1999 Annual Review for Italy

This record reviews 1999's main developments in industrial relations in Italy

Economic developments

During 1999, there was little growth in the Italian economy – GDP rose by 1.2% in the first nine months of the year, according to the Italian statistical office Istat. However, the government maintains that GDP growth in 1999 shows that the Italian economy is recovering and should continue to do so in 2000.

According to Ministry of Finance estimates, the public accounts showed an improvement compared with 1998 – in 1999, the public deficit amounted to around 2% of GDP, while the public debt/GDP ratio stood at 115%.

The inflation rate in December 1999 stood at 2.1%, according to Istat. In the last part of the year, there was an increase in inflation, mainly due to a rise in petroleum prices.

In October 1999, the unemployment rate was 11.1%, which represented a decrease of 0.8 percentage points compared with October 1998, thus confirming the reduction experienced during the first half of 1999. However, there remained strong differentiation between unemployment at regional level – while unemployment in the north of Italy stood at 5.4%, it was 9.1% in the centre and 21.1% in the south. In terms of gender and age, the unemployment rate for women stood at 15.1%, compared with 8.6% for men and 33.6% for young people (with a peak as high as 56.4% in the Mezzogiorno). In all the above categories, however, there are signs that the rate of unemployment is falling. Other data showed a decrease in employment levels in firms employing at least 500 employees – in the manufacturing sector, the level of the decrease was 3.3% in the year to September 1999, while in service firms the decrease was 0.4%.

Political developments

In December 1999, disagreement among the political parties which constituted the governing coalition caused a political crisis, which lead to the fall of the government. However, a few days later, a new centre-left coalition supported by seven parties - the Democratic Left (Democratici di Sinistra, Ds), the Italian People's Party (Partito Popolare Italiano, Ppi), the Democrats (Democratici), Udeur, the Party of Italian Communists (Partito dei Comunisti Italiani, PdCI), the Greens (Verdi) and Rinnovamento- and still led by Prime Minister Massimo D'Alema, came to power. However, the new government has a narrower parliamentary majority, due to the abstention of some parties - the Italian Democratic Socialists (Trifoglio-Socialisti Democratici Italiani), Upr and the Italian Republican Party (Partito Repubblicano Italiano, Pri) - which formerly supported it.

The European Parliament elections of 13 June 1999 confirmed the deep fragmentation of the Italian political system. The centre-right Forza Italia won the most support, with 25% of the vote, followed by Ds with 17.4%.

Collective bargaining

At the end of November 1999, 53 industry-level agreements were in force, according to the data issued by Istat on sectoral bargaining which cover 80 industry-wide bargaining units and some 11.5 million workers. The agreements in force covered a total of 9.6 million employees and around 83% of Italy's overall paybill is regulated by the agreements recorded, showing an increase of more than 50% compared with the beginning of 1999 (IT9902243F). In 1999, 32 of the agreements were renewed, including important settlements in manufacturing - such as metalworking (IT9907249F) - services - such as commerce (IT9909128N) and banking (IT9907121N) - and important parts of public services and administration - such as school teachers (IT9903337F) and workers employed by the national health service (IT9902101N). In November 1999, according to the Istat panel, 27 sectoral agreements, covering some 1.8 million workers, were awaiting renewal.

2000 will bring other important renewals (eg building, textiles, and local bus transport), as well as negotiations over the possible definition of new industry-wide agreements for telecommunications, electricity, water and gas, and railways. All of these sectors are being affected, though to varying degrees, by liberalisation policies.

There were no significant shifts regarding the relative importance of the different bargaining levels during 1999. Generally, employers seem to favour a move towards more flexible and decentralised collective bargaining arrangements, while trade unions support the importance of maintaining the existing two-tier (sectoral and company) structure (IT9907250F).

Some signs of increasing decentralisation may be found in the efforts to develop forms of territorial tripartite agreements in order to foster local economic growth and employment creation, such as "territorial pacts" and "area agreements" - examples being those in Vibo Valentia (Calabria) (IT9901194N), Rome (IT9902198N), Piedmont (IT9902199N) and Gioia Tauro (Calabria) (IT9904339F).

