Latest trends in atypical employment

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In August 2005, data released by the Italian Social Security Institute (Inps) show that, in Italy, there are about 3.3 million people in atypical employment, the majority of whom are aged between 30 and 39 years. The gradual increase of social security contributions, as established by the Biagi reform, has boosted the social security purse, but has not changed the pessimistic pension forecasts for this group of workers.

Flexibility and precarious employment

In Italy, as in the rest of Europe, there is an ongoing debate on the subject of flexibility and precariousness, further to the introduction of new 'non standard' forms of employment. These issues divide both the political and the trade union world. The trade union organisations had diverging views on the reform of the labour market (Biagi law 30/2003, IT0303103N) carried out by the Italian centre-right government: the Italian Confederation of Workers’ Unions (Confederazione Italiana Sindacato del Lavoro, Cisl) and the Union of General Labour (Unione Generale del Lavoro, Uil) were not prejudicially against the reform, while the General Confederation of Italian Labour (Confederazione Generale Italiana del Lavoro, Cgil) was completely against the reform.

The reform of the labour market is a major issue among Italy’s political alignments: the centre-right coalition considers that the recent reform of the labour market is one of the most important achievements of its governmental action, while the centre-left parties, even if with some internal divergences, seek some changes in the reform.

The 2004 annual report of the National Institute for Social Security (Istituto Nazionale per la Previdenza Sociale, Inps) provided important information for a more detailed evaluation of the impact of the labour market reform. The most relevant issue concerns young people’s access to the labour market. During the past years, despite the low economic growth, companies were more inclined to employ people.

According to many observers, employment probably grew as a result of the increase in new atypical employment forms, which provided temporary and precarious jobs to a number of young people. However, the debate ignores the prospect of a mediocre social security protection, arising from the precarious situation of so many young people, which will determine, during the next 10 years, a situation of social marginalisation and poverty for thousands of workers.

Economically dependent work

Among the atypical employment contracts, economically dependent work represents an increasingly widespread form of employment in Italy (IT0308304F). All freelance workers and employer-coordinated freelance workers are considered to be economically dependent (the duration, performance and remuneration of the work are set by an individual agreement), and are obliged to be enrolled in a scheme specially created for them by Inps (Gestione separata Inps).

The recent reform of the labour market has modified and slightly regulated the non-standard forms of employment previously introduced by the centre-left government (Treu law no.196/97). Ever since the Biagi reform in October 2003, all employer-coordinated freelance contracts (contratti di collaborazione coordinata e continuativa) have to be linked to the realisation of a project, or phases of a project. Moreover, the contract needs to be in written form (IT0307204F) and its meaning made clear in all respects. New rights and benefits have also been introduced for these workers in particular: maternity benefit, sickness benefit (though only in case of hospitalisation) and compulsory accident insurance. Workers’ absence on one or other of these grounds will not imply the end of the employment relationship, just its postponement. The regulations on health and safety at work have also been extended to economically dependent workers.

Extent of the phenomenon

According to the Inps databank on economically dependent workers, the numbers increased by 75% in four years, from less than two million workers in 2000 to 3.3 million in 2004.

The statistical annexes of the 2004 Inps Report provide data divided by sex, showing a well balanced gender distribution; divided by geographical area, showing a predominance of economically dependent workers in the Northern areas (1,828,716); and divided by age, revealing that more than one third of such workers are aged between 30 and 39 years.

Table 1: Number of economically dependent workers registered by age and sex (31.12.2004)
Age <20 20-24 25-29 30-39 40-49 50-59 60 Total
Women 6,311 107,352 280,182 577,937 325,371 176,944 92,099 1,566,196
Men 6,198 76,256 196,945 541,921 385,647 306,523 277,633 1,764,123
Total enrolments 12,509 183,608 477,127 1,092,858 711,018 483,467 369,732 3,339,319

Source: Inps rendiconto 2004

Table 2: Number of economically dependent workers registered by geographical area (31.12.2004)
. North Centre South and Islands
Total enrolled workers 1,828,716 786,104 715,499

Source: Inps rendiconto 2004

According to Giuliano Cazzola and Michele Tiraboschi, well-known national labour market experts, the statistical data released by Inps in August 2005 on economically dependent workers contradict the widely held view that all Italian young people - i.e. those under 25 years as defined at European level - are in precarious employment.

