Social partners divided on wages and inflation

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In August 2002, inflation in Italy started to rise. Under the country's current incomes policy, recently confirmed in the tripartite 'Pact for Italy', pay rises in forthcoming sectoral collective bargaining should not by higher than the government's inflation forecast for 2003, which is 1.4%. Trade unions believe that, given rising inflation, pay increases at this rate will result in a cut in workers' purchasing power, and have asked the government to increase the inflation forecast. The government and employers are opposed to any such revision.

The National Institute of Statistics (Istituto Nazionale di Statistica, Istat) provisional Consumer Prices Index (CPI) for August 2002 showed - after a slow downward trend over three months - an increase of 0.1% compared with July 2002 and of 2.3% compared with August 2001. Furthermore, manufacturing prices, after a downward trend which started in October 2001, increased by 0.3% in July 2002 compared with June 2002. Experts believe that this increase in prices is due to developments within the Italian market, and not to 'imported' inflation such as that caused previously by increases in the price of oil.

Many organisations - from the Italian Union of Chambers of Commerce, Industry, Artisans and Agriculture (Unioncamere) to consumers’ associations - believe that the real inflation rate is higher than the official rate calculated by Istat. According to many experts, the products that Istat uses as a reference (the so-called 'basket') are inappropriate and obsolete for calculating the inflation rate. The introduction of the euro single currency at the beginning of 2003 has also led many traders to 'round up' prices. According to consumers’ associations, this rounding up of prices has had negative effects on Italian families: they claim that since January 2002 each Italian family has spent about EUR 1,000 more than during the same period in 2001. Given such criticisms, the Chamber of Deputies' parliamentary commission for productive activities has decided to launch a survey of prices and tariffs.

Clothing, footwear and agricultural products have recorded the highest increases in prices. The cost of car and motorcycle insurance (which is compulsory) has increased in some cases by 300%. Electricity and gas prices and road tolls have also increased.

The inflation situation alarms trade unions, which have asked the government to review the predicted inflation rate of 1.7% for 2002 and the 1.4% rate forecast for 2003 in the government's recent economic and financial planning document (Documento di programmazione economica e finanziaria, Dpef). Under the terms of the tripartite agreement of 23 July 1993 on incomes policy, the wage increases provided for by national collective agreements to be concluded in autumn 2002 should not exceed the forecast inflation rate. This approach was confirmed in the 'Pact for Italy' (Patto per l'Italia) signed by government and the main social partner organisations - except the General Confederation of Italian Workers (Confederazione generale italiana del lavoro, Cgil) - in July 2002 (IT0207104F). The unions believe that new pay agreements based on an inflation rate so far from the real one will not guarantee workers' purchasing power.

According to Paolo Nerozzi, the confederal secretary of the General Confederation of Italian Workers (Confederazione generale italiana del lavoro, Cgil), maintaining the inflation forecast at 1.4% 'shows that the only social partner of the government is Confindustria[Italy’s main employers’ association]'. Pierpaolo Baretta, confederal secretary of the Italian Confederation of Workers' Unions (Confederazione italiana sindacato lavoratori, Cisl) stated that 'incomes policy provides for a predicted inflation agreed upon by the social partners, and the social partners have not agreed the 1.4% rate. The government is making a mistake in keeping at this figure, which cannot be attained.' Adriano Musi, the deputy secretary general of the Union of Italian Workers (Unione italiana del lavoro, Uil) said that reference should be made to European inflation forecasts of 1.9% in 2003.

Confindustria, by contrast, invited the government, at a meeting on 2 September 2002, to keep to the predicted inflation rate of 1.4% and to reduce by two percentage points the tax burden on companies - as provided for by the 'Pact for Italy' (Patto per l'Italia) on the labour market, the tax system and the South of Italy, signed by government and the main social partner organisations (except Cgil) in July 2002 (IT0207104F).

The centre-right government - facing a major public deficit for 2002 which makes it difficult to respect the parameters of the EU's Economic and Monetary Union (EMU) stability pact - has suspended by decree until 31 December 2002 planned increases in electricity, rail, gas, post and road prices. As regards the trade unions' request to review predicted inflation rates, the labour minister, Roberto Maroni, does not intend to change the forecast rate. According to the government, under the terms of the 1993 incomes policy agreement, any possible decrease in purchasing power due to higher than forecast inflation should be recovered 'later on'.

Although trade unions are united in voicing criticisms of the government on inflation, their unity of action is under pressure in the area of the forthcoming renewal of national sectoral collective agreements. The main divisions concern the respect of incomes policy commitments, as set out in the 1993 agreement. While trade unions in the public sector are drawing up a unitary platform of demands that will meet the parameters set by the 1993 agreement, in the metalworking sector a unitary platform will be hard to achieve because the Italian Federation of Metalworkers (Federazione Impiegati Operai Metallurgici, Fiom), affiliated to Cgil, has decided to demand higher wage increases 'exceeding incomes policy'.

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