2002 Annual Review for Italy

This record reviews 2002’s main developments in industrial relations in Italy.

Political developments

The centre-right coalition of parties elected in May 2001, the House of Freedoms (Casa delle Libertà), continued to govern during 2002, led by Prime Minister Silvio Berlusconi. The coalition is composed of Forza Italia, the National Alliance (Alleanza Nazionale), the Northern League (Lega Nord) and the Centre Christian Democratic Union (Unione Democratica Cristiana di Centro, UDC). The latter party was established through a merger at the end of 2002 between the Christian Democratic Centre (Centro Cristiano Democratico, CCD), the United Christian Democrats (Cristiani Democratici Uniti, CDU) and European Democracy (Democrazia Europea, DE), a party founded by Sergio D’Antoni, the former general of the Italian Confederation of Workers' Unions (Confederazione Italiana Sindacati Lavoratori, Cisl).

On 26 and 27 May 2002, some 12 million Italians voted to renew 10 provincial administrations and 967 municipal councils. Out of the 27 larger towns where elections took place, the centre-left coalition (which has a minority in parliament) won a majority in 14 municipalities (four more than at the previous elections), including Genoa and Verona.

In spring 2003, elections will be held to renew two regional councils, 12 provincial administrations and 443 municipalities, involving some 13 million voters. This may be an important mid-term political test for both the governing coalition and the centre-left opposition..

Collective bargaining

According to a survey by the National Institute of Statistics (Istituto nazionale di statistica, Istat) on sectoral collective bargaining, which covers 80 industry-wide agreements and some 11.5 million employees (out of some 16 million dependent workers), 34 of these agreements were renewed in 2002. These renewals involved 3.6 million employees and almost a third of the total paybill surveyed. The renewed agreements were mainly in the manufacturing and construction sectors, covering a total of more than 2 million employees.

In the public sector, despite a framework agreement signed in February 2002 (IT0203102N) which set the guidelines for average wage increases in 2002-3 and stated that collective bargaining, rather than legislation, must govern matters concerning public sector employment conditions, there were no particular developments in collective bargaining in the public administration. At the end of 2002, the public sector had the lowest share of agreements in force (in terms of the sectoral paybill). Over 80% of public sector agreements were awaiting renewal.

There has been no significant shift between different levels of bargaining, even if the issue of introducing a more decentralised bargaining structure - which, according to some observers, could adjust more flexibly to local labour market conditions - is much debated among social partners and practitioners. Research published in 2002 on decentralised bargaining in the public administration over 1998-2001 found that decentralised 'second-level' agreements had spread to a larger extent than in the private sector (IT0212209F). The report states that the public sector reform of the 1990s has been successful in bringing collective bargaining closer to that of the private sector. However, some significant, and possibly inescapable, differences persist, notably in areas such as the formation of specific skills and competences for personnel management, the autonomy of professional industrial relations managers, and the use of incentive schemes and 'atypical' work.

Pay

According to Istat data, collectively agreed hourly wages increased by an average of 2.6% in 2002. The sectors in which the rise was higher than average included commerce (3.4%), metalworking (3.2%) and the public administration (2.8%). However, increases were significantly lower than the average level in hotels and catering, transport and communications (all 0.5%) and insurance (0.3%). In 2002, the inflation rate, as measured by the retail prices index (RPI), was 2.5%.

Working time

In terms of working time issues, one of the most significant agreements in manufacturing was in the chemicals sector. This accord was signed in February 2002 after four months of negotiations and without any strike action (IT0203103N). The agreement provides for a reduction of annual working time by eight hours (which corresponds to the recently-introduced holiday of 2 June for the anniversary of the proclamation of the Italian Republic).

Job security

Job security issues have been addressed mainly in the framework of reorganisation processes and through an increased effort at supporting the diffusion of training initiatives (see below under 'Vocational training').

