Debate on reform of collective bargaining

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In June 1999, the debate on Italy's collective bargaining system was revived by a call on the part of employers for greater flexibility and decentralisation. Trade unions, though with differing emphases, do not share this point of view and stress the importance of maintaining the current two-tier bargaining structure. Another issue at stake is the redefinition of bargaining units and the possible creation of new sectoral agreements, notably for those branches which are affected by privatisation and liberalisation processes.

A debate has recently begun in Italy, involving academics, practitioners, employers' associations and trade unions, concerning possible reform of the collective bargaining system. The issues discussed and the solutions proposed are numerous, and depend on the specific circumstances of the individual observer - neutral analyst or participant at company or sector level. Nevertheless, an attempt can be made to identify the issues in the debate and the reasons behind it. The main points at issue are:

• changing the bargaining structure and, in particular, altering the relationship between the "first-level" national industry-wide collective agreement and "second-level" decentralised bargaining at company and territorial level; and

• redefining the field of application of sectoral agreements (ie redefining their "boundaries"). This seems necessary to some parties for several reasons. First, the end - already reached or soon to come - of the monopolies exercised in numerous public services means that standards must be set for competing companies which operate in the same market, but currently apply different collective agreements (a case in point being telecommunications). Second, in certain sectors, the main problem seems to be the large number of agreements, a problem which often overlaps with those of fragmented representation and uncertainty in identifying the bargaining unit (as in transport - IT9901240F). Third, in some cases it seems no longer practicable to use the same "umbrella" agreement to cover very different production situations and markets, with different levels of competitive pressure and different cost structures (as has been argued in relation to the metalworking agreement).

The reasons cited by the various parties in seeking change in the collective bargaining system are, as can be imagined, different. The employers and their associations emphasise the need for greater bargaining flexibility, which they believe would increase the international competitiveness of Italian firms. The trade unions, for their part, see reform of the bargaining structure and of the boundaries of sectoral agreements as a device to increase the extent and coverage of collective bargaining, and to reduce the scope for what they consider to be forms of "social dumping" made possible by the fact that directly competing firms are covered by different collective agreements with heterogeneous pay levels and forms of workforce protection.

Confindustria proposes à la carte agreements

During June 1999, amid the comments and discussion that followed the renewal of the metalworking sectoral agreement (IT9907249F), some employers raised the issue of revising the two-tier bargaining structure established by the central tripartite agreement of July 1993 (IT9803223F) confirmed by the "social pact" signed on 22 December 1998 (IT9901335F). For instance, Andrea Pininfarina, president of Federmeccanica, the major metalworking employers' association, and Paolo Cantarella, managing director of Fiat, argued that the two-tier structure, with both a national and a decentralised level, no longer meets the requirements of the market, and that it could be replaced with a system that equips firms with the more flexible instruments that they need to be competitive (reported in Il sole 24 ore, 12 June 1999).

At the same time, Giorgio Fossa, president of Confindustria, the main employers' confederation, has repeatedly stated in public that greater emphasis should be placed on decentralised bargaining and on enabling firms to choose among different types of agreement, according to their structure and size. Mr Fossa calls this the "à la carte" solution whereby, in order to avoid overlaps among agreements, especially as regards pay, firms should be able to choose among the various levels. Thus, the company-level or territorial agreement could be an alternative to the national sectoral one (which would retain only the function of providing general guarantees), introducing a sort of general "opening clause" so that collective bargaining more closely reflected the situation of each individual firm. A reference to some recent developments in Germany is implicit (DE9709229F).

In an interview given to Il Sole 24 ore on 13 June 1999, Sergio Cofferati, secretary general of the Cgil trade union confederation, rejected Mr Fossa's suggestion, declaring that any revision of the bargaining structure confirmed a few months ago by the social pact is out of the question. According to Mr Cofferati, the idea that the two levels, national and decentralised, could be alternatives is unacceptable, because their integration, in the Italian experience, helps achieve the most important objectives of a balanced development of the industrial relations system. Moreover, he said, it is difficult to argue for the extension of second-level territorial (rather than company) bargaining: if decentralised bargaining is to concern performance-related pay, collective bargaining can take place only at company level. Rather, Mr Cofferati continued, some boundaries of national sectoral agreements could be redefined, or new agreements created - for example, in sectors undergoing deregulation - while awaiting discussion of a Europe-wide level of bargaining. This latter objective was reaffirmed in Helsinki by Italian trade unions in June-July 1999 during the European Trade Union Confederation congress (EU9907182F).

