Italy has no minimum wage prescribed by law. Minimum wages are set through collective agreements at sectoral level, and the majority of employees in Italy are covered by a collective bargaining agreement in which wages are set. This article outlines the latest positions (2023) of the government and the parliament regarding the introduction of a statutory minimum wage.
Basic minimum pay in Italy consists of basic wage elements (which are laid down in national collective bargaining agreements) and further wage elements (additional wage elements that are set by individual employment contracts). Against this backdrop, the issue of a statutory minimum wage represents a ‘battleground’ between the Italian government and its opposition. The introduction of a statutory minimum wage has been on the political agenda for some years now. During the second Giuseppe Conte government (October 2019 to February 2021), several bills on a statutory minimum wage were introduced into the Italian parliament 1 ; however, none of these bills were passed.
Under the Mario Draghi government, there was renewed discussion of whether a legal minimum wage should be introduced in Italy, following the European Commission’s proposal for a Directive on Adequate Minimum Wages (October 2020). In July 2022, at a press conference held after a meeting with the trade unions, Prime Minister Mario Draghi and Labour Minister Andrea Orlando announced the possibility of introducing a type of minimum wage. With this proposal, the wage figure would be linked to the overall effect on wages of the most widespread collective agreements or those signed by the most representative trade unions, by sector, without setting a minimum cross-sectoral figure by law. However, political momentum for this initiative declined following the fall of the Draghi government in 2022. The current debate on a statutory minimum wage is taking place in the Italian parliamentary committees.
It is important to understand that the collective bargaining system in Italy is not regulated by law or decree, as paragraphs 2–4 of Article 39 of the Italian Constitution, which refers to the operation of trade unions, have never been regulated by law. The entry into force of the EU Directive on Adequate Minimum Wages has not led to any direct or indirect effects on the Italian way of setting minimum wages in collective agreements so far. The debate on the need to reform the collective bargaining system and the industrial relations model in Italy is very lively and involves a variety of stakeholders. The most representative confederal trade unions and employers’ organisations, which are usually signatories of agreements that guarantee better working conditions, have long been fighting against what are known as ‘pirate’ collective agreements. These are collective agreements signed by non-representative trade unions and employers’ organisations that only guarantee lower minimum wage thresholds and tend to worsen working conditions, and thus produce a social dumping effect with downward wages. For these reasons, social partners are fighting against the proliferation of pirate collective agreements and calling for greater quality in collective bargaining.
This article outlines the latest positions of the government and the parliament in 2023 regarding the introduction of a statutory minimum wage. The positions of both the government and the opposition parties are described below.
On 30 November 2022, the right-wing majority supporting the Giorgia Meloni government declared its aversion to the introduction of a statutory minimum wage in Italy. According to the government, a statutory minimum wage is not the right solution in a country where national collective bargaining agreements are widespread, and it would be more effective to extend and strengthen the national labour contracts and reduce labour taxes. According to the Prime Minister, the EU Directive on Adequate Minimum Wage will not represent an ‘external constraint’ requiring Italy to introduce a statutory minimum wage. The parliament approved the right-wing’s united motion that commits the government to the following initiatives regarding worker’s rights.
[The government will] achieve the objective of protecting workers’ rights not by introducing the minimum wage, but through the following initiatives: activate interlocutory paths between the parties not involved in collective bargaining; extend the effectiveness of the comparatively most representative national collective agreements … to the categories of workers not included in national bargaining; initiate a process of analysis with respect to national collective bargaining, which, especially in certain areas, involves a large number of workers.
(N. 1/00034, signed by Chiara Tenerini (Forza Italia))
The government aims to strengthen national collective bargaining, extending it to those sectors that do not engage in this sort of collective bargaining, and to reduce labour taxes. At the same time, trade unions demand that the government protect all forms of work, assigning a general value to collective agreements in the Italian collective bargaining system, making them applicable to all, and thus also approving a statutory minimum wage.
Six proposals have been drafted by the opposition parties. The most salient aspects of the proposals are summarised below.
The proposal looks at the case law which interprets Article 36 of the Italian constitution in relation to ‘proportionate and sufficient’ remuneration for workers and how it relates to ‘wage authorities’ and their function in national collective bargaining.
Workers have the right to a remuneration that is proportionate to the quantity and quality of their work and to ensure free and dignified existence for themselves and their families. Maximum daily working hours are established by law. Workers have the right to a weekly rest day and to be paid for annual holidays. They cannot waive this right.
In the proposal, the statutory minimum wage envisaged by the most representative collective bargaining agreements (national collective bargaining agreements) is extended to all workers. The gross wage envisaged by the national collective bargaining agreements (which are the most widespread collective agreements or those signed by the most representative social partners) is the only system of measurement for defining the proportional and sufficient wage to be paid to workers.
The aim of the proposal is to fight against downward wage competition through the remuneration agreed in the collective bargaining agreements signed by the most representative employer and trade union associations.
The proposal refers to the overall effect on wages, which is defined as the entire salary owed to workers once a specific collective agreement is applied to them. ‘Proportionate and sufficient total remuneration’ means the overall sum paid to the workers, which must be no less than that provided for in the national collective bargaining agreements signed by the most representative associations at national level whose scope of application is strictly connected to the employer’s main activity.
The proposal suggests establishing an interinstitutional commission, which could identify the gross wage if it is not defined in the national collective bargaining agreements or is not stipulated in an ad-hoc interconfederal agreement. In any case, the minimum wage paid to workers cannot be less than €9.50 per hour, gross of social security contributions.