The data, in fact, show, that the number of workers employed on precarious or atypical contracts is lower than the number of those who enter the labour market on a training or work-entry contract. In 2004, there were only 196,117 young economically dependent workers in Italy (6% of the total), compared with 553,000 apprentices, 117,576 young people employed on new work-training contracts and more than 30,000 young workers employed on work-entry (contratti di inserimento) contracts as established by the Biagi law.

According to Mr Cazzola and Mr Tiraboschi, 'today, the majority of Italian young people enter the labour market from the main door, through work-training contracts and not through atypical and precarious forms of labour'.

Pension and social security coverage

From the social security point of view, the situation of economically dependent workers has changed over time.

The compulsory payment of social security contributions for atypical workers was introduced in 1996 with the creation of the Inps separate management fund, further to the Dini reform of the social security system (law 335/1995), in order to provide social security coverage to the workers of a new and rapidly growing segment of the labour market. The creation of this special fund allowed the consolidation, within the Italian labour market, of economically dependent workers, which was a generic definition - introduced by Inps - to indicate workers registered to this fund. Workers who are obliged to pay contributions to this fund are differentiated; the fund includes both workers who pay contributions to other compulsory social security schemes and those who do not.

The obligatory payment of contribution, up to the Biagi law (IT0307204F), included:

  • workers with incomes resulting from a professional activity;
  • employer coordinated freelance workers (collaboratori con contratto di collaborazione coordinata e continuativa);
  • door-to-door salespeople;
  • custom forwarding agents (spedizionieri doganali).

The Biagi reform changed the defined status of many atypical workers but it has also gradually increased social security contributions, from 10% (the initial contribution rate which was equal for all workers) to 14% (in 2002) to 19%, according to various parameters: workers who are enrolled in another compulsory social security scheme still pay 10%, retired workers who continue to work pay 15%, while economically dependent workers, who do not have any form of social security coverage, pay 19% like all other independent workers.

The contributions paid to Inps finance the obligatory fund guaranteeing pensions (old-age, survivors’ and invalidity pensions), which are calculated on the basis of a minimum of five years of contributions.

The current forecasts for the future pensions of economically dependent workers are pessimistic. According to a study carried out by the Centre for Research on Pensions and Welfare Policies (Cerp), entitled Semi-subordinate employment: what pension future?, the estimated pension for these workers will probably be lower than the social state allowance, about 30% of their last salary.

The creation of the fund enabled Inps, within 10 years, to confront a severe deficit situation. In 2004, Inps closed its financial year with a positive balance of EUR 5,264 million (compared with 405 million in 2003). The separate management fund accumulated a net endowment of EUR 22,663 million in 2004. However, it must be underlined that the fund is currently active because only 10% of contributors are close to retirement age and the number of retired workers is negligible.

Representation and collective bargaining

In 1998, the three main Italian trade union confederations, Cgil, Cisl and Uil, set up specific workers’ organisations to represent atypical workers (IT9807327F): the New labour identities (Nuove Identità di Lavoro, Nidil-Cgil), the Association of atypical and temporary agency workers (Associazione Lavoratori Atipici e Interinali, Alai-Cisl and the Committee for employment (Comitato per L’occupazione, Cpo-Uil).

These organisations campaign for the definition of precise juridical regulations and for a clear definition of the field of work and rights of workers employed on atypical contracts. In particular, they ask for: rules for the regulation of individual contracts and for the identification of professional and sectoral profiles; tools to face the precarious situation of the labour market; training; certification of the professional path, a targeted labour market; access to credit; insurance and supplementary pension access; transparency in the management of the Inps separate management fund.

In recent years, the bargaining activity of these trade unions was intense both at national, company and local level (IT0503101N, IT0407303F).

Commentary

The regulation of the labour market is a union priority and an important social issue.

The Biagi law on the reform of the labour market had a positive impact in increasing the inclination of companies to employ people but, on the other hand, it has given rise to many issues related to job stability and security. The most relevant issues, at present, concern atypical workers’ income protection during the phases of transition, protection in case of maternity and illness, and pension perspectives.

The trade union actions, promoted by the sectoral trade union organisations, have not so far greatly influenced the condition of these workers. Collective bargaining is sporadic and concerns a small number of workers employed in big companies or in public administration. Labour flexibility is considered as a socially and naturally accepted condition. Further legislation is required to match labour flexibility, as needed by companies, with greater social security. This will be the task of the social partners and of the new parliament to be elected in the spring of 2006. (Domenico Paparella and Marta Santi, Cesos)

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