Cgil presents package of four bills on labour market reform

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In March 2003, Cgil, the largest Italian trade union confederation, presented four 'voter initiative' bills to parliament, having collected over 5 million signatures in their support. The bills aim to: reform the 'social shock absorbers' and employment protection system; provide greater guarantees against unfair dismissal; speed up the arbitration of dismissal disputes; and extend the rights of 'atypical' workers. The voter initiative bills are intended to act as a legislative alternative to a bill on reform of the labour market which the government has submitted to parliament.

Discussion has been in progress for many years on reform of the Italian labour market and of the system of social shock absorbers - the measures which seek to protect workers affected by job losses and restructuring (IT0205204F). The Italian system of social protection has serious shortcomings as regards the protection of dismissed workers, job-seekers and unemployed people. Today, the accumulation of numerous legislative acts over the years has fragmented the various interventions and produced a 'dual' system whereby protection is provided for certain categories of firms and workers (those in large-scale manufacturing industry) and not for others (small firms and the services sector).

In this context, on 15 November 2001 the centre-right government approved a proposal for a 'proxy law' (No. 848) on the labour market (IT0201277F) - a proxy law means that parliament delegates to the government the power to legislate on a particular issue. However, the government’s bill brought harsh criticism from the trade union confederations, especially with regard to the parts concerning: amendments to Article 18 of law 300/70 (the Workers' Statute), which provides for reinstatement of workers dismissed without 'just cause ' or 'justifiable reason ' (IT0112127N); the reform of the social shock absorbers; and unemployment benefits and incentives. As a result of these protests (IT0205101N), the government proposed removing the most controversial aspects from the proposed proxy law and transferring them to another bill (No. 848bis), which was to be discussed separately. After this initiative, trade unions took diverging positions. The General Confederation of Italian Labour (Confederazione Generale Italiana del lavoro, Cgil) refused to resume negotiations, while both the Italian Confederation of Workers’ Unions (Confederazione Italiana Sindacato Lavoratori, Cisl) and the Union of Italian Workers (Unione Generale del Lavoro, Uil) considered the changes to the bill as a sign of the government's willingness to engage in dialogue

Negotiations thus continued without Cgil (IT0205204F and IT0206102N) until July 2002, when the government and all the social partners but Cgil signed the 'Pact for Italy' (Patto per l'Italia), a national agreement on the labour market, the tax system and the South of Italy (IT0207104F). Cgil, however, organised protests against the measures proposed in the Pact and held a unilateral general strike on 18 October 2002 (IT0212104N). Proxy law No. 848 on the reform of the labour market was finally approved by parliament on 5 February 2003 (IT0303103N), while law No. 848bis is still under discussion.

As an alternative to the draft law No. 848bis, Cgil decided to promote its own 'voter initiative bills' (proposta di legge popolare) - whereby legislative proposals may be made to parliament if a certain number of citizens' signatures are collected - on labour market reform. On 10 March 2003, the union confederation presented a package of four such voter initiative bills in parliament, after collecting a total of 5,122,000 signatures since the summer of 2002 - an undertaking which the general secretary of Cgil described as 'the greatest collection of signatures ever made in Italy'.

The Cgil’s voter initiative bills

Cgil’s package of proposed legislation consists of four bills on:

  • reforming the social shock absorbers and employment protection;
  • extending protection against unfair dismissal;
  • accelerating the arbitration of dismissal and transfer disputes; and
  • extending the rights of dependent employees (as regards social security contributions, sickness, maternity, workplace injury, holidays, and dismissal without just cause) to the entire range of 'atypical' workers and, in particular, 'freelance workers coordinated by an employer' (IT0011273F) - sometimes known as 'economically dependent workers' (TN0205101S).

The four bills have two main objectives: to extend employment protection to cover the overwhelming majority of workers; and to rationalise the system of social shock absorbers by removing all thresholds related to sectoral differences, type or size of firm or type of contract. The key points of the four proposals are as follows.

Employment protection

The voter initiative bill on employment protection sets out a complex system of 'defensive' measures with respect to collective dismissals, focusing first on the use of job-security agreements (contratti di solidarità). This is a scheme introduced by a national agreement in 1983, which provides for the reduction and rescheduling of working hours and pay during company crises in order to avoid job losses, with financial assistance for the workers affected. This provision (the only proposed measure which imposes an access threshold determined by firm size) should be extended in its scope to include all enterprises with five or more employees. The proposal fixes the maximum amount of reduced working time allowable as hours worked in excess of 20 per week (ie workers' hours may not be cut below 20 per week), for a maximum period of 24 months which is renewable for another 24 months (36 in the South of Italy). The supplementary benefit paid to workers under job-security agreements should amount to 75% of their lost pay. Firms using these contracts would be entitled to a 35% reduction in the social security contributions paid for the workers concerned, provided that no staff cuts are made in the following 12 months.

