Working hours still a controversial issue in Italy

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By the end of November 1998, the Italian parliament was to decide whether or not to enact the government's decree-law No. 335, aimed at restricting the use of overtime. Overtime is a very controversial issue which is intertwined with the debate over the reduction of working time. Furthermore, the debate over the decree has given the social partners the opportunity to emphasise their role in the regulation of the employment relationship, by asking the government and parliament to follow the guidelines set out in a 1997 joint declaration by employers' organisations and trade unions on the transposition of the EU working time Directive.

On 29 September 1998, the Italian government issued a decree-law (No. 335) aimed at restricting the use of overtime working (orario straordinario). Parliament had until the end of November to decide whether or not to enact this decree-law.

An intricate situation

Unlike many other European Union countries, which have used the transposition of the 1993 Council Directive on certain aspects of the organisation of working time (93/104/EC) as an opportunity to renew legislation neglected for decades, Italy has still not updated its general law in this area. Consequently, the measure on overtime now before Parliament only modifies a decree dating back to 1923, the provisions of which have given rise to constant conflicts of interpretation. This is the third legislative intervention on overtime to be introduced in recent times: the first was law No. 549 of December 1995, and the second was law No. 196 of July 1997 (the so-called "Treu package", after the minister of labour who proposed it) which, with the objective of implementing a broad flexibilisation of labour legislation, introduced a number of measures on overtime, but without abrogating the previous law. The 1997 legislation was varied in content, but it comprised four main provisions:

1. "normal" weekly working hours were reduced from 48 to 40. However, according to commentators, this provision did not have the effect of reducing maximum daily working hours, which remained fixed at eight hours of ordinary work and two of overtime. Instead, it merely established the maximum annual total at 1,920 working hours plus overtime;

2. the system used to calculate working hours was made more flexible. In compliance with the EU Directive, collective bargaining was permitted to centre on a weekly average calculated over a reference period not exceeding one year;

3. adjustments were made to social security contributions. The cost of labour was progressively increased for weekly hours worked after the 40th hour (for example, hours worked in excess of 48 now cost 25% more than ordinary work - 10% higher pay and 15% higher contributions). At the same time, a special fund was created to finance the reductions in working hours made possible by introducing part-time contracts, or at any rate shorter working hours. This provision was to be implemented by the Ministry of Labour through the issuing of a specific regulation; and

4. finally, modification of the limits on normal working hours made relevant again a provision which requires employers wishing to use overtime to notify the local offices of the Ministry of Labour. However, law No. 196 postponed implementation of this rule for six months.

The main aim of these legislative measures was to counteract the consequences of what some trade union analysts had called the "overtime paradox". This refers to the fact that, because workers and their representatives had neglected the issue of working hours in recent years, especially at company level, the hours actually worked in private firms had grown well beyond the limits fixed by collective bargaining - to the great advantage of employers. It was claimed that, by agreeing with the unions to apply a complicated system of calculation apparently more advantageous for workers than that provided by law, employers had, in fact, been able to avoid the extra payments due in the event of overtime work. According to figures issued by the National Council for Economic Affairs and Labour (Consiglio Nazionale dell'Economia e del Lavoro, Cnel), in some sectors the hourly labour cost for overtime thus amounted to 20% less than the cost of ordinary working hours.

Although the "Treu package" has brought Italian law more closely into line with the EU Directive by introducing average annual working hours, it has not implemented at least two of the Directive's most important requirements:

1. it makes no change to the concept of "effective work", which is still restricted to cases in which work is actually performed. Consequently, jobs involving waiting or caring are covered by regulations other than those envisaged by the Directive, which by contrast defines working time as "any period during which the worker is working, at the employer's disposal and carrying out his activity or duties"; and

2. it allows 576 hours of overtime per year, that is, 192 hours more than the maximum permitted by the application of the rules laid down in the Directive.

The contents of the new decree

Shortly after approval of the "Treu package" in autumn 1997, a serious government crisis took place in Italy because of the threat (subsequently carried out much later in October 1998) by the Communist Refoundation Party (Partito della Rifondazione Comunista, Prc) to withdraw its parliamentary support for the government headed by the leader of the Ulivocoalition, Romano Prodi (IT9710136N). The crisis was resolved only when the Government promised to present a bill in parliament which would introduce a 35-hour working week by 2001 (IT9710133N), following the French model as proposed by minister Martine Aubry (FR9806113F).

Although the crisis was resolved, implementation of the "Treu package" was considerably delayed:

• under pressure from the Prc, the Government ignored the recommendations of the social partners by cancelling from the text of the law which is passed each year to deal with the transposition of EU Directives (the so-called "Community law") - just before its definitive approval - a rule which authorised the Government to enact the working time Directive through regulatory means. This would have made it possible to convert into law a joint declaration signed on 12 November 1997 by the Confindustria employers' organisation and the Cgil, Cisl and Uil trade union confederations on the transposition of the Directive (IT9711140N); and

• the ministerial regulations on the allocation of the money (more than ITL 2,000 billion) earmarked by the "Treu package" for funding working time reductions were not issued, while the rule that would suspend the obligation on employers to notify the administrative authority of their intention to use overtime was postponed on two occasions.

When the second postponement of the overtime rule expired, in order to fulfil pledges made previously, the government was forced to issue the decree-law now being debated in Parliament. This decree was issued by the government on 29 September 1998 and must be enacted by parliament before 28 November 1998, otherwise it will expire.