At company level, restructuring and reorganisation have been prominent themes, owing to the difficult economic situation, particularly in certain industries. This applies particularly to the airline Alitalia, which was hit by the international civil aviation crisis that followed the terrorist attacks on the USA on 11 September 2001 (IT0203101N). An agreement signed in March 2002 (IT0205202F) enabled the company to avoid 2,500 redundancies which had been previously announced through:

  • the provision of incentives to encourage retirement by older employees;
  • the reduction of labour costs as a result of a two-year pay freeze; and
  • the use of solidarity contracts, in order to distribute the impact of reducing labour costs among the largest possible number of employees by means of a corresponding reduction in working time.

Other firms badly hit by the economic slowdown include those belonging to the so-called 'new economy'. In 2002, some of these companies implemented restructuring (IT0202101N and IT0203305F). Interestingly, but not unexpectedly, this difficult situation favoured an increase in unionisation rates and an increase in the importance of the role of trade unions and industrial relations in a sector in which the predominant practice had previously been individual management of the employment relationship.

However, the most high-profile case of industrial restructuring in Italy in 2002 was in the most traditional and representative sector of 'old economy' manufacturing: car making. Fiat Auto was struck by a profound crisis (IT0201107N and IT0206101N) and the measures to be taken to relaunch the company were at the centre of a fierce confrontation between company management and the unions, which also led to the involvement of the government. In October 2002, after a first agreement (IT0208102N) had been reached with the Italian Metal-Mechanical Federation (Federazione Italiana Metalmeccanici, Fim), affiliated to Cisl, and the Union of Italian Metal-Mechanical Workers (Unione Italiana Lavoratori Metalmeccanici, Uilm), affiliated to the Union of Italian Workers (Unione Italiana del Lavoro, Uil) - but not the Italian Federation of Metalworkers (Federazione Impiegati Operai Metallurgici, Fiom), affiliated to the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil) - Fiat issued a second industrial plan (IT0210303F) which envisaged an investment programme of around EUR 2.6 billion per year from 2003 to 2005 and a substantial utilisation of 'social shock absorbers' (measure to cushion the effect of restructuring, such as the Wages Guarantee Fund and the 'mobility procedure'- IT9802319F), affecting some 8,000 employees. The industrial plan was considered unacceptable by all the unions because, according to Fim, Fiom and Uil, it envisaged the closure of a number of Fiat plants and the shedding of more than 8,000 employees.

Eventually, Fiat and the government reached a 'programme agreement' on company reorganisation (IT0212211F), which envisages some measures to support the revitalisation of the market and the introduction of a specific law to provide around 2,400 employees with income support until they reach retirement age. The agreement was rejected by the unions because they believe that the impact on employment is still excessive and that the guarantees provided for the company's revival are insufficient.

Equal opportunities and diversity issues

A company agreement signed at Ferrero in October 2002 (IT0212103N) introduced, as a two-year experiment, the possibility of activating job-sharing schemes - whereby two workers share the same position - especially designed to meet the needs of: working mothers who have completed their maternity leave and whose children are still under the age of three, in the period until the third birthday of their child; and workers with serious and documented health problems.

The issue of equal opportunities and gender-based inequality were also addressed at 'territorial' level, as illustrated by the examples of a new 'pact for employment and growth' in Milan (IT0205203F) and a social concertation agreement in Lombardy (IT0209206F). In the latter case, initiatives to support female employment involve specific training efforts, counselling and the provision of incentives to support the creation of company crèches and the use of flexible and diversified working hours, including telework. Other measures in both agreements concern the employment and social integration of migrant workers.

Other issues

Beyond pay and working time, the February 2002 sectoral agreement for chemicals - one of the most important signed during the year - established a sectoral voluntary supplementary health insurance scheme, funded by both the employees and the employers. Other important commitments relate to: the improvement of health and safety standards, by conforming to international standards, such as ISO 14000, the EU's Eco-Management and Audit Scheme (EMAS) and the chemicals industry's Responsible Care scheme; and the support of training initiatives, through the creation of a joint national body for vocational training in the chemicals sector and the introduction of 'training contracts' for individual employees (see below under 'Vocational training').

