Alitalia agreement provides for employee shareholding and trade union representatives on the board

Since 18 May 1997, three trade union representatives have sat on the board of directors of the Italian national airline, Alitalia, where they represent the interests of the employee shareholders. This development results from the terms of the company's renewed national collective agreement signed on 19 June 1996, which introduced an in-company shareholding programme.

The June 1996 Alitalia collective agreement was reached after two years of difficult bargaining, and is intended to restructure the company, which is beset by severe financial problems. This restructuring involves a reduction of labour costs in exchange for the setting-up of a fund for the purchase of shares set aside for the company's employees. This fund will be created when the European Commission has authorised the ITL 2,800 billion increase in capital envisaged by the restructuring plan. One year on from the renewal of the national contract, the participatory bargaining model envisaged by the Alitalia agreement may be considered of key importance both for improving the competitive position of this company, and regulating industrial relations in the transport sector.

The contents of the Alitalia national agreement

The preliminary agreement was signed by eight of the nine unions present in the company and set out a plan for corporate recovery over 1996-2000, which envisaged a reduction in labour costs amounting to more than ITL 500 billion per year.

The agreement comprised the following points:

• recapitalisation of the company with ITL 3,000 billion provided by IRI (Istituto per la Ricostruzione Industriale), the Italian public holding company, in two instalments - the first in 1996 and the second in the first six months of 1997;
• the setting-up of an independent HCC (High Competitive Carrier) company, known as Alitalia Team, for the reorganisation of flight activity. This company, entirely owned by Alitalia and taking the form of a holding company, has become the employer of Alitalia's flight attendants. The national agreement, subsequently signed on 1 November 1996, provides that new hiring by Alitalia Team will be on less onerous contractual terms than those of Alitalia, but that pay scales for flight attendants will continue as before. An increase in flying hours will also help to reduce hourly labour costs;
• a reduction in ground staff from 11,975 in 1995 to 10,539 by 31 December 2000;
• the development of a company shareholding scheme for employees, amounting to between 20% and 30% of Alitalia's ordinary capital. Employees will be given the option to buy shares in the company by a fund totaling ITL 520 billion divided among the three categories of employees: ITL 182 billion for the 1,800 pilots; ITL 170 billion for the 4,000 flight attendants, and ITL 170 billion for ground staff. Unions representing the shareholding employees have three seats on the board of directors (taking seats formerly held by representatives of IRI) and one on the board of auditors; and
• the setting-up of bilateral bodies to devise projects concerning development plans, customer services, personnel training and organisational models.

Commentary

The Alitalia agreement was welcomed by the social partners, which regard it as a good example of workforce involvement in corporate affairs. In fact, employee shareholding has only begun to spread in Italy during the last 10 years. It still involves only a few companies, mainly banks, insurance companies, state-controlled enterprises, and some private firms (such as Fiat and Olivetti). Moreover, whereas shareholding has to date been regarded mainly as a benefit, the Alitalia case is a first attempt to use an employees' stock option as a tool of corporate finance, at a time when the Italian national airline is in severe financial difficulties.

Making workers more responsible with regard to companies' activities is also viewed with particular favour in the context of the sensitive issue of conflict in the transport industry. In comments that followed the agreement, both trade union leaders and company representatives were hopeful that employee participation in company capital, and the new participatory model of industrial relations, will radically curtail conflict and improve the quality and efficiency of Alitalia's services.

Overall, the agreement can be regarded as an encouraging example of participatory bargaining, at a time when, in Italy and elsewhere in Europe, the model of participatory industrial relations is faced by major difficulties.

Since the signing of the agreement, however, a number of problems have arisen. First, a possible confusion between the representation of workers' general interests and protecting the investment of the worker shareholders has been highlighted. The shares assigned to employees will be managed collectively through a workforce shareholding fund run by the union organisations. The employee representatives on the board of directors, who have been in place since May 1997, are the chair of the pilots' union, Anpac and the general secretaries of Filt-Cgil and Fit-Cisl, while a representative of the Uil Trasporti union has joined the board of auditors. The appointment of these representatives is not strictly linked to the existence of the employee shareholding fund (which has been delayed pending approval of the recapitalisation)

This arrangement has been criticised on the grounds that the presence of trade unionists on the board of directors may obstruct the restructuring process (Mondo Economico, 2 June 1997). More advisable, from this point of view, would be an "employee association" set up on the pattern of that already in operation at the Eni (Ente Nazionale Idrocarburi) energy and chemicals group. This association represents solely the interests of employees as shareholders, and not the general interest of the company's workers.

Finally, the issue of the company's recapitalisation is still open, since it is currently being scrutinised by the European commissioner responsible for transport, Neil Kinnock. Although the first positive effects of the restructuring plan are now apparent, and although the balance sheet for the month of April 1997 showed a profit for the first time in 10 years, the commissioner has found fault with the restructuring plan, deeming it inadequate. He has also suggested that the conditions for public aid for the company's restructuring should be discussed. Negotiations between the Italian delegation, consisting of the Minister of Transport, Claudio Burlando and the managing director of Alitalia, Domenico Cempella, and Mr Kinnock, are currently in progress.

One last problem concerns the renewal of the Alitalia board of directors on 12 June, which has led to enlargement from 13 members to 17. The three union members have criticised this move on the grounds that it is dictated by a partisan logic, in that some of the members are said to be closely connected to political parties (Il Sole 24 Ore, 13 June 1997). (Simonetta Carpo, Ires Lombardia)