The approval of this decree would represent a further step towards full implementation of the EU Directive. It incorporates the section on overtime in the social partners' November 1997 agreement on the transposition of the Directive, fixing the maximum amount of overtime per year in the industrial sector at 250 hours and establishing a limit of 80 hours per quarter. These provisions would be valid only if there are no specific collective agreements on the matter, thereby guaranteeing the autonomy of the parties, and if employer and worker reach agreement on this point. Finally, any requirement for prior approval of overtime would be cancelled, leaving only the obligation to inform the provincial Labour Office when weekly working time exceeded 48 hours.

In this manner - and without taking account of the fact that contractual working hours actually amount to around 39.5 per week - Italian law would lie well within the EU parameters, given that it would fix the maximum upper working time limit at 2,170 hours per year, of which 250 would consist of overtime hours and 1,920 of ordinary working hours.

The decree-law gives a detailed list of the cases in which overtime is allowed, reproducing the general formula of the 1923 decree and adding nine specific instances. However, the list is of little significance because the entire matter is essentially deregulated, with collective bargaining given the task of setting different limits on annual overtime levels, as well as establishing further cases in which the use of overtime is permitted.

However, during the enactment process, parliament has introduced significant changes to the original text of the decree which, according to social partners and particularly Confindustria, would interfere with the initial meaning of the regulation and contradict the content of the social partners' joint declaration signed in November 1997. Specifically, the Senate approved two main amendments, stating that:

1. 250 hours of overtime should be the legal annual upper limit, so that collective bargaining could only reduce it (and not vary it upwards); and

2. informing the provincial Labour Office should be mandatory after the 45th hour of weekly working time (this threshold is obtained by adding to the normal 40-hour week, the result of dividing the 250 hours of maximum yearly overtime by the number of working weeks - ie about five hours per week). Furthermore, the possibility was introduced that the provincial Labour Office could issue "specific provisions" to ensure compliance with the regulations.

These modifications may be linked to the wider debate on the reduction of the working week and to an intention of stating in a more explicit way the principle of overtime reduction. The changes, however, triggered a reaction during the discussion in the Chamber of Deputies by part of the parliamentary majority which supports the government : Giancarlo Lombardiof the Italian Popular Party (Partito Popolare Italiano- Ppi) has, in fact, proposed amendments to re-establish the original wording of the decree, especially the part which stated that the 250-hour ceiling would apply only in the event of no collective agreement being concluded on this subject. The reaction of the centre-right opposition has also been very strong: the opposition started filibustering to prevent approval of the law and asked for a reintroduction of the rule which provided for the provincial Labour Office to be informed only when the 49th weekly working hour is reached.

In this difficult political situation, Confindustria declared that reinstating the autonomy of the social partners in fixing the ceiling for overtime would lead to a positive change, though not a fully satisfactory one. In Confindustria's opinion, the limits on weekly working hours should take into account the possibility of implementing the annualisation or flexibilisation of working time. In any case, Confindustria would consider the approval of the text passed by the Senate as a negative outcome: indeed, for Rinaldo Fadda, deputy director of Confindustria, it would be better for the decree to lapse than for it be adopted in its present version (quoted in Il Sole-24 ore, 19 November 1998).

Commentary

The discussion over the enactment of the decree-law on overtime has highlighted with great emphasis the issue of the relationship between legislative and bargained regulation of the employment relationship. The social partners, by signing their November 1997 agreement, intended to affirm the principle of their autonomy in the regulation of working time, in order to make a wide set of flexibility measures possible which are beyond even the provisions of the EU Directive. Confindustria, in particular, has taken up a position which aims to avoid any impediment to the utilisation of overtime work. The Prodi government found it difficult to accept the joint declaration reached by the parties and to intervene in this subject, mainly because of its relations with the Communist Refoundation Party and its commitment to reduce weekly working hours. The decree-law of September 1998 should have broken the deadlock by opting openly for the acceptance of the social partners' joint declaration, which was reproduced almost word-for-word in the decree's section on overtime. The intervention of the Senate, however, has stressed once more both the divisions within the parliamentary majority and the opposition between parliament and social partners over the issue of the autonomy of collective bargaining in the regulation of the employment relationship.

In any event, once approved, the decree will represent further progress towards definitive and complete uniformity of Italian law with European Union law. However, there is an evident need for comprehensive legislation which covers every aspect of overtime and extends to other non-industrial sectors as well - such as commerce, tourism and services in general - which seemingly fall outside the present regulations. The Government has announced the introduction of such a law in the future (although such announcements are frequent and are not always followed by concrete action).

The reference to maximum ceilings on overtime set by the social partners, on which the abovementioned political debate is focused, seems to restore the importance of the concertation and dialogue method involving the partners. In a difficult period for the Italian political system, concertation has not only allowed inflation to be slowed down and a pension reform law to be approved, but it has also produced initiatives designed to encourage employment and structural investments.

It is difficult to predict future developments. The recent formation of a new Government led by the Democrats of the Left (Democratici di Sinistra, Ds), and not requiring the support of the more extreme wing of the Communist Refoundation Party, seems to have "de-ideologised" the debate by slackening the tensions that previously prevented any decision from being taken. However, it is likely that the future law will do no more than introduce a few general rules, leaving the actual management of overtime to collective bargaining (Vincenzo Ferrante, Catholic University of Milan).