Legislative developments

The progress of a major government initiative to reform the labour market, which was the most important legislation-related development in 2002, is dealt with below under 'Other relevant developments'.

In 2002, the government and the social partners placed great emphasis on measures to promote the 'regularisation' of irregular work - ie employment which is not declared for tax and social security purposes and does not observe the pay and conditions laid down by sectoral collective agreements. Since new rules introduced by the centre-right government in late 2001 (IT0109302F) had apparently yielded limited results, new legislation was passed in April 2002 to give renewed impetus to regularisation (IT0205105F). The new law provides for a three-year period of 'emergence' from the underground economy, during which companies and workers involved in irregular work will benefit from tax and social security incentives as they regularise their situation. Following this intervention and the negotiations which led to the Pact for Italy (see below under 'Other relevant developments'), a joint opinion on measures to 'regularise' irregular work was signed in July 2002 by 36 employers’ associations and trade unions, with the exception of Cgil, to propose amendments to existing legislation (IT0208103N). The government has modified the rules and procedures of regularisation in accordance with the social partners’ joint opinion through a decree issued in September 2002, which was converted into legislation, with modifications, in November 2002.

Another important legislative development was a new law on immigration, passed in August 2002 (the so-called 'Bossi-Fini' law, named after the leaders of the Northern League party - and minister of institutional reforms - and of the National Alliance party - and vice-prime minister - who drafted it) and the ensuing regularisation of irregular immigrants employed as domestic workers and employees which started in September 2002 (IT0209103F). In general, the new law intends to enforce a stricter and more effective control on irregular immigration, including by establishing a closer link between employment and residence permits. The unions have criticised the new law, notably with respect to: the obligation to provide fingerprints when applying for the residence permit; the close link between the existence of an employment contract and the possibility of obtaining a residence permit; and the restrictions on family reunification. As far as regularisation is concerned, more than 700,000 migrant workers have applied: some 340,000 domestic workers and around 360,000 dependent employees.

The organisation and role of the social partners

In 2002, the executive of the Cgil trade union confederation elected Guglielmo Epifani as its new general secretary (IT0210101N). He succeed Sergio Cofferati, who stood down after eight years in office. 2002 saw major strains in the relations between trade unions, and these are dealt with below under 'Other relevant developments'.

Industrial action

In 2002, there was an increase in industrial conflict, largely connected to the confrontation between the government and trade unions over labour market reform (IT0201277F) (see below under 'Other relevant developments'). Opposition to the 'proxy law' on labour market reform, especially in respect of the proposed modification of the law on individual dismissals, reached its peak when a general strike was held on 16 April 2002 (IT0204102N). According to the Cgil, Cisl and Uil union confederations, which organised the strike, some 13 million workers joined the action and around 3 million participants in demonstrations (IT0205101N).

Provisional data on strike activity in 2002, issued by Istat, show a total of 4.1 million working days lost, marking a nearly four-fold increase over 2001 ( 355.2%). April alone accounted for almost 50% of all days lost, while other significant concentrations occurred in January 2002 (10.7%), when the first strikes were called, and October 2002 (14.1%), when Cgil held a unilateral general strike against government policies (IT0212104N).

Strikes connected to the employment relationship (as opposed to those related to government policies) accounted for 15.9% of the total. The sectors involved were mainly metalworking (5.5%) - largely in connection with the Fiat crisis and the difficult situation of the sector which led the unions to call a national strike in November 2002 (IT0212106N) - the public administration (2.5%) and transport (1.6%), which confirms this as one of the more strike-prone industries in recent years.

Employee participation

In February 2002, the Ministry of Labour started consultations with the social partners on the transposition of the EU Directive (2001/86/EC) on employee involvement linked to the European Company Statute (ECS) (EU0206202F). In December 2002, Cgil, Cisl and Uil harshly criticised the government for not having included employee participation rights, as envisaged in the European Company Statute or as is the practice in France and Germany, in a reform of company law which was finally passed at the beginning of January 2003 (IT0302101F). The new EU Directive (2002/14/EC) on national information and consultation rights (EU0204207F) was included in the annual 'Community Law', which covers EU legislation to be transposed into Italian law, and should be implemented by way of a legislative decree in 2003.

