Path to reform of 1993 collective bargaining agreement

The tripartite agreement of July 1993 on the Italian industrial relations and collective bargaining system has been the subject of debate for many years. These discussions have finally led to an experimental reform of January 2009. The reform was agreed by the social partners, with the exception of the General Confederation of Italian Workers. The proposals maintain the country’s two-tier bargaining structure, based on sectoral and decentralised agreements.

The July 1993 agreement has been regarded as a sort of ‘basic agreement’ for Italian industrial relations, since it ended more than two decades of under-institutionalisation of collective labour relations. The tripartite agreement introduced a number of rules on the coordination of collective bargaining, the introduction of strike-free periods during the renewal of collective agreements and plant-level trade union structures. Since the early 2000s, however, the agreement has been at the centre of a wide debate on the opportunity to introduce substantial amendments, which has eventually led to the experimental reform of January 2009 agreed by the social partners, with the notable exception of the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil) (IT0902059I).

Summary of July 1993 agreement

The 1993 tripartite agreement included numerous provisions with a direct impact on collective bargaining and industrial relations. In summary, the basic elements of the protocol were as follows.

  • An income policy system established that the forecast inflation rates set annually by the government would be the essential reference for pay increases to be agreed in industry-wide bargaining.
  • A dual bargaining structure was introduced based on industry-wide accords and decentralised bargaining, either at company or territorial levels, according to the established sectoral practices.
  • Sectoral agreements set pay increases in line with the income policy parameters and could possibly take into consideration economic, labour market and sectoral trends. They also defined common normative protections. The normative part of the agreement had a four-year duration, while the economic content was negotiated every two years, taking into account the difference between forecast and actual inflation.
  • Industry-wide bargaining defined the scope of decentralised bargaining. Company bargaining covered issues and elements that were different from those included in sectoral agreements. Pay elements introduced at company level should be linked to productivity, quality and competitiveness improvements, or company economic performance. The duration of decentralised agreements was four years.
  • Agreement renewals had to respect a certain timing and follow a specific procedure, including a conflict-free period of four months, during which the parties should not take unilateral action.
  • A joint trade union representation body or unitary workplace union structure (Rappresentanza sindacale unitaria, Rsu) was established at workplace level, which is entitled to participate in decentralised bargaining together with the territorial structures of the trade union signatories to the sectoral agreement.

Debate over bargaining reform

The discussion over the reform of the Italian bargaining system was formally initiated by the government appointment in September 1997 of a special committee to assess the outcomes of the July 1993 agreement, as expressly envisaged by the accord itself (IT9709212F). The committee was chaired by Gino Giugni, who was the Minister of Labour at the time when the agreement was reached; the committee comprised a high-level group of experts and academics in economics, sociology, industrial relations and labour law, including the late Marco Biagi (IT0203108N) and Massimo D’Antona (IT9905112N).

The final report by the committee highlighted a number of issues and proposals (IT9803223F), which were then taken up in the wider debate (IT9907250F), including the introduction of a greater decentralisation of bargaining and more specific functional specialisation of the two levels of negotiations. The possibility of including ‘opening clauses’ in sectoral agreements to allow a divergence from the standard terms – following the German model (DE9709229F) – was also considered, as was a reform of workplace trade union representation, with the introduction of methods for measuring union representativeness.

Interim pact

Despite the contribution of the report by the Giugni committee, difficulties in reaching an agreement on modifications to the bargaining structure eventually led to the confirmation of the existing system by the 1998 Social pact on development and employment (IT9901335F).

However, the broad ongoing discussion did not halt. Although social partners and academics have widely recognised the importance of the July 1993 agreement for the regulation of Italian industrial relations and its crucial contribution to guarantee wage moderation and macroeconomic stability, a number of issues have remained at the centre of the debate for the past 10 years. In addition to some more technical questions, such as the duration of the industry-wide agreements, the two main areas of contention have been the income policy framework and the relative importance of sectoral and decentralised bargaining.

