1998 Annual Review for Italy

This record reviews 1998's main developments in industrial relations in Italy

Introduction

In the first nine months of 1998, according to the National Institute of Statistics (Istat), Italian GDP rose by 1.6%, a smaller increase than expected. The inflation rate decreased marginally to 1.6%, while the unemployment rate stood at 12.6%, slightly up from 1997. At the same time, the employment rate grew by 0.9%. This can be explained by the fact that the unemployment rate differs markedly between geographical areas - for example, it is particularly high in Southern Italy (23.2%). In addition, unemployment affects women more than men, with rates of 16.9% and 9.6% respectively. In 1998, the public deficit stood at 2.6% of GDP.

Following a political crisis caused by the opposition of the Communist Reconstruction Party (Partito della Rifondazione Comunista, PRC) to the 1999 Budget law, a new centre-left coalition government led by Massimo D'Alema came to power in October 1998. The new coalition is formed by the Ulivo centre-left grouping (which includes the Democratic Left), the centrist Democratic Union for the Republic (Unione Democratica per la Repubblica, UDR) and the Party of Italian Communists (Partito dei Comunisti Italiani), which was created by a split within the PRC.

Key trends in collective bargaining and industrial action

At the beginning of 1998, tensions caused by the government's proposed legislation to reduce the working week to 35 hours (IT9803159N) hampered negotiations over the renewal of sectoral collective agreements (IT9803158N). However, talks resumed in April 1998 (IT9804322F) when the Confindustria employers' confederation agreed that its affiliates should restart negotiations on the renewal of sectoral agreements.

The main national sectoral agreements signed in 1998 were those for the chemicals industry (IT9806325F), parts of the public sector (IT9808329F and IT9811187N), and agriculture (IT9808178N). The first national collective agreement for temporary work agencies was signed in May (IT9806170N).

In February, after negotiations which lasted almost a year, the Italian Banking Association (Associazione Bancaria Italiana, Abi) and the unions signed an agreement that laid the basis for a profound restructuring of the Italian banking sector (IT9803321F). It addressed labour costs - which are the highest in Europe - and overstaffing, by setting up a redundancy fund, financed partly by the banks and partly by the employees.

In September 1998, the negotiations over the renewal of the national collective agreement for the metalworking industry started (IT9809234F). In view of its traditional "pattern-setting" role, this agreement should have a major influence on the 1999 bargaining round. At the end of 1998, negotiations were hampered by conflicting opinions on working time reduction and wage increases.

At the intersectoral level, In December 1998, the government and 32 interest organisations, including employers' associations and trade union confederations signed a Social pact for development and employment (IT9901335F). This pact reduces labour costs and the tax burden on businesses and introduces further training measures. The government and the social partners also confirmed, without amendment, the collective bargaining structure introduced by the tripartite central agreement of 23 July 1993 (IT9803223F), which consists of two levels - a national sectoral level and a decentralised company or territorial level.

Another important issue which received attention at international, as well as at national level in 1998 was the problem of child labour. In April, the Italian government, the trade unions and Confindustria signed an agreement against child labour (IT9804162N).

Industrial relations, employment creation and work organisation

Employment creation featured as one of the major topics of both government intervention and collective bargaining. The EU Employment Guidelines played an important role in prompting government intervention, but the most important factor was the persistently high level of unemployment, particularly in Southern Italy. The government, which discussed its measures in this area with the social partners to varying extents, presented in April its Economic and financial planning document (Documento di programmazione economica e finanziaria, Dpef), which included important employment creation policies to be implemented over 1999-2001(IT9805323F). This document includes: development initiatives in the high-unemployment areas of Southern Italy; the regularisation of "irregular work"; the reform of income support schemes to encourage re-entry into employment; and training.

Another important government measure was the creation, during summer 1998, of Agensud, a state agency devoted to the promotion of development and employment creation in the South. Agensud will be responsible for promoting major infrastructural projects, advising local authorities and coordinating and rationalising initiatives to create enterprises and employment in Southern Italy (IT9809330F).

In November 1998, the government launched important initiatives in the field of training. First, a legislative decree was issued setting up a national vocational training system, which will entail a structural involvement of the social partners. The decree is based on the idea of concertation (dialogue and consultation) between public authorities and social partners, and strengthens the role of the latter in the development of training activities, the allocation of financial resources and the management of continuing vocational training (IT9811186N). Second, the government put forward a proposal for introducing a form of compulsory vocational training until the age of 18, in order to help economic growth by filling the existing gap between the demand for, and supply of, skills (IT9812334F).

