Efforts to combat illegal work intensified

Recent official statistics show that, in Italy, illegal labour accounts for between 15.9% and 17.6% of gross domestic product. Various laws and initiatives have sought to address the problem at European, national and local levels. Recently, legislation and measures to tackle informal work have been reinforced in Italy.

At various levels, an increasing effort has been made in recent years to combat illegal or undeclared work and to encourage companies to ‘emerge’ from the shadow economy by means of legislation, awareness-raising campaigns, economic incentives and tougher penalties. Nevertheless, irregular work – that is work performed without the worker having a regular contract and adequate social security and insurance cover – remains a serious problem in Italy.

Assessing the problem

Irregular work in Italy accounts for between 15.9% and 17.6% of gross domestic product (GDP) and involves four million workers, according to the National Statistics Institute (Istituto Nazionale di Statistica, Istat). A survey carried out in 2005 by the National Social Security Institute (Istituto Nazionale Previdenza Sociale, Inps) on more than 100,000 companies found irregularities of some form in more than 78,000 of them, affecting almost 50,000 workers (as cited by the Centre for Social Studies and Policies, Censis). The findings of this survey are interesting, but they also give cause for concern and call for more effective action.

In terms of sector, as in most countries, in Italy irregular work is particularly widespread in the construction industry, services sector and agriculture. Large numbers of foreign workers – who represent the most vulnerable group in relation to illegal work – may be found in certain sectors, according to immigration data. A study conducted in 2005 by the Economic and Social Research Institute (Istitituto di Studi e Ricerche Economiche e Sociali, Ires) reported that around three million non-nationals from 191 different countries were working in Italy, representing an average of 8% of the total labour force. However, this proportion rose to 12% of the labour force in the manufacturing sector, 15% in agriculture, 20% in construction, and a remarkable 80% in domestic work.

The majority of irregular workers are immigrant women who often work on an illegal basis, followed by unemployed workers, pensioners, workers on redundancy benefit, students, self-employed workers, workers on sick leave and minors taken out of school.

The Italian economy is characterised by notable regional differences, but irregular work is problematic in every part of the country. For example, in Lombardy, a region in the north of Italy often described as the country’s ‘economic engine’, the regional labour inspectorate reports that irregularities have been found in more than 75% of companies inspected, and undeclared work operates in various sectors, especially in construction.

Measures at European level

At European level, among the 10 fundamental objectives approved in July 2006 by the Council of the European Union in its annual guidelines for employment policy, ‘emergence’ from the shadow economy is a fundamental component of the European Employment Strategy. The guidelines (136Kb PDF), first adopted in 2003, state that:

Member States should develop and implement broad actions and measures to eliminate undeclared work, which combine simplification of the business environment, removing disincentives and providing appropriate incentives in the tax and benefits system, improved law enforcement and the application of sanctions. They should undertake the necessary efforts at national and EU level to measure the extent of the problem and progress achieved at national level.

In July 2004, shortly after the EU enlargement to 25 Member States, the European Commission published a report on the extent of undeclared work across the EU (EU0407204F).

Measures at national level

In Italy, the Minister of Labour and Social Policy, Cesare Damiano, has declared that ‘eradicating the shadow economy is a fundamental factor for quality development’. According to Minister Damiano, unlawful work has two main harmful effects: ‘First, workers in the shadow economy are less protected and this may cause fatal accidents; second, it is a form of unfair competition among companies’.

Since the summer of 2006, the Ministry of Labour and Social Policy (Ministero del Lavoro e delle Politiche Sociali) has considerably intensified controls and surveillance activities in liaison with the labour protection division of the Carabinieri police force, Inps and the Italian Workers’ Compensation Authority (Istituto Nazionale per l’assicurazione contro gli infortuni sul lavoro, Inail).