Pay

The intersectoral level kept its central position in regulating pay increases, as a result of the annual meetings on income policy that define the planned inflation rate, which is the fundamental parameter (and limit) for rises set by sectoral agreements (IT9709212F). Normative issues and specific pay increases are essentially addressed by industry-wide bargaining, while company-level agreements can cover only topics expressly set aside for this level and may not overlap with sectoral regulation (following the system of so-called "coordinated decentralisation"). In particular, company-level bargaining may define performance-related pay. However, it is interesting to note that company-level collective bargaining is not widespread. Research carried out by Istat, which analysed company-level bargaining between 1995 and 1996, indicates a total coverage of only 9.9% of manufacturing and service companies with at least 10 employees, corresponding to 3.2 million workers or 38.8% of total employment in the relevant sectors (IT9905246F). Moreover, it is important to mention that annual data and variations may be of limited relevance, since the July 1993 national tripartite agreement defined a duration of four years for company-level agreements.

In November 1999, hourly pay set by collective bargaining was growing at an annual rate of 1.8%, down from 2.5% in 1998. The growth rate was 1.8% in manufacturing, 1.2% in services, and 3.2% in public administration, as a consequence of the renewals of collective agreements in these sectors.

Working time

The issue of working time was particularly important in collective bargaining during 1999, at both sectoral and company levels. A prominent feature was the increase in flexible working time, through the use of atypical schedules, as in the case of "Saturday working" in the commerce sectoral agreement (IT9909128N), "hours banks", as in the metalworking (IT9907249F) and banking (IT9907121N) sector agreements, and multi-week flexible working time schedules (as in all three of the abovementioned agreements). Working time reductions, though frequently present, have usually been limited. An interesting measure was provided for in the commerce sector accord, which linked a reduction in working time to increased flexibility. In the case of the healthcare sector, a 35-hour working week has been introduced, on an experimental basis, for shiftworkers, thus replacing the normal weekly working time of 36 hours. Specific provisions for part-time work and job-sharing were present, in particular, in the commerce (IT9909128N) and tourism (IT9902100N) agreements.

According to data covering firms employing at least 500 employees, issued by Istat in September 1999, actual working time had increased by 1.4% compared with 1998, while the proportion of overtime in relation to total working time had slightly decreased from 4.6% to 4.5%.

Equal opportunities

Collectively-bargained measures have frequently provided for the creation and regulation of joint committees for equal opportunities. For instance, the 1999 collective agreement in the metalworking sector (IT9907249F) provided for the creation of a three-level system of joint committees (national, territorial and company). Their tasks are to monitor female employment conditions in the sector and promote campaigns to combat discrimination against women.

In April 1999, the Minister for Equal Opportunities presented the social partners with a report which revealed the extent of discrimination against women employees in Italy (IT9905114N).

Job security

In Italy, employment growth in 1999 was mainly the result of the increase in new "atypical" employment contracts, covering workers employed on fixed-term or part-time contracts and consultancy and freelance work "coordinated" by an employer. More than job security, collective bargaining in 1999 focused on labour market deregulation.

A new departure for industrial relations is the collective bargaining at local level on the issue of labour market deregulation. In Rome, the agreements on the reorganisation of Rome's public environmental services company, Azienda Municipalizzata Ambiente (Ama), signed in June 1999 (IT9907124N) and in October 1999 (IT9911132N), provided for recruitment of additional workers in return for a reduction in labour costs. In July 1999, a preliminary agreement on an "employment pact" was signed in Milan by the city's municipal administration, the employers' associations and the trade union confederations (with the opposition of the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil) (IT9908251F). The aim of the deal is to introduce pay and employment measures to boost employment opportunities for weaker sections of the labour force, such as immigrants, long-term unemployed workers, workers over 40 and disadvantaged young people. (The final agreement was signed in February 2000, still without Cgil (IT0003264N).)

Training and skills development

In July 1999, the government issued a multiannual training plan, the so-called "MasterPlan", as provided for in the national social pact on development and employment signed in December 1998 (IT9901335F). The aim of the MasterPlan is to raise levels of qualification and improve the integration between formal education and further training, and between the vocational training system and the economic system. The MasterPlan follows the lines of the training system reform issued by the Italian government at the end of 1998 (IT9812334F).

Legislative developments

An important step was taken in 1999 towards the adoption of new rules on parental leave as a means of transposing the 1996 EU parental leave Directive. In October 1999, the Chamber of Deputies passed the bill which then went to the Senate for its final approval. Its examination was halted during the debate over the 2000 budget and resumed after mid-January 2000. The most innovative aspects of the new draft legislation are that it increases parental leave to 10 months within the first eight years of a child's life and encourages the use of parental leave by fathers.