According to the trade unions, the income policy framework has determined a disproportionate erosion of real wages (IT0310206F). With regard to the relative importance of sectoral and decentralised bargaining, the employers and some trade union confederations have been advocating a substantial shift of the focus of negotiations to the workplace or territory (IT0412306F, IT0508206F, IT0508307F). On the other hand, Cgil has always maintained that the primary position of industry-wide bargaining should be preserved to better guarantee worker protection at national level.

Progress on reforms

In 2008, the discussion over the reform of the bargaining structure intensified and the social partners drafted various documents to identify possible amendments to the existing rules.

Trade union proposals

The three major trade union confederations – Cgil, the Italian Confederation of Workers’ Trade Unions (Confederazione italiana sindacati lavoratori, Cisl) and the Union of Italian Workers (Unione italiana del lavoro, Uil) – issued a joint document on possible changes to the collective bargaining system in May 2008 (IT0806049I). The trade union document confirmed their support for a two-tier bargaining structure, based on sectoral and decentralised agreements, in which industry-wide agreements would continue to set common economic and normative protections for all industry workers at national level. In addition, the document suggested the harmonisation of rules in the private and public sectors.

More specifically, the trade union document emphasised the need to introduce some technical innovations, such as a reduction in the number of industry-wide agreements and a three-year duration for collective agreements, for both the economic and normative parts. With regard to the economic part, the trade unions suggested adopting a new reference indicator for the protection of real wages – a ‘realistically predictable inflation rate’, based on the Harmonised Indices of Consumer Prices (HICP) of the European Commission. The document thus proposed the effective termination of income policy, since the reference for wage increases would cease to be the forecast inflation rate – that is, an economic policy instrument.

Furthermore, the trade unions demanded a reform of representation and representativeness in the private sector, with the establishment of a certification authority; they suggested that the National Council for Economic Affairs and Labour (Consiglio nazionale dell’economia e del lavoro, Cnel) could adopt this role.

Employer guidelines

In September 2008, the Confederation of Italian Industry (Confederazione Generale dell’Industria Italiana, Confindustria) published its guidelines for the negotiations on the collective bargaining reform. The document endorsed the two-level structure of collective bargaining, but demanded the introduction of certain measures to simplify the procedure of collective agreement renewals. Such measures included:

  • the extension of the no-strike clauses to a seven-month duration – six months before the agreement expiration date and one month after;
  • a reduction in the duration of collective agreements;
  • some forms of compensation for a delay in renewing the agreement;
  • specific reconciliation and arbitration measures.

The Confindustria proposal also suggested replacing the planned inflation rate with a more ‘predictable three-year index’ calculated by ‘a third party of recognised authority and reliability’. The document envisaged the possibility to introduce – in industry-wide agreements – a special pay element for workers employed in enterprises where company-level collective bargaining does not take place. It also proposed specific derogations to the economic and normative parts of the industry accords through decentralised bargaining. However, the Confindustria proposals were criticised by the trade unions and especially by Cgil, which practically abandoned the negotiations at the beginning of October 2008.

Joint social partner position

The discussion continued between Confindustria and Cisl and Uil and led to a common document, which identified a basic set of principles for the collective bargaining reform. Cgil declared its willingness to participate in a larger discussion on the bargaining structure, notwithstanding its criticism of the document signed by Confindustria, Cisl and Uil. The main provisions included in the joint document envisaged the following amendments:

  • a three-year duration for collective agreements;
  • special wage elements for workers excluded from company-level bargaining and with only basic pay;
  • the adoption of a new indicator for the preservation of real wages based on the HICP, excluding imported energy;
  • a request for structural economic incentives to promote the spread of decentralised agreements.

In the following months, similar joint documents on the collective bargaining reform have been signed by Cisl and Uil and other employer organisations in the commerce and trade sector and representing small and medium-sized enterprises (SMEs). In general, these documents replicate the main measures set out in the joint Confindustria, Cisl and Uil document. The proposals emphasise the fundamental role played by bipartite bodies in the development of appropriate services for workers and companies, following the model introduced for craftworkers at the end of November 2008 (IT0812059I).

Roberto Pedersini and Diego Coletto, University of Milan

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