Green Paper addresses future of welfare system

Italy’s Labour Minister presented to the Council of Ministers a Green Paper analysing the country’s welfare system in July 2008. The Green Paper sought to initiate negotiations, which were to end within three months, on the reform of the welfare system in Italy. However, the government seems to be adopting a contradictory position by encouraging consultation with the social partners while deciding on welfare cuts without proper negotiation.

A Green Paper entitled ‘The good life in active society’ was presented by the Minister of Labour, Maurizio Sacconi, to the Council of Ministers on 25 July 2008. The paper is divided into two parts: after the minister’s preface, the document analyses the reasons why Italy’s welfare system needs to be reformed, identifying current functioning problems, welfare needs for the future and possible objectives; the paper then offers a general outline of several operational proposals.

Each paragraph of the document presents questions to which social actors and individual citizens can give answers, in turn formulating their own proposals.

Analysis of welfare system

The analysis presented in the Green Paper highlights the failure and economic non-sustainability of the current welfare system in Italy. It also points to the dramatic differences in terms of the quality of service among the various Italian regions. The Green Paper underlines the inefficacy of the welfare system connected with the current employment conditions, such as the so-called ‘social shock absorbers’ (ammortizzatori sociali) – measures designed to help cushion the effects of job losses and restructuring (IT9802319F, IT0205204F). Moreover, it argues that the labour market is blocked and that today’s employment levels are no longer able to finance the pension system, due to the ageing of the population. Even training policies have failed and the education system does not prepare young people for entering the labour market.

Possible solutions

In order to render the Italian welfare system more sustainable, the Green Paper puts forward two possible solutions:

• a ‘rigorous control of spending’ through the use of information and communication technologies (ICT) and by raising the statutory pensionable age established by the last reform (IT0712029I,IT0710029I);

• an increase in incoming contributions by increasing the number of active workers.

The central problem of the Italian welfare system is the insufficiency of the contributory funds through which it is financed. According to Minister Sacconi, on the one hand, the welfare system is financed by too small a number of active workers and, on the other hand, it has restraining effects, which do not contribute to increasing the number of economically active people. The solution lies in ‘raising regular employment rates, especially among women, young people and those over 50 years of age’. This could be achieved through the simplification and deregulation of employment relationships, the progressive reduction of the tax burden on work and on citizens, and more efficient training and guidance services. According to the minister, in this context the school system should also aim to ‘introduce numerous work experiences during the education phase’.

Secondly, the dissemination of bilateral private social security and health funds – financed on the basis of contractual agreements between trade unions and companies – or private insurance should be supported and stimulated. For this purpose, according to the Green Paper, the state may draw up an adequate regulatory framework, offer tax benefits and help the relevant parties – especially individuals – to acknowledge the limits of public intervention.

The reform actions must be carried out with a view to governance, which can be implemented through the introduction of fiscal federalism and the establishment of centralised ‘steering committees’ for the labour market, health and welfare system.

According to Italy’s Labour Minister, a ‘central support to the governance system will depend on the quality and proper functioning of a system of industrial relations that must be reformed now, on the basis of the social partners’ final decisions in the negotiations taking place on the collective bargaining structure and the subject of representation’ (IT0806049I).

Reactions to paper

While the employers had made no response to the Green Paper at the time of writing, the trade unions reacted with concern to its proposals.

The Confederal Secretary of the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil), Morena Piccinini, expressed some concern about the proposal of raising the pensionable age and argued that the Green Paper: ‘on the one hand, recognises the challenges posed by the ageing population and, on the other hand, states that it is important to reduce health expenditure, urging citizens to resort to private healthcare services. At the same time, the government asks trade unions to organise alternative social protection systems.’

The General Secretary of the National Pensioner Federation of the Italian Confederation of Workers’ Trade Unions (Federazione Nazionale Pensionati – Confederazione Italiana Sindacati Lavoratori, Cisl Pensionati), Antonio Uda, agreed that his organisation was open to bargaining; however, he contended that: ‘they talk of complementary healthcare for employees but, this way, we make retired persons, who represent a growing proportion of the population, lose quality of services.’

Meanwhile, the General Secretary of the Union of Italian Workers (Unione Italiana del Lavoro, Uil), Luigi Angeletti, discussed the idea of raising the pensionable age and insisted that, after the last reform (IT0712029I, IT0710029I), the subject was no longer on the social agenda.

Commentary

Italy’s centre-right government appears to be adopting a contradictory stance in this context: through the Green Paper, it seems to be seeking to initiate a comprehensive process of agreement through consultation with the social partners in order to reach consensus on shared reforms of the welfare system. However, at the same time, pressurised by budget constraints, it has decided on welfare cuts without a comprehensive plan and without consulting the social partners. Moreover, it has eliminated protection for workers on atypical work contracts in violation of the regulations currently in effect. This manner of proceeding is conducive to greater social conflict rather than fostering a process of agreement through consultation for a shared welfare reform.

Vilma Rinolfi and Domenico Paparella, Cesos