Other legislative initiatives in 1999 included a draft bill to reform law 146/90 on strikes in essential public services and strengthening the role of the Guarantee Authority which is empowered to enforce the law (IT9903105N). In addition, the social partners in the temporary agency work sector reached an agreement regulating temporary work which subsequently formed the basis for legislative amendments (see below under "New forms of work").

The organisation and role of the social partners

During 1999, a split opened up between the two largest Italian union confederations, Cgil and the Italian Confederation of Workers' Unions (Confederazione Italiana Sindacati Lavoratori, Cisl), (IT9909345F and IT9912137F). There was thus a break with the traditional collaboration among the three main union confederations - Cgil, Cisl and the Union of Italian Workers (Unione Italiana del Lavoro, Uil) - which had produced substantial unity of action throughout the 1990s, despite the political and ideological differences. The split has stopped the process of moving towards union unity (IT9707307F).

In terms of trade union internal organisation, Cisl decided in July 1999 to undertake a major restructuring of its sectoral federations – the aim is to streamline structures by reducing the number of federations from 36 to just 11 (IT9907122N).

Industrial action

Provisional data relating to strikes during the first 11 months of 1999 show a total of 4.8 million hours not worked because of industrial action. This represents an increase of 24.6% compared with the same period in 1998, but a decrease of almost 40% compared with 1997.

Owing to the renewal of various sectoral collective agreements which took place in 1999 – and in particular the difficult negotiations over the metalworking agreement, which alone led to more than 30 hours of widespread strike action – the increase in the level of industrial action can be seen as "episodic" because the overall progressive reduction in strike levels was substantially confirmed by 1999 data. This view may be supported by the fact that the increase in strike hours took place in the first five months of 1999, during the same period when the metalworking accord was being negotiated.

However, if the picture of declining industrial action is true of manufacturing sectors, it is far less so for public transport, especially in the cases of railways and air transport, where the high incidence of industrial action (IT9707209F) was confirmed in 1999. This high level of industrial action prompted the tripartite "pact on concertation policies and on new rules on industrial relations for the transformation and European integration of the transport system", which was signed on 23 December 1998 at the Ministry of Transport (IT9901240F), and the draft bill to reform law 146/90 on strikes in essential public services and strengthen the role of the Guarantee Authority (IT9903105N). The high-level of industrial action also brought a search for alternative forms of action, prompting a debate over the "virtual strike", as carried out by pilots and cabin crew at the Meridiana airline in July 1999 (IT9909252F). During a "virtual strike", workers continue to work without being paid, while the company pledges to donate an amount equivalent to the receipts collected during the action to humanitarian organisations. While it received positive comments, the "virtual strike" at Meridiana raised a series of technical questions and difficulties which has so far prevented further applications.

National Action Plan (NAP) for employment

In May 1999, the government approved the 1999 Italian National Action Plan (NAP) for employment (IT9905115N), which is based on a mixture of Keynesian policies such as public investment, support for local economic development and active labour policies, and supply-side measures including the reduction of labour costs by decreasing the tax burden, liberalisation of employment services and training. One of main objectives is the regularisation of the clandestine economy, which is particularly widespread in the south of Italy.

The NAP aims also to increase the incidence of female employment by adopting measures to help reconcile work and family care. Furthermore, it stresses the relevance of concertation between the government and the social partners both at national and at local level.

The impact of EMU on collective bargaining and industrial relations

In 1999, the impact of EMU on collective bargaining and industrial relations in Italy can be considered to be more indirect than direct. No specific agreements on this subject have been signed, although the actions of the government and the social partners were constrained by EMU.

Throughout the year, in collective bargaining, the social partners respected their commitment to low wage increases, in order to keep inflation under control, while one of the government's priorities has been to reduce the state deficit.

Employee representation

In November 1999, elections for Rsu unitary worker representative bodies took place for the first time in the Italian Post Office. The federations affiliated to the main confederations, Cgil, Cisl and Uil, received around 80% of votes (IT9911348F).

