Implementation of the tripartite Pact for Employment

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The Italian Government and social partners are currently implementing their tripartite "Pact for Employment" (Patto per il Lavoro), which is intended to promote employment and foster economic development in Italy through the introduction of a wide and complex set of policies. The agreement, signed on 24 September 1996, is of the utmost political importance as it falls within within the framework of the renened social concertation strategy that has been pursued over the 1990s. The Pact earmarks a total amount of about ITL 15,000 billion for its implementation over the 1997-1999 period.

The Pact

The key points of the Pact for Employment are as follows.

  • Education and training. The reform of education and training systems will involve a particular emphasis on training paths and continuing education programmes.
  • Employment promotion. This involves the reform of some important institutions:
    • apprenticeship contracts will be extended to cover all sectors, including agriculture, and will be open to people aged 16-24 (26 in the case of Southern Italy);
    • for the first time, temporary work agencies are now permitted in Italian law. Agencies specifically authorised by the Ministry of Labour will be able to hire workers and "lend" them to other firms.
    • some subsidies and fiscal incentives are introduced for reductions in working time.
  • Infrastructural policy. Important infrastructural public investment is planned in order to boost national competitiveness and reduce the gap between Northern and Southern Italy.
  • "Area pacts and agreements" ( patti territorialiand contratti d'area). These initiatives should promote new productive investment in areas with low rates of development and high unemployment. They may be concluded at any level, especially provinces, cities or large neighbourhoods, within broad regional framework agreements. The Government will identify target areas (mainly in Southern Italy), giving priority to those in which these programmes are most likely to be successful. Area agreements will be signed by the local administrations, trade unions and employers' organisations, banks and any other interested parties. Economic recovery of the areas involved will, it is planned, be assured by ad hoc financing and targeted incentives, and through the operations of an agency that will be responsible for promoting investment in such areas.

The implementation so far

After the conclusion of the Pact, trade unions sought a rapid implementation through the budget law that was due to be discussed in Parliament. However, only a small part of the agreement was eventually incorporated in the budget law - mainly the regulation of area pacts and agreements - while the rest was left to a bill that was presented in December 1996 by the Ministry of Labour. This bill on the implementation of the Pact included the incentives for the reduction of working hours, the extension of the work/training contract scheme, new age limits for apprenticeships and provisions regulating temporary work.

Around the same time, Parliament approved a significant amendment to the budget law, presented by the Green Party and Rifondazione Comunista (the Communist party which supports the government without directly participating in it). The amendment made an important change to the Pact for Employment: area agreements may not set wage rates below those set by national collective agreements. Confindustria, the main employers' organisation, strongly criticised this amendment and its president, Giorgio Fossa, raised the possibility of withdrawing from the Pact for Employment. Employers were not only disappointed at this specific change, but also worried about further possible modifications that Parliament might introduce.

Overall, the most controversial issue in the Pact is the definition of policies to increase labour market flexibility. So far, criticism has focused on wage flexibility within area pacts or agreements, while the regulation of temporary work remains a very sensitive issue, and its definition will probably not be easy. On wage flexibility, a division emerged among trade unions in January 1997 when Cisl, one of the three confederations that signed the Pact, openly advocated the possibility of agreeing wage levels below the national minimum rates, in order to sustain development in some disadvantaged areas. This new attitude was welcomed by Confindustria while the two other major trade union confederations (Cgil and Uil) opposed it.

On 12 February the general secretaries of Cgil, Cisl and Uil met the Prime Minister, Romano Prodi, and the Minister of Labour, Tiziano Treu, to discuss the implementation of the Pact. Trade unions were dissatisfied with the meeting and expressed their concern about the commitment of the Government to implementing fully the measures set out in the Pact. They also announced that during the following weeks they would put constant pressure on the Prime Minister in order to obtain "top priority" for employment. This mobilisation will culminate in a rally to in Rome on 22 March, aimed at urging both the Government and Parliament to take effective action for the promotion of employment.

Commentary

Apart from the funding and implementation problems, the area pacts represent a particularly interesting element of the Pact. These pacts developed as the outcome of an autonomous initiative from the social partners and local authorities under the auspices of CNEL (Consiglio Nazionale dell'Economia e del Lavoro- National Council for Economic Affairs and Labour, made up of representatives of all social partners), and were subsequently endorsed by the Pact for Employment. According to reports in the newspaper,Il Sole, in mid-February, 102 area pacts have so far been submitted to Cnel for approval, and two have already been financed. The Italian Government is now also trying to involve the European Commission in the realisation of the pacts, by using part of the financial resources assigned to Italy as EU funding. Finally, this initiative has also attracted the interest of OECD officials, as a means of sustaining local development.

The Pact for Employment represents an important outcome of the new wave of "social concertation" which has underway in Italy since the beginning of the 1990s, and which reached its highest point in the 1993 tripartite agreement on incomes policy and collective bargaining. The Pact should also be placed in the context of similar developments elsewhere in Europe, in countries such as Finland,Belgium, Portugal, Ireland and Germany. This new tripartite framework is clearly influenced by the financial problems of the Italian state and its efforts aimed at joining the EU's Economic and Monetary Union. Italian trade unions have proved to be prepared to offer wage restraint and greater labour market flexibility, but not without problems and internal divisions. Employers may be willing to expand investment and employment, but the stagnation in the economic cycle and the increasing exchange rate of the Italian Lira make their efforts uncertain.

Furthermore, the Italian situation is marked by the still-evident division within the trade union movement, and by the presence in the parliamentary majority that sustains the Government of a party, Rifondazione Comunista, that often intervenes directly in labour disputes. This further threatens the equilibrium of trade unions and, due to the crucial position of this party within the parliamentary majority, it also could weaken the ability of the government to play the role of "regulator". (Simonetta Carpo, IRES Lombardia, and Roberto Pedersini, Fondazione Regionale Pietro Seveso)

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