In April 2002, Italian transposition of the EU Directive (94/45/EC) on European Works Councils (EWCs) was finally completed by legislative decree 74/2002. The social partners had reached an agreement on transposition in November 1996, but a number of matters needed to be dealt with by legislation.

In connection with the Fiat crisis, the Fiat group EWC issued a statement and, together with the Italian unions, proposed to the European Metalworkers’ Federation (EMF) that it organise a European day of action (calling for 'A future for Fiat'). This was held on 16 December 2002 and involved a two-hour mobilisation at all Fiat's European plants. The demands behind this action were to avert job losses and maintain production and employment levels in the Fiat group (IT0212211F).

In terms of financial participation, the agreement to tackle the Alitalia crisis confirmed the strategic importance of employee shareholding in the company (IT0205202F), which already stands at more than 20%. Alitalia undertook to give free 'warrants' (or options) to flight crew, cabin crew and ground staff to enable workers to purchase shares when they are issued in an ad hoc company capital increase. Moreover, Alitalia committed itself to finding statutory means to promote workforce representation in its governing bodies.

Telework

2002 saw no specific response in Italy to the agreement on telework signed in July 2002 by the EU-level central social partners (EU0207204F), which is to be implemented by the national social partners in the Member States (by July 2005). There were also no legislative initiatives on telework in 2002.

In terms of collective agreements, however, in May 2002, the management of the Telecom Italia group and the trade unions reached an important agreement on the company's 2002-4 industrial plan (IT0206203F). The accord covers important issues, such as the redefinition of the Telecom Italia group's employment levels and the rebalancing of its occupational and skills mix. If the reorganisation process involves geographical redeployment, a preliminary consultation on such mobility must take place, with a view to identifying solutions aimed at reducing the burdens on the workers involved, including by using new forms of work, such as telework. The agreement provides that consultations may be held in the individual companies and business units aimed at introducing, strengthening and developing the use of telework.

As mentioned above (under 'Equal opportunities and diversity issues'), telework has been included among the actions to support female employment which have been envisaged by a social concertation agreement in Lombardy (IT0206203F), with a view to eliminating the structural factors that impede the reconciliation of work and family responsibilities.

Vocational training

There was no specific response in 2002 by the Italian social partners to the 'joint framework of actions for the lifelong development of competencies and qualifications ' agreed by the EU-level social partners in March 2002 (EU0204210F). However, a focus on continuing and vocational training has recently been emerging as an important element in collective bargaining. This is true for all bargaining levels, from intersectoral, as shown by the establishment of intersectoral funds to finance vocational training, to company and territorial bargaining.

Legislation adopted in Italy 2000 made it possible for the social partners to set up intersectoral funds to finance continuing vocational training. Under the terms of the new law, intersectoral funds can be set up in four areas of the economy: industry, agriculture, the services/tertiary sector and artisanal production. By 2002, five such funds had been set up (IT0202103F). Individual firms may choose whether to join these new intersectoral funds or not. The new funds will receive the 0.3% paybill contribution for continuing training levied on the employers which join the funds, which formerly went to the public authorities. The common objective of the funds is to promote and finance vocational training programmes at company level - for individual enterprises or for groups where there has been an agreement between the social partners to that effect - and at territorial, sectoral and regional levels.

As far as sectoral bargaining is concerned, an innovative feature has been introduced by the 2002 chemicals sectoral agreement which has introduced the possibility of a 'training pact' (patto formativo) to be concluded between the individual worker and the employer. Under this pact, the company allows the worker to participate in continuing vocational training and the workers agrees to modify their working hours, rest times or other contractual aspects in order to take parts in training initiatives (IT0203103N). Further, the industry-wide agreement for temporary agency workers which was signed in July 2002 covered this subject both by establishing a national joint observatory, which will have an executive role and draw up proposals concerning vocational training, and by providing agency workers with an individual right to training (IT0208101N).

