dismissals, provides for outplacement services for redundant workers. In particular, the company promoted the building of a network which involved various social actors, such as social partners operating at local level and local authorities. The network offers services for direct matching of labour supply and demand in the area of Bergamo and Treviso.

In December 2010 Electrolux announced a reorganisation plan for its plants located at Porcia (1,500 employees) and Susegana (1,300 employees), in the North-East of Italy. The plan envisaged 800 job-cuts. In March 2011, after some negotiations which involved also the Minister of Economic Development and local authorities, the company and the trade unions reached an agreement on the management of reorganisation process. Also in this case, the agreement envisages innovative measures aimed to make the re-employment of redundant workers easier, beyond the recourse to more traditional measures. The company provides for outplacement services and economic incentives to companies hiring the redundant workers. Additional benefits will be offered to workers who intend to start their own business, including the opportunity to use parts of the Electrolux plants for the start-up.

In November 2010 Tamoil, one of main companies specialised in refining petroleum and commercialising energy products, announced the closure of its refinery located in Cremona, with the consequent loss of 270 jobs. In April 2011, the company and the trade unions reached an agreement, which envisages the recourse to traditional social shock absorbers measures for redundant workers, but also the creation of a ‘solidarity fund’ in order to cushion the negative effects of the closure for the small and medium enterprises, which have operated as subcontractors of the refinery. The fund will be financed by Tamoil and managed by the Province of Cremona and the local Chamber of Commerce. Moreover, Tamoil will pay for the land reclaiming activities (please see the ERM website for more details on the cases).

Other major cases of reorganisation include Telecom Italia (IT1009019I) and Poste Italiane (IT1010019I). In both cases, collective agreements defined a set of measures to reduce the employment and social impacts of restructuring.

9. Other relevant developments

In 2010, there were no other significant developments in Italy.

Roberto Pedersini and Diego Coletto, Università degli Studi di Milano, and Mario Giaccone, Ires

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