Confindustria calls for reforms to boost Italy's competitiveness

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At the annual assembly of Confindustria, Italy's main employers' confederation, held in May 2002, the programme for the next two years presented by its president, Antonio D'Amato, was approved by a large majority. At the meeting, Confindustria stressed the crucial importance for Italy's competitiveness of reforms, especially of the labour market.

On 22-23 May 2002, Confindustria, the largest Italian employers' confederation, held its annual assembly in Rome. Besides the usual plenary session - the main features of which were the address by the Confindustria president, Antonio D'Amato, and speeches by Prime Minister Silvio Berlusconi and other members of the government - a 'private assembly' was held. During this restricted session, votes were held on Confindustria's programme for the next two years and to elect the officials who will support Mr D'Amato. Voting rights in the private assembly are held by representatives of the local-level associations and sectoral federations affiliated to Confindustria. These votes were of great importance as they indicated the level of support for the Confindustria president, now half-way through his term of office (IT0006268F). The programme presented by Mr D'Amato was in fact approved by a large majority of delegates (with around 84% of votes in favour).

Italy's competitiveness

Confindustria's annual assembly was preceded by an important conference, held in Parma in April 2002, during which Confindustria's research centre (Centro Studi) presented the results of large-scale research on Italy's competitiveness. By means of 'benchmarking', the data for Italy were compared with those of the main European countries, and in some cases with the other most industrialised states. The indicators used concerned three broad areas: economic performance; the institutional and legal system; and research and innovation.

Confindustria's analysis found that the factors mainly responsible for Italy's poor competitiveness are a high tax burden, labour market rigidities and distortions in the welfare system (with a high level of expenditure on pensions, limited development of supplementary pension schemes, and less coverage by 'social shock absorbers', such as unemployment benefit, than in other countries).

Italy's system of production is characterised by the key importance of small and medium-sized enterprises, which are generally very efficient and highly competitive. However, according to Confindustria, these firms encounter difficulties in a number of areas of crucial importance for competitive success - research and development, for example - and in many cases they should gear themselves more closely to the international market.

Research and development is of crucial importance for Italy's competitiveness, according to the study, but it is hampered by numerous factors, ranging from the shortcomings of the university system and of research institutes - in which Italy has few centres of excellence - to the small size of many firms and a lack of flexibility. Indeed, Confindustria claims, the rigidity of the labour market dissuades numerous firms from investing in research and development, as this rigidity restricts the possibility of undertaking organisational changes which may entail labour mobility.

According to Mr D'Amato, the Confindustria study shows that Italy requires modernisation which enables innovation to be combined with flexibility

Calls for reform

Mr D'Amato's address to Confindustria's annual assembly dealt with various themes, among them the association's relations with the government and the trade unions. This was a topic of great importance, given that the assembly was held during fierce conflict between the unions and government (IT0205101N) over the latter's proposals for labour market reform (IT0201277F), and most controversially to amend Article 18 of law 300/70 (the Workers' Statute). This Article provides for reinstatement of workers dismissed without 'just cause ' or 'justifiable reason ' and the government plans, for an experimental period, to replace reinstatement with financial compensation for certain groups of workers.

Mr D'Amato denied the existence of any collaboration between Confindustria and the centre-right government, but stated that their views converged on the need for reforms: the government, however, must implement these reforms. As regards the unions, the Confindustria president expressed the hope that their opposition to the government's reforms would not lead to resurgence of conflict. For Confindustria, dialogue with the unions is fundamental.

One of the main points in Mr D'Amato's address was a call for reforms to modernise the Italian economy and make it more competitive. In economic policy terms, according to Mr D'Amato a policy of financial rigour can be compatible with a reduction in the tax burden, with positive effects on investments, and therefore on growth and employment.

The most important of the reforms envisaged by the Confinfustria president is that of the labour market. The recent transposition of the EU Directive (1999/70/EC) on fixed-term work (IT0105282F) and the liberalisation of the job placement system and its opening up to private agencies (though this has not yet been completely implemented) are regarded as important achievements. However, Mr D'Amato hoped that the government would approve all the provisions of the proxy lawon labour market reform, presented in autumn 2001 (IT0201277F), and that it would not concern itself solely with reform of Article 18 but also deal with employment incentives, the 'social shock absorbers' (the schemes which cushion the effects of redundancies and restructuring in some sectors - IT0205204F), and the introduction of 'on-call jobs' and job-sharing.

For Mr D'Amato, reform of the labour market is interlinked with reform of the welfare system: it is important to shift to a 'workfare' system - that is, one based not on benefits but on providing to means to find work. Flexibility should also be increased, for which purpose Mr D'Amato believes that reform of Article 18 is essential.

Commentary

Confindustria held its annual assembly at a difficult time for Italian industrial relations. The outcome of the restricted session showed that Mr D'Amato enjoys greater support than some external observers thought, given that he had been criticised by some members of Confindustria for what they saw as his excessively tough line on reform of Article 18.

As regards content, the Parma conference and the annual assembly have highlighted the fact that Confindustria regards reforms as of crucial importance. The study by Confindustria's research centre contains a wealth of data and is an important document for the analysis of Italy's competitiveness.

However, the excessive emphasis placed by Confindustria, and by Mr D'Amato in particular, on labour market rigidity as a critical factor is somewhat perplexing. Suggesting that such rigidity hampers the growth of firms, investments in research and development etc, may be too simplistic. (Marco Trentini, IRES Lombardia)

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