New forms of work

As mentioned above (under 'Vocational training'), in July 2002, employers’ organisations and trade unions in the temporary agency work sector signed a new national collective agreement (IT0208101N). Among other matters, the agreement provides for the creation of various joint bodies and defines in more detail the tasks of the existing Ebitemp sector-level joint body. Moreover, the agreement regulates trade union representation by providing for appointed territorial representatives and elected company-level structures.

In 2001, a total of 470,000 temporary agency workers were hired out in Italy, with 55% working in the industrial sector and 23% in the services sector.

In 2002, with a total labour force of 15.9 million dependent workers, labour market participation was divided as follows: 84% permanent full time; 6% permanent part time; 3% temporary part time; and 7% temporary full time (according to the October 2002 Istat labour force survey). In dependent employment, only 3.2% of men are part-timers, while this proportion reaches 17.7% among women. Part-time is concentrated mainly in agriculture (17.7% of employees) and in services (11.3%), while it is lower in industry (4.5%).

In June 2002, parliament passed a decree which introduces maternity allowances for women engaged in 'freelance work coordinated by an employer' (IT0207303F). This form of work is one of the most widely used forms of atypical employment in Italy - it is estimated that the number of workers involved mainly in freelance 'coordinated' work amounts to around 1 million (IT0011273F).

The 'proxy law'- a law whereby parliament delegates to the government the power to legislate on particular issues - on labour market reform (see below under 'Other relevant developments') which was discussed in parliament during the latter part of 2002 and passed in February 2003, after amendments introduced through the Pact for Italy (IT0201277F and IT0207104F), envisages a series of provisions on new forms of work, including:

  • the introduction of a new kind of employment relationship known as 'work on call' (IT0007159F), whereby the worker is entitled to an 'availability allowance' in exchange for a commitment to work on a discontinuous or intermittent basis;
  • the extension of temporary agency work to the agriculture sector; the introduction of some basic rights for freelance workers coordinated by an employer; and
  • the certification of work relationships by joint committees, with a view to identifying the regulatory framework to be applied and thereby reduce disputes.

Other relevant developments

Industrial relations in 2002 in Italy were marked by two interconnected developments. First, the strong opposition of all the unions to the government’s initiative to reform the labour market and notably the rules on individual dismissals, by eliminating the right to reinstatement in case of unlawful dismissal, as provided for by article 18 of the Workers’ Statute (IT0201108N, IT0201277F, IT0204102N and IT0205101N). Second, the opening up of a division in the trade unions’ front as Cisl and Uil decided to continue negotiations over reform with the government (IT0206102N, IT0207101N) and signed in July 2002 the tripartite Pact for Italy (IT0207104F), which defined the general lines of labour market reform and envisaged an experimental and limited intervention on individual dismissals (see below). However, Cgil refused to participate in tripartite negotiations unless the proposed amendments to article 18 were abandoned altogether and organised a strong mobilisation against the government's policies, which led to Cgil calling a general strike in October 2002 (IT0212104N). This split added to other divisions which had previously emerged in various negotiations in 2000 and 2001 (for instance, in the renewal of the metalworking agreement and in a joint statement on the EU fixed-term work Directive) and contributed to worsening the general climate of industrial relations in Italy.

The July 2002 Pact for Italy is considered of great relevance by all the signatories and covers three main issues: incomes policy and tax reform; 'welfare to work' (including labour market policies); and investment and employment in the Mezzogiorno regions of southern Italy (IT0207104F).

Among the various measures, the pact envisages:

  • some tax reductions for both families and companies;
  • an increase in the level and duration of unemployment benefit;
  • the suspension for three years, on an experimental basis, of the rules which provide for the reinstatement of unfairly dismissed workers in all companies that, through new recruitments of workers on open-ended contracts, bring their workforce size to over 15 workers (the legal threshold for the application of the Workers’ Statute); and
  • provision to support investment and the realisation of infrastructures in the South of Italy.

The social partners which signed the agreement expressed concerns over the possibility of a partial implementation of the Pact and urged the government to fully respect its commitments in the preparation of the 2003 budget law (IT0209205F).

