Milan employment pact assessed - one year on

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In February 2000, an employment pact was signed for the city of Milan, Italy, with the aim of fostering the employment of people from socially disadvantaged groups. One year later, projects have been approved which involve the creation of around 1,000 jobs. The city council and the social partner organisations which signed the agreement are substantially satisfied with these results, though the Cgil trade union confederation - which did not sign - is still strongly critical of the Milan initiative.

In February 2000, an "employment pact" (Patto per il lavoro) was signed in Milan in order to promote the entry into employment of people who are in a weaker position in the labour force (IT0003264N), in particular: inactive or unemployed immigrants; socially, psychologically or physically disadvantaged people; and workers aged over 40 either on redundancy schemes or unemployed because of company restructuring. Under the pact, the creation of new jobs occurs through the submission of specific projects by employers to a tripartite committee (the "concertation committee") made up of representatives of all the parties to the agreement. If the project is approved by the committee (unanimous approval is required), employers may use the forms of flexible employment envisaged by the pact: fixed-term contracts, training/work contract s, traineeships, employment grants and "freelance work coordinated by the employer" (collaborazioni coordinate e continuative) (IT0011273F).

In particular, the pact extends the possibility of using fixed-term contracts to recruit the disadvantaged people targeted by the job-creation projects, and by firms with fewer than five employees. It also envisages the use of such contracts for the hiring of persons already employed by firms as "coordinated freelance workers". Work entry for the people concerned is facilitated by a training programme, which is intended to help "stabilise", at least partially, the employment relationship. Negotiations on the pact were long and difficult and caused a split between the trade union confederations (IT9908251F): while Cisl and Uil signed the final agreement, Cgil was severely critical of the initiative, arguing that the use of flexible forms of employment - especially fixed-term contracts - on the basis of subjective criteria introduces forms of discrimination among workers. The other signatories were the various local authorities and employers' organisations.

The results

The concertation committee began its work towards the end of March 2000, when the first projects were submitted by employers. By the beginning of December 2000, the committee had met 19 times, approving projects for the creation of a total of 981 jobs. Company requests concerned 627 immigrant workers, 342 workers aged over 40, and 12 persons suffering from psycho-physical and social disadvantages. The projects envisaged short training courses paid for by the employer for 521 workers, while the other 460 workers should attend preliminary training courses financed by the European Social Fund or the provincial and regional vocational training programmes.

The employers' associations coordinated and promoted either their own projects or those organised by their members: the Association of Small Firms (Associazione Piccole Imprese, Api) submitted schemes - especially in the metalworking sector - for the creation of 105 new jobs; the crafts and small firms organisations applied to hire 200 workers; the cooperative associations asked for 80 auxiliary workers in social-welfare services; and Assolombarda, the employers' association for the province of Milan affiliated to Confindustria, promoted projects by its members for the creation of 140 jobs.

After the first few months of 2001, the total number of new jobs envisaged by the projects approved has risen to 1,040. Compared with the figures projected in the approved initiatives, at present 128 new workers have actually been hired, while another 68 are on training courses. The majority of employment contracts have been of open-ended type, while around one-quarter of them have been fixed term.

With a view to implementing the pact, a "Milan Labour Office (Sportello Milano Lavoro)" was opened in July 2000 in order to improve the match between labour demand and supply. The office runs a database containing the CVs of persons wishing to be involved in the projects set up under the pact. Personal details are collected by means of interviews, during which information is also given about the career guidance services and training courses available. At the beginning of March 2001, the database contained 1,200 CVs. Moreover, the office screens applicants for the various projects and, after a meeting to discuss the jobs, type of contract and training on offer, sends candidates to firms or training centres for them to make the final selection.

In the course of 2000, the implementation of a project submitted by Manpower (the multinational temporary work agency) highlighted possible forms of collaboration between the Milan Labour Office and temporary work agencies, based on access to the office's database. The latter, in fact, is an important source of information, because it is compiled in close collaboration with the local associations and institutions that act as points of reference for the pact's priority target audiences, for instance immigrants.

Assessments by the parties

Among the trade unions, probably the greatest support for the Milan employment pact has been provided by Cisl. One year after the signing of the pact, the Milan Cisl organisation is substantially satisfied with the initiative. However, Fulvio Colombo, a member of the provincial secretariat who is responsible for the project, does not deny that there have been problems. In the first few months, for example, the delayed approval of projects, due to the fact that the concertation committee was still in its start-up phase, caused difficulties because it was impossible to respond promptly to firms' requests. The evaluation and approval process is now more rapid, and in order to streamline the committee's work still further, a "fast-track" procedure is being discussed whereby the authorisation to proceed with hirings is granted immediately, while projects will be fully evaluated later.

An important concern for Cisl has been to ensure respect for the principles enshrined in the pact: the creation of additional employment by means of specific projects, and the guarantee that work is combined with training in order to "stabilise" jobs. The former principle - ie that projects should create new jobs - has led to the shelving of some initiatives until they have been thought out in more detail, and to a request that collaboration with the temporary work agencies should concern specific projects, rather than merely providing the agencies with access to the Milan Labour Office database. Moreover, in Cisl's view, the linkage between training and employment has not been entirely satisfactory during the first few months of the initiative: first, because some projects have proposed what are essentially only training schemes, so the firms concerned have been asked to pledge that they will hire the trainees once they have completed the course; second, because, in the majority of cases, only initial training is given, and using funds provided by the European Social Fund or the provincial and regional administrations.