New forms of work

In 1999, new forms of work were particularly important for sustaining employment growth. According to data from Istat, between October 1998 and October 1999 "atypical" jobs accounted for about 85% of the overall increase in labour demand. In October 1999, 8.7% of the total labour force was employed on a part-time basis. The incidence was higher among women (16.2%) than men (3.7%). While women outnumbered men almost threefold (857,000 compared with 293,000), the incidence of part-time working has been increasing for both categories, at a rate of 1.3% and 0.4% respectively. The rate of growth of fixed-time contracts, though still rising, had decelerated to 0.5% in October from a level of 1.3% in April. At the same time, data on temporary agency work shows a substantial increase in the use of this form of employment contract in Italy (IT9909126N). The tendency towards the diffusion of new forms of work was confirmed by various research results, which analysed both behaviours and attitudes (IT9910130N and IT9905246F).

In July 1999, an agreement was reached for the introduction of teleworking in the public administration, on an experimental and voluntary basis (IT9908344F).

In November 1999, the temporary workers' organisations affiliated to the Cgil, Cisl and Uil union confederations - respectively Nidil, Alai and Cpo- and Confiterim, the employers' association for temporary work agencies, signed an agreement to modify the regulation of temporary agency work (IT9912135N). The parties asked the government to implement these changes through a revision of the existing legislation. The government accepted the proposals and pledged to change the relevant law accordingly. Amendments to the legislation have since been approved and mean that use of temporary agency work can be extended to low-skilled and unskilled workers and, on an experimental basis, to the agriculture and building sectors.

Other developments

An important debate which gained momentum in the second half of 1999 concerned the referenda on labour and industrial relations issues proposed by the Radicals political party (IT9909253F). The proposals, which are considered by trade unions as "anti-union", cover many issues, such as individual dismissals, job placement agencies, welfare provisions, the tax system, the public funding of trade-union benefit advice centres, and the regulation of specific employment relationship (homeworking, part-time and fixed-term contracts). At the beginning of January 2000, the debate became more intense (IT0002260N). The government declared its substantial political opposition to the so-called "social referenda", though it stated that it would not oppose the proposals until the Constitutional Court had ruled on their admissibility. Following this, the major Italian employers' association, Confindustria, declared that it was going to support some of Radicals' proposals and trade unions strongly criticised this position. (In February 2000, the Constitutional Court ruled on the admissibility of the proposals for referenda, allowing only two of the proposed referenda on trade union and labour issues - those on on individual dismissals and on the collection of trade union fees (IT0002260N).)

On 20 May 1999, Massimo D'Antona, a union-linked labour law expert, academic and government consultant, was murdered by the Red Brigades terrorist group (IT9905112N). By assassinating Mr D'Antona, it is thought that the terrorists meant to attack Italy's current social dialogue and concertation, as he was closely involved in a number of the important legislative initiatives which have characterised the development of the Italian system of industrial relations during recent years, and wrote the text of the tripartite national "social pact for development and employment" signed in late 1998 (IT9901335F). A Red Brigades' document found on the same day of the murder also contained a direct attack on trade unions for their support of social dialogue.

Outlook

In 2000, it is likely that Italian industrial relations actors will probably have to face many difficult issues which will be a significant test for the overall industrial relations system. Important legislative reforms should be reaching the approval stage, such as that on "social shock absorbers" (ie measures to ease the blow of redundancies) (IT9802319F) or the highly controversial new law on employee representation (IT9804226F), while the debate on welfare reform, and the pensions system in particular, will continue.

The relationship between the three main union confederations and Confindustria might suffer, should the debate over the referenda on labour and industrial relations issues become particularly intense. For the time being, Confindustria has taken up a cautious approach, but if and when the referenda are put before the electorate (two of the referenda on labour issues have been permitted - see above under "Other developments"), the endorsement of the "social referenda" by the major Italian employers' association may have important and negative consequences for the social dialogue.

Another sensitive point, this time in inter-union relations, are the diverging views that Cgil, on one side, and Cisl, on the other, are displaying, mainly in the domain of interventions for fostering economic growth and employment creation, both at national and territorial level. The new phase of "competitive unity" that Cisl seems to be intent on pursuing might divide and weaken the trade union movement.

However, there are also important elements that may push again towards a "unity of action". These include not only the campaign against the "social referenda", but also the important challenge of creating new industry-wide agreements for liberalised sectors that, in the trade unions' view, should eliminate the possibility of unfair competition and "social dumping", as well as the pressing priority of defining measures to support economic growth and the reduction of unemployment. The latter may be particularly important, since the present signs of improvement in both the economy and the labour market may offer to the social partners important opportunities for effective intervention through the method of social concertation. The relevance of these common goals – economic growth and the fight against unemployment – might be a powerful incentive for the social partners and the government to find shared positions and compromises on the more controversial issues.

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