New legislation

Rather than introducing emergency measures, the government has held trilateral talks with the social partners and passed legislation which lays down rules intended to combat the problem. The most important provisions introduced by Law No. 248/2006 and the 2007 Budget Law (IT0610029I), are the following:

• extending to the agricultural sector the use of the ‘Unique Document’ on certification of regularity in the payment of social security contributions (Documento Unico di regolarità contributiva, Durc), which was previously compulsory only in the construction industry. The 2007 Budget Law will make this certification compulsory for all sectors;

• a ‘congruence index’ (indice di congruità), which states the ratio between the quality of the services or goods produced and the amount of hours necessary to produce them;

• obliging employers to report the hiring of workers on the day before the employment relationship begins;

• requiring workers to carry an identity card while at work;

• increasing sanctions, the amount of which has been raised five-fold (the revenues will be paid into the Employment Fund);

• introducing easures to encourage spontaneous legitimisation of work, advantageous to both employers and workers;

• using part of the Employment Fund to increase institutional action and improve information in order to combat illegal work, as well as to promote new employment and workplace health and safety;

• ensuring stronger inspection powers;

• creating a national committee to coordinate and develop local initiatives.

Some passages draw on previous legislation, such as Law 448/1998, which instituted the Committee for the Exposure of Irregular Work (Comitato per l’emersione del lavoro non regolare) operating at regional and provincial level through local commissions. Reference is also made to Law 266/2002, which instituted Committees for Work and its Emergence (Comitati per il Lavoro e l’Emersione, CLES). Other measures too, such as tougher sanctions and the strengthening of inspection powers, underline the determination to tackle the problem.

Trade union action

In addition, the trade unions have adopted initiatives on the issue. In July 2006, the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil), the Italian Confederation of Workers’ Trade Unions (Confederazione Italiana Sindacati Lavoratori, Cisl) and the Union of Italian Workers (Unione Italiana del Lavoro, Uil) signed a joint document against irregular work. Given the extent of the problem, these three major trade union confederations presented proposals, mostly coinciding with those listed above, and a strategy based on:

• a policy of development of quality production together with tougher controls and sanctions;

• a policy that moves from the notion of exposing irregular work to the concept of ‘accompanying’ it towards regularisation;

• an improved relationship between public administration, companies and social actors in order to ensure greater transparency in relation to subcontracting.

Indirect policies

Efforts to combat illegal work can also be pursued through indirect policies, such as targeting tax evasion and, in more recent years, establishing tighter controls on immigration. Various proposals regarding the latter issue remain controversial. In September 2002, a legislative bill (No. 195) regulated two types of non-EU workers: those employed as domestic workers and those employed in other kinds of subordinate work. This bill was criticised by the trade unions particularly because it made entry into Italy conditional on possession of an employment contract (IT0209103F). Law No. 189 of July 2002, known as the ‘Bossi-Fini’ Law, had introduced several immigration reforms but was recently repealed by the new centre-left government, in office since May 2006 (IT0611029I).

Measures at local level

The variety of local socioeconomic contexts has necessitated different regional initiatives to combat illegal work. One of the most interesting and best-known initiatives has been the regional law enacted in Apulia (Puglia), in the southeast of Italy, for ‘the exposure of illegal work’ (Law No. 28 of 26 October 2006), which combines incentives for emergence with tighter controls. The regional labour department had first discussed the draft version of the law with the social partners (Tajani, C., Lavoro nero. La legge regionale della Puglia, 2006, available at Il diario del lavoro). Cgil, the General Confederation of Italian Industry (Confederazione Generale dell’Industria Italiana, Confindustria) and the General Confederation of Italian Agriculture (Confagricoltura) submitted their recommendations in writing. The main measure introduced was the obligation on companies applying for any kind of funding to certify the regular employment of their entire workforce. The Puglia law introduced the congruence index as in the national legislation, as well as a Regional Observatory on the Shadow Economy.

In Lombardy, 13 regional councillors have recently signed a regional bill on ‘Combating the exploitation of irregular labour in Lombardy’.

Apart from regional laws, other initiatives have been undertaken in an effort to increase visibility of the undeclared work problem. In October 2006, for example, Cgil, Cisl and Uil held a joint demonstration in the city of Foggia in the Puglia region to protest against illegal work after a number of fatal workplace accidents took place involving irregular workers.

Furthermore, some communication and information activities have been developed. On behalf of the Ministry of Labour and Social Policy, the Agenzia Italia Lavoro launched a project entitled Servizi per l’impiego network nazionale (Spinn) in the province of Isernia, in the Molise region situated north of Puglia. The aim of the project is to raise awareness of illegal work by means of workshops. Moreover, information services have been opened in 51 municipalities, and training courses have been organised for staff at job centres.

Manuela Galetto, Ires Lombardia