New area agreements promote employment and labour flexibility

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March 1998 saw the conclusion by Italian trade unions and employers of new "area agreements" aimed at promoting the reindustrialisation of Crotone and Manfredonia (Foggia).

On 24 September 1996, the Italian Government and the social partners signed an agreement, known as the "Pact for Employment" (IT9702201F) which was intended to promote employment through a series of innovative measures. These included schemes to foster economic development and productivity in those areas of Southern Italy characterised by unemployment and de-industrialisation. The instrument that the social partners have themselves developed for assisting areas of high unemployment is the "area agreement" (contratto d'area) which aims to create a favourable environment for the development of production initiatives in these areas by means such as guaranteeing efficient administrative action and favourable industrial relations. The legal aspects of this type of agreement were subsequently regulated by the Interministerial Economic Planning Committee (CIPE) (IT9704203F).

On this basis, the local organisations of trade unions and the Confindustria employers' confederation signed new area agreements on 3 March 1998 in Crotone and on 4 March at Manfredonia (Foggia). The two agreements are very similar, providing for the use of special contracts for hiring new workers, the reduction of labour costs, flexibility in working hours, investment and employment growth. Specifically, the agreements provide for the following:

• work/training contracts lasting 12 months, with a lower job classification than laid down in national regulations;

• by exception to the national legislation, companies will be able to hire on fixed-term employment contracts a number of workers equivalent to 20% of their personnel. Companies with fewer than 20 employees will be able to hire no more than four workers on such contracts;

• by exception to collectively-agreed provisions, the pay of apprentices will be equal to 60% of the contractual minimum for skilled blue-collar workers for the first year of their apprenticeship, rising to 75% for the second year, 85% for the third year and 90% for the fourth year;

• a bargaining moratorium will mean that company-level negotiations on pay will not be able to start until four years after production begins in new plants;

• on working time flexibility, working hours will be calculated on the basis of averaging over a year and not, as previously, on a weekly basis. New shifts will be introduced in order to guarantee the full exploitation of plants, part-time contracts will be possible, and companies will be able to resort to weekend overtime working to a greater extent than foreseen by national collective agreements;

• long-term unemployed workers hired by a company on work-entry contracts (contratti di inserimento) will be paid according to the same criteria used for young workers employed on a work/training contract; and

• the parties commit themselves to fostering training placements, apprenticeship courses and study grants in order to help young people entering the labour market.

The parties will jointly monitor the implementation of the agreements every six months.

The area agreements will probably have positive effects on employment in the Italian South or Mezzogiorno. Indeed, 54 new entrepreneurial initiatives are due to be implemented in Crotone with an investment of ITL 80 billion and the hiring of more than 700 workers. Manfredonia foresees the implementation of seven new initiatives that will create more than 300 jobs. Moreover a "twinning" agreement has been concluded between Northern companies and the Government (IT9803156N) which will have positive effects on employment in the South.