The issue of employment creation was also addressed in tripartite discussions at both national and territorial level. Tripartite negotiations on employment creation were linked with talks over the revision of the tripartite agreement of July 1993. Indeed, at the end of August, both the Treasury Minister, Carlo Azeglio Ciampi, and the then Minister of Labour, Tiziano Treu, stressed that the focus of concertation, after its achievements in incomes policy had led to financial stabilisation, should now move on to employment creation (IT9809235F). The debate eventually led to the December 1998 tripartite social pact that envisaged the use of fiscal policy and training for employment creation and confirmed the July 1993 agreement (see above). Because of differences of opinion among the social partners about the revision of the bargaining structure and incomes policy, it was not possible to make any adjustments to the provisions of the July 1993 agreement. This was despite the fact that a specially appointed committee had presented proposals for modification in early 1998, together with a positive evaluation of the agreement's effects (IT9803223F).

The other aspect of tripartite negotiations on employment creation was at the territorial level. This bargaining activity had basically an operational content and mostly applied previous higher-level agreements. The main "tools" utilised at local level were "territorial pacts" and "area agreements" (IT9803155N, IT9803156N and IT9805169N).

The topic of working time was one of the most controversial in 1998 (IT9811238F). In March, the government issued a draft bill on the reduction of the statutory working week from 40 to 35 hours, starting from January 2001 (see above). For the bill to come into force, it must be passed by parliament and this had not occurred at the end of the year. In early 1999, it was difficult to predict events following late 1998's change in the government coalition. The formation of a new government without the external support of the Communist Reconstruction Party seemed to have reduced the tensions on this issue.

In November, parliament enacted a decree-law on overtime (IT9812192N), aimed at restricting the use of overtime work, which is one of the main methods used by firms to increase working time and make it more flexible.

As for collective bargaining on working time, one of the most innovative aspects of the new agreement for the chemicals sector is that it: fixes the working week at 37 hours and 45 minutes; increases working time flexibility; establishes an "hours bank" in which workers can accumulate overtime; and introduces "work-entry hours", whereby in economically depressed areas a weekly work schedule of 28-32 hours can be used for newly-hired workers, with an equivalent reduction in pay. In the public sector, the agreements for ministry workers and employees of state-controlled and local authorities (see above) introduced a 35-hour working week on the same pay for a limited number of categories of employees (eg shiftworkers).

Working time is also an important issue in company-level bargaining, which often applies the general rules defined through industry-wide bargaining on a case-by-case basis. In 1998, some of the more innovative company agreements were signed in the food sector, as at Galbani, Nestlè (IT9807232F) and Barilla (IT9810331F).

Work organisation issues were developed at many levels. For example, the beginning of the year saw temporary agency work being used for the first time in Italy (IT9801147N). By October 1998, the number of workers on temporary work contracts stood at approximately 40,000, with blue-collar workers slightly outnumbering white-collar workers. Temporary agency workers are used mainly by firms in the industrial sector (71.6%), with the remainder (28.4%) are hired in services. Geographically, this form of employment is most widespread in Northern Italy (75% of all contracts), followed by the Centre (17%) and then by the South (8%). Temporary work is more common amongst men than women (21,192 against 17,994).

In April, a communication from the Minister of Labour, Tiziano Treu, defined the terms and conditions for using job-sharing, in an attempt to promote this kind of employment relationship. The communication sets general guidelines and leaves the definition of the detailed aspects to decentralised collective bargaining (IT9805166N).

At sectoral level, the main changes in work organisation have been introduced in the public sector. For example, in June, the Senate voted to allow the introduction of teleworking in the public administration (IT9806173N). Moreover, in order to increase the quality and efficiency of services, the new agreement for employees of ministries, state-controlled bodies and local authorities modified job gradings.

Developments in representation and role of the social partners

The reform of employee representation at company level came to a decisive point in 1998 (IT9804226F) when a draft bill was drawn up by the Labour Commission of the Chamber of Deputies, which would introduce legislation on the "unitary trade union representative body" (Rappresentanza sindacale unitaria, Rsu). Workplace employee representative bodies are currently regulated by the Workers' Statute, which introduced the plant-level union structure (Rappresentanza sindacale aziendale, Rsa) in 1970. Rsus already exist in practice, having originally been envisaged in the July 1993 central tripartite agreement, which was later implemented by an interconfederal agreement signed in December 1993.

The main innovation of draft legislation is that national-level bargaining could introduce the possibility of establishing workers' representative bodies for companies with under 15 employees. The proposal also provides for the establishment of a coordination committee for plant-level representative bodies in multi-plant firms, as well as the elimination of the one-third quota of seats which is presently reserved in the Rsu for representatives of unions which signed the sectoral agreement applying to the relevant company. In particular, the latter provision faced strong opposition on the part of social partners, and mainly Confindustria, which fears fragmentation of representation. Another important feature of the draft bill is the link between "representativeness" and the right to involvement in elections for the Rsu: only trade unions that signed the collective agreements which applied to the firm, or with a membership rate of at least 5%, or electoral lists supported by at least 5% of the workforce, would have this right.