According to Cisl, this has given rise to two main problems: a long delay before the effective start-up of projects while waiting for approval of the training initiatives, which in some cases has prejudiced the effectiveness of the projects themselves; and the scant availability of continuing training, which Cisl believes should be one of the most important means to ensure the stable employability of disadvantaged persons. Nevertheless, according to Mr Colombo, the principal merit of the Milan pact is that it looks for new ways to ensure non-precarious entry into employment by groups of persons who would otherwise be largely excluded from the labour market, with little chance of escaping a "marginalisation trap".

Cgil is still hostile to the Milan pact. Giorgio Rollo of the Milan Chamber of Labour (Camera del Lavoro di Milano) (the Cgil's provincial structure) explains that, first, Cgil continues to oppose any form of employment flexibility based on the subjective characteristics of the workers concerned. Second, Cgil considers that the Milan pact has been largely a failure in terms of the number of jobs that it has actually created. Third, Cgil maintains that the use of fixed-term contracts in order to promote the employment of disadvantaged workers - the issue that provoked the trade union split over the agreement - has proved to be not just discriminatory but also ineffectual. According to Mr Rollo, the small number of workers hired on this type of contract under the pact demonstrates that the signatories were wrong to insist that the broader possibility for the use of fixed-term employment should be kept in the final version of the agreement, rather than eliminating it and placing the emphasis on training, as the Milan Cgil had wanted.

The employers' associations are generally positive in their judgment of the employment pact, first because it has introduced some innovations in the use of certain forms of employment relationship, such as fixed-terms contracts and employer-coordinated freelance work, and second because it promotes the employment of people in weak segments of the labour force. A certain delay in setting up the structure and procedures defined by the pact was to be expected, and has not caused serious and general problems. According to the employers, the strengths of the initiative are the guidance and screening services provided by the Milan Labour Office and the training opportunities guaranteed by the pact.

According to the Milan city council, the initiative is to be judged positively because it provides for an important innovation in terms of schemes to help people from disadvantaged groups, in that it provides a service specifically intended to enhance the match between labour demand and supply. As regards results, although the number of new jobs created is apparently low, it is more than those achieved by other provincial initiatives aimed at all groups of workers. Another important aspect of the project, according to Ave Salvoni, head of the Milan Labour Office, is that it represents a concrete opportunity to engage in social dialogue at the local level. The role of the concertation committee - which approves and supervises each individual project and works on the basis of decisions taken unanimously - ensures that all issues are thoroughly examined and fosters cohesion among social partners. Ave Salvoni believes that the close control exercised by the concertation committee undermines the reasons cited by Cgil for not endorsing the pact. If Cgil had signed the agreement, it could have made a major and effective contribution to the committee's work. Moreover, again according to the head of the Milan Labour Office, firms have an incentive to submit projects so that they can gain access, not to otherwise unavailable forms of work flexibility, but rather to the screening and training services available under the scheme; and it is only the long time taken to approve training projects, especially European ones, that has delayed the start-up of numerous projects.

Commentary

The first months of implementation of the Milan employment pact have highlighted various aspects of local-level social dialogue to promote employment. First, direct action to enhance the match between labour demand and supply may be hampered by the time-frame and procedures of social dialogue, which require the devising of specific projects and evaluation by the concertation committee. This may lead to a mismatch between the needs of firms and the effective availability of workers. However, in this case the structure of social dialogue is of particular importance, because it concerns groups of disadvantaged people. Indeed, this is not merely a question of matching labour demand and supply already in existence, but in many cases of "creating" supply and drawing on resources and potential often excluded from the labour market. Consequently, of crucial importance is integration among: the office which compiles the database of job candidates and furnishes counselling and training services; the associations and public and private organisations which work with disadvantaged people; and the concertation committee which appraises and approves the projects.

The second crucial aspect is the relationship between employment creation and training, since this is essential for the occupational integration of disadvantaged people. In this regard, the direct involvement of the public institutions in the provision of financial resources and training is still of key importance. Whilst on the one hand the social importance of the work entry of disadvantaged people fully justifies public intervention, on the other hand total reliance on public resources may restrict the effectiveness of measures by delaying the start-up of projects, and it may also mean that firms involve themselves in training and work integration schemes to only a limited extent. Probably, less traditional and less structured forms of training, with a greater overlap with work, may enable more rapid and efficacious entry into employment by workers. In other words, it may be useful to extend the partnership approach to training as well, perhaps supporting it with specific incentives and forms of co-financing.

Finally, as regards the forms of work flexibility which are able to foster employment creation, the issue of fixed-term employment has still not been resolved. Cgil's opposition to an extension of this arrangement has also been apparent in the current negotiations on the transposition into Italian law of EU Directive (1999/70/EC) on fixed-term work (IT0102277F). It is precisely these negotiations, still in progress and now sustained by government mediation, that may yield a solution agreed by all the social partners and thereby give further impetus to local concertation on job creation. (Roberto Pedersini, Fondazione Regionale Pietro Seveso)

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