The next stage in the proposed sequence of measures would be use of the wages guarantee fund (Cassa integrazione guadagni, Cig), a scheme which currently pays a state benefit to some workers whose employment is suspended by firms undertaking restructuring. The use of the Cig would be extended to all workers (including freelance workers coordinated by an employer) and it would provide total benefit amounting to 80% of the worker’s previous remuneration. All categories at present excluded from the Cig would be entitled to supplementary benefit of 60% of their lost pay, up to a maximum of EUR 1,000 per month, and index-linked on an annual basis.

It is proposed that when the alternatives (ie job-security agreements and the Cig) have been exhausted, an extended 'mobility allowance' scheme (with standardised procedures, forms, times and communication methods) would apply. Mobility schemes provide for redundant workers to receive a state allowance and benefit from various measures to help them find work. Under the Cgil proposal, all workers on job-security agreements or receiving income support for more than six months, and workers who have lost their jobs because of collective redundancies or for 'justifiable reasons', would be entitled to enrol on the mobility scheme's availability lists and to use its facilitated job redeployment scheme. The new mobility allowance would be equal to the basic supplementary benefit (60% of previous pay, subject to maximum amounts) and payable for a period of 18 months, extended to 36 months for workers aged over 50. Employers hiring workers 'in mobility' would be entitled to 100% relief on social security contributions for 18 months.

As regards unemployment benefit, compulsory insurance against unemployment would apply to all workers (including freelance workers coordinated by an employer). Two years of insurance payments would be necessary for entitlement to benefit, and the duration of the benefit would be 12 months, with a monthly benefit equal to 60% of the worker's previous wage (with a maximum EUR 1,000).

Finally, the bill proposes the full-scale introduction of a 'minimum integration income' (reddito minimo d’inserimento), already tried out on an experimental basis by previous centre-left governments (IT9807176N), in order to combat poverty and social exclusion.

Extension of protection against unfair dismissal

The bill on unfair dismissal proposes an increase in the compensation paid to workers who cannot be reinstated in their jobs if they are unfairly dismissed, ie those working for firms with fewer than 16 employees. Should a court decide that a worker in a firm with fewer than 16 employees has been unfairly dismissed, it would order the worker’s immediate reinstatement in their job. At this point the employer could lodge an appeal with the court asking for the definitive dismissal of the worker. The court could then declare the employment relationship terminated, but order the employer to pay compensation ranging from a minimum of 15 to a maximum of 24 months of the worker’s previous remuneration.

Disputes over dismissals and transfers

The bill on this issue mainly consists of procedural rules intended to 'fast-track' the most sensitive and important labour law disputes, namely those which concern dismissals and transfers. The aim is to deal with the problem of the long-drawn-out procedures that make it difficult to reinstate workers after a long time has elapsed since their dismissal. The bill therefore envisages a simplified fact-finding procedure so that rulings can be made more rapidly.

Extension of rights to freelance workers coordinated by an employer

The bill proposes that the rights and protections enjoyed by dependent employees (particular as regards pensions, but also maternity, sickness, holidays, workplace injury and dismissal without just cause) should be granted to all workers engaging in continuous freelance work coordinated by the same employer.

The proposal is to revise Article 2094 of the Civil Code, which defines the nature of contracts for dependent employment in a firm. The new text of Article 2094 as proposed by the bill extends the contract of dependent employment to cover both dependent employment relationships and 'semi-dependent' ones (ie 'economically dependent workers'), thereby eliminating the distinction between the two types. The automatic effect would be to grant to semi-dependent workers all the rights and guarantees now granted by labour law to dependent employees.

Commentary

The four bills proposed by Cgil will be examined by the labour committees of the Chamber of Deputies and the Senate. However, although Cgil’s voter initiative has involved more than 5 million Italians, its conversion into law will be extremely difficult. The centre-right coalition, which enjoys a large majority in parliament, is committed to labour market reforms which lean more towards liberalisation and the increased flexibility of employment contracts. Moreover, one cannot take for granted that the centre-left opposition will be united in its adoption of Cgil’s proposals, neither as regards their technical contents nor in providing political support for them.

As regards the extension of protection against unfair dismissal, the proposed two-stage judicial procedure will only prolong an already extremely lengthy process. The system proposed by Cgil appears to be excessively cumbersome.

To be judged positively, however, is the proposal to unify worker protection provisions by establishing equivalence between dependent employment and continuous freelance work, given that the majority of so-called 'semi-subordinate' workers are effectively dependent employees subject to a single employer. It will then be the task of the legislature to re-write the relative rules (Livio Muratore, Ires Lombardia)

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