In the public administration, a major development was the first election for members of Rsus in November. The most significant results of the elections were the high participation rate and the success of the main trade union confederations, compared with independent unions (IT9812333F). These Rsu elections were required owing to the new rules on public sector employee representation and collective bargaining introduced in August 1997, and also because of the criteria devised to measure the representativeness of trade unions in the public administration. Under this legislation, the degree of representativeness is measured by the average of the membership rate and the votes obtained in the Rsu elections, with a minimum threshold set at 5%, a limit which is expected to lead to a great simplification of representation in the public administration (IT9806229F).

European Works Councils (EWC s) have so far had limited effects on the Italian industrial relations system (TN9807201S). This may be because of: the fact that they are linked to the existing system of Rsu representation, via the procedure for appointing employee representatives; or because of their small numbers, together with the already widespread presence of information and consultation provisions.

January 1998 saw the end of the separate employers' associations for the Italian public sector, when Intersind, the association for the publicly-owned enterprises of the Iri group, "directly and totally" joined Confindustria, the largest employers' organisation for private companies. Public employers' associations had played an important role in the development of the Italian industrial relations system, their contributions having included: the introduction of complementary bargaining, sanctioned by the Asap-Intersind agreement of 1962; and the promotion of workers' participation, which was included in pioneering collective agreements signed in 1984-6 (the Iri protocol) and at the end of the 1980s (the Eni and Efim protocols) (IT9802221F).

The representativeness of trade unions was an important issue in industrial relations in 1998:

• the new rules on union representativeness in the public administration were applied for the first time to the renewals of national collective agreements (IT9806229F);

• an important section of the abovementioned draft bill on representation was devoted to the identification of representativeness criteria for unions. The verification of a certain level of representativeness on the part of signatory unions would be the basis for applying a collective agreement to all the workers in a bargaining unit, irrespective of whether or not they are members of the signatory organisations (the so-called "erga omnes" effect of collective agreements) (IT9804226F); and

• the December tripartite agreement in the transport sector setting up a concertation system and defining new rules on the right to strike introduced limitations on access to collective bargaining based on representativeness (IT9901240F).

In each of these cases, the criteria and the threshold applied are the same, almost indicating a "general rule". Representativeness is measured as the average of the union's membership rate (its members as a proportion of all union members) and its electoral support (votes received in Rsu elections as a proportion of the total votes cast) in the relevant bargaining unit; and the minimum rate for access to collective bargaining is set at 5%.

An analysis of the membership of the three main union confederations - the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil) Italian Confederation of Workers' Unions (Confederazione Italiana Sindacati Lavoratori, Cisl) and the Union of Italian Workers (Unione Italiana del Lavoro, Uil) - over recent years (IT9803224F) highlighted three principal intertwined trends: the progressive replacement of active members by retired workers, whose constant increase in numbers gives rise to a numerical growth in overall membership, despite a constant fall in the rate of unionisation among employees. These trends confirm the growing difficulties that the confederations are facing in representing employees, also because of the competition from autonomous trade unions, particularly in some tertiary sectors such as transport.

Industrial relations and the impact of EMU

Italian employers' associations and trade unions have fully supported Italy joining EMU. In May, Confindustria approved a document on the consequences of European unification for the Italian economy (IT9805167N). The document stresses the necessity to increase labour market flexibility, to reform the public administration and the training system, and to reduce the tax burden.

According to the unions, monetary unification will also have repercussions on industrial relations. Sergio Cofferati, the general secretary of Cgil, maintained in May that the unions must prepare themselves to play a more active role at the European level. They must press for the introduction of uniform labour legislation in all European countries, while also addressing the question of the introduction of European-level agreements (IT9805324F).

Conclusions and outlook

In 1998 the role of the social dialogue was recognised, particularly in terms of its contribution to employment creation measures. However, the social partners did not reach an agreement on the revision of the industrial relations rules laid down in the July 1993 tripartite agreement, which were substantially confirmed by the tripartite agreement of 22 December 1998. In fact, trade unions and employers' organisations could not reach a common understanding on the adjustments required to correct the imbalances uncovered by the 1993 agreement's application and to take into consideration the new situation represented by EMU. Therefore, they decided to keep unmodified a system that had yielded significant achievements in reducing inflation and protecting wages.

In 1999, it will be possible to assess both the first results of agreed employment creation policies and the effects that the confirmation of the July 1993 agreement without amendments will have on the collective bargaining round, starting from the renewal of the metalworking industry agreement. The conflicting views of the social partners on bargaining structure and wage increases will have to be dealt with in sectoral bargaining, since they could not find a compromise at the intersectoral, tripartite level.

Other important issues will be: the reform of employee representation; the introduction of verification of trade union representativeness in the private sector; and the definition of the rules for the erga omneseffects of collective agreements. Finally, 1999 will probably be a decisive year for clarifying the objectives of the government and social partners on working time reduction and the 35-hour working week. (Roberto Pedersini, Fondazione Regionale Pietro Seveso, and Marco Trentini, Ires Lombardia).