This proposal intends to support collective bargaining autonomy, with particular regard to the national collective bargaining agreements signed by the most representative trade unions and employer organisations. It envisages extending the minimum wages contained in these agreements to the categories of workers not included in national bargaining. In the proposal, the minimum overall economic conditions envisaged by the national collective bargaining agreements constitute the only system of measurement for defining the proportionality and sufficiency of the remuneration, and apply to all workers in the given sector who are employed anywhere in the national territory.
For those production sectors not covered by collective bargaining, the minimum wage is fixed annually by a decree of the Ministry of Labour and Social Policies, in agreement with the Conference of Regions and Autonomous Provinces, and having heard the views of social partners, taking into account the salary levels in force in related sectors. There are sanctions for employers who violate this article, in addition to compensation for economic damages suffered by workers.
This proposal also aims to legislate for the right to a fair salary provided for in Article 36 of the Italian Constitution. Collective bargaining implementing the constitutional provisions depends on the parties being representative, following judgment No. 51 of the Constitutional Court of 26 March 2015, in which the court identified a system of measurement of sufficient and proportionate remuneration in the cooperative sector in collective bargaining agreements signed by the most representative trade unions and employer associations. It transposes into law the principle that, when determining the correct remuneration pursuant to the right to a fair salary, reference must be made to the industry-wide agreement of the trade unions and employer associations that are most representative at national level in the sector. The minimum wage established by the national collective bargaining agreements, therefore, must apply to all workers in the sector, wherever they are employed within the national territory.
In areas of activity not covered by the national collective bargaining agreements, the minimum guaranteed wage – that is, the minimum salary that employers must pay any worker to whom they apply the discipline of subordinate work, including coordinated and continuous (self-employed) workers (Article 2 of Decree-law No. 81 of 15 June 2015) – is based on the amounts and methods determined by a special joint commission for representation and collective bargaining.
The proposed joint commission must, within 18 months of its formation, define the areas of national collective bargaining, the criteria for identifying the national collective bargaining agreements that are most representative in each area, the measurement and certification criteria for the employer associations and trade unions, the ownership and effectiveness of national and decentralised collective bargaining, the relationships between the different contractual levels from a coordinated perspective, the guaranteed minimum wage for areas of activity not covered by collective agreements, and the criteria for updating this minimum wage.
Similar to the above proposal by Mauro Laus, this bill aims to legislate for the right to a fair salary provided for in Article 36 of the Italian Constitution.
The proposal provides for the simultaneous use of the extension of collective agreements and the setting of a statutory minimum wage, even though they are different, and potentially incompatible, instruments.
The definition of ‘proportionate and sufficient overall remuneration’ considers the overall sum paid. This amount must not be lower than that provided for by whichever national collective bargaining agreements is in force in the sector in which the company operates (stipulated by the employer associations and the most representative trade union organisations at national level) and is objectively most closely related, in a qualitative sense, to the employer’s activity. The minimum hourly salary defined by the national collective bargaining agreements cannot, however, be less than €9 gross pay.
If multiple national collective bargaining agreements are applicable, the overall ‘proportionate and sufficient remuneration’ cannot be less than that provided for by the national collective bargaining agreements in the given sector.
The Ministry of Labour and Social Policies is expected to set up a commission responsible for assessing the update of the minimum hourly salary, monitoring its compliance with the overall proportionate and sufficient salary, and identifying the prevailing national collective bargaining agreements.
Similar to the above proposal by the Five Star Movement, this proposal provides for the simultaneous use of the extension of collective agreements and the setting of a statutory minimum wage. The minimum hourly salary defined by the national collective bargaining agreements cannot, however, be less than €10 gross pay.
It extends the application of the statutory minimum wage to coordinated and continuous (self-employed) workers and those working under other forms of contract, including self-employed workers.
To respect the right to a fair salary, this proposal establishes a minimum hourly wage of €9, with a special joint commission established to monitor and update the minimum hourly wage and decide on administrative fines if employers violate the provision. The social partners are expected to update the national collective bargaining agreements in compliance with this standard.
The proposed statutory minimum wage covers all types of employment relationships including coordinated and continuous workers, occasional collaborators, and ‘all employment relationships whose remuneration is established on an hourly basis’.
The proposal provides that the result/productivity bonus (management by objectives), within the annual limit of €6,000 gross, and the wage increases paid to workers on the basis of decentralised bargaining do not count as taxable income.
Following the entry into force of the EU Directive on Adequate Minimum Wage, no direct or indirect effects on the setting of minimum wages in collective agreements in Italy have been detected so far. On the one hand, the directive cannot provide the perfect solution given that national collective bargaining systems are so prevalent in the industrial relation system in Italy. On the other hand, the introduction of a statutory minimum wage could be necessary to fight the precarious and poor working conditions, and especially considering Italy is the only country in the OECD where the average annual wage has decreased over the last 30 years.
It appears unlikely that a statutory minimum wage will be approved in the near future. The Meloni government (2022) has already announced its aversion to the introduction of a statutory minimum wage. Instead, workers’ rights should be protected through the extension of the most representative national collective bargaining agreements.
The debate, however, revolves around social partners, and the need to reform the collective bargaining system and the industrial relations model in Italy. To avoid the proliferation of pirate collective agreements, the trade union and employer organisations call on the government to intervene and promote high-quality collective bargaining, and to give more prominence to collective agreements signed by the most representative organisations, including through legislating for the right to a fair salary, as enshrined in Article 36 of the Italian Constitution.
Image © Kamy
Bill Catalfo et al. S.658 (2018), Bill Nannicini et al. S.1132 (2019) and Bill Catalfo et al. S2187 (2021).