The secretary general of the Cisl union confederation, Sergio D'Antoni, is also critical of Confindustria's suggestion, because, he believes, it proposes a model in which bargaining levels are completely alternative to each other. Nevertheless, showing partial differences with Cgil's position on this matter, he envisages the possibility of a flexible bargaining system with a decentralised "centre of gravity", while the national sectoral agreement would provide only the necessary general guarantees. In his opinion, this would create a closer link between wages and productivity, and a closer match between bargained flexibility and local or company circumstances.

Changing the system of sectoral bargaining

An issue which relates closely to that of revising the overall bargaining system is the proposal to overhaul the sectoral bargaining system. In this case, however, very different positions have been taken up, and they reflect the specific features of sectoral bargaining, as well as the different "climate" of industrial relations in the various sectors. For example, the chemicals workers' trade unions do not regard the development of territorial bargaining as important, because in this sector more than 60% of companies are covered by company-level agreements. If anything, these unions propose a reduction in the number of existing agreements and envisage a future Europe-wide agreement. In the textiles sector, by contrast, the coverage of company-level agreements is much smaller: it currently stands at around 25%. In this context, the textiles workers' unions regard the guarantees provided by a national agreement as indispensable, and at the same time argue for territorial and inter-company bargaining to be extended in order to define forms of labour flexibility and to link wages to productivity increases.

The situation is clearer in industries which have been, or are due to be, affected by privatisation and deregulation processes. In these cases, the increasing number of operators now requires the introduction of a common regulatory framework. At the same time, taking the collective agreement of the previous publicly-owned monopoly and extending it to cover the entire sector is impracticable. A significant example is provided by telecommunications, where the unions have already called for talks on defining a single national agreement. Another example could be, in the future, the energy industry. The declared objective of the trade unions in telecommunications is to define a basic agreement which covers all the workers in the industry (at the moment they are mostly covered by company agreements or by the metalworking sector agreement) and forestalls forms of "dumping through collective regulation". The agreement for the former monopoly, Telecom Italia, would thus become a company-level agreement (though of national relevance), because it is not feasible for an agreement signed in a formerly protected and publicly-owned enterprise to be extended to all the new operators in the sector.

Confindustria, however, does not regard the redefinition of agreement boundaries as a priority. More important, it believes, is the introduction of bargaining arrangements which foster competitiveness. According to Rinaldo Fadda, vice-director general of Confindustria, the standardisation of pay levels among competing firms is ensured by the market, as evidenced by the case of the telecommunications industry where, he argues, despite the application of different agreements, pay levels are substantially the same. Finally, according to Mr Fadda, in certain sectors, such as transport, there are problems of fragmented representation and of conflict which cannot be solved merely by redefining the boundaries of the national agreement. These are problems which should be tackled directly.

Commentary

The debate which is underway reflects a quite complex situation: employers seem to favour the reduction of the regulatory content of sectoral agreements to a minimum in order to rely to a greater extent on company-level and decentralised bargaining; while the trade unions' objective is apparently the extension of collective bargaining coverage. Reducing the role of industry-wide agreements to only a very general framework which assures basic protections could be viable in deregulated sectors, where common rules must be created from scratch and where the existing collective agreements of ex-monopolies offer few realistic indications. It is very difficult in all other situations, since specific sectoral conditions and industrial relations traditions are very important. For instance, the chemicals sector is traditionally characterised by a very strong industry-wide level of collective bargaining where collaborative industrial relations prevail: it is difficult to think of major changes in such circumstances.

References to "opening clauses", regardless of the actual terminology which is used, are common among employers and are not completely unknown among trade unions (with the significant exception of Cgil). In general, industrial relations academics also seem to accept this possibility. However, in the short term, it is unlikely that major changes in the collective bargaining structure could take place, since its "bi-polar" model is deeply entrenched in bargaining practices and experiences, as well as in the most important features of the Italian production system.

As far as the boundaries of sectoral agreements are concerned, some marginal adjustments and innovations seem more likely. In fact, signals of strong pressures towards the redefinition of boundaries are evident in current negotiations over some important agreements, as in the case of the insurance and banking sectors, where the issue of "bargaining areas" is prominent - for instance, which collective agreement should apply to call-centre workers?

However, even in this case, it is difficult to imagine that the usual pattern of sectoral bargaining will change radically. It is more probable that adjustments and extensions would follow the path set by already established situations. This might be the case of telecommunications, for which Confindustria seems to maintain that the "reference agreement" may become the metalworking sector agreement, which, since the latest renewal, already covers the production of devices for telephony, telecommunications, network management and telephony services. Yet, the future acceptance of this possibility by the telecommunications sector trade unions is questionable and still to be assessed, since their "traditional references" are completely different (Gian Primo Cella and Roberto Pedersini, Fondazione Regionale Pietro Seveso).