The 'proxy law' which delegates to the government the authority to introduce its labour market reform (including the modifications made by the Pact for Italy) was finally passed by parliament in February 2003, and implementing measures will follow.

The measures included in the 2003 budget law attracted a variety of comments, though mostly critical (IT0211104F). According to the Confindustria employers' confederation, the budget law is a missed opportunity, since the government has limited itself to taking a series of one-off measures without addressing the structural problems of the Italian economy, such as the reform of the pension and healthcare systems. Cisl and Uil expressed appreciation for the government’s decision to respect the Pact for Italy and not to reduce social expenditure and pensions, even if they were very critical of the measures relating to the Mezzogiorno. According to Cgil, the budget law is not rigorous, the estimations of economic growth and inflation are unreliable and the cuts in social expenditure are unacceptable.

At the end of 2002, the main metalworkers’ federations, Fim, Fiom and Uilm, decided to present separate platforms of demands for the renewal of the sectoral agreement, thereby breaking a long tradition of unity and marking further the divisions which have been opening up between the three major confederations in recent times.

On 19 March 2002, Marco Biagi, a highly respected labour law professor and a government consultant, was murdered in a terrorist attack by the Red Brigades (Brigate Rosse) in the centre of Bologna (IT0203108N). This assassination added to a tragic series of attacks on Italian labour researchers which started in the 1980s with the wounding of Gino Giugni and the killing of Ezio Tarantelli and continued in the 1990s with the murder of Massimo D’Antona (IT9905112N). Marco Biagi had worked with the ministers of labour in the previous Prodi and D'Alema governments and was an active consultant to the present minister of labour, Roberto Maroni. In this role, he made an essential contribution to the preparation of the White Paper on the labour market which was presented in October 2001 (IT0110104F). Professor Biagi collaborated with the European Commission's Directorate-General for Employment and Social Affairs and was a member of the High Level Group on Industrial Relations and Change in the European Union.

Outlook

2003 will probably be crucial for Italian industrial relations in many respects: for the relations between the social partners and the government; for bilateral relations between the social partners, and notably for the structure of collective bargaining; and for the endurance of some sort of unitary action on the part of the major union confederations. A number of issues and tensions which have been building for some time are apparently reaching the stage where some adjustment, even if of a temporary nature, is unavoidable.

First, the government will face an important credibility test as it tries to ensure an improvement of public finances and economic growth through a series of reforms which will affect the country’s fiscal and pension systems and labour market institutions. Dissatisfaction with the government’s policies, which has been growing in connection with the preparation of the 2003 budget law, may fade away if the government successfully manages to meet those objectives. At the same time, the effectiveness of social concertation and social dialogue in contributing to defining the contents of the ongoing reforms will prove essential for the future viability of this form of involvement of the social partners in policy making.

The two-tier bargaining structure introduced by the tripartite agreement of 23 July 1993 has been under strain for some time, as demands for further decentralisation have increased. However, any doubts on the sustainability of the existing bargaining structure may also call into question the durability of the current incomes policy. At present, the limit on sectoral wage bargaining set by the forecast inflation rate (under the terms of the 1993 agreement) has been under attack by the trade unions, which consider it to be too restrictive and often excessively low (not to mention doubts about the reliability of the RPI itself - IT0209101N). The settlement of this question will come mainly from bargaining activity and, as it concerns a traditional 'distributive' conflict, a solution might be difficult to reach. Future bargaining rounds, and notably that for the metalworking sector, will provide important occasions to assess possible solutions.

Finally, the overall picture and the environment in which both tripartite and bilateral relations will develop are jeopardised by the divisions which have opened up between the major union confederations. The convergence which emerged during the Fiat crisis seems more of an exception than a turning point and there are no clear prospects for unitary action. Continuing divisions among the trade unions may make solutions more difficult to find, relations more unstable and regulation by industrial relations weaker, a situation that neither the social partners nor the government would probably welcome. Therefore, the capacity of unions to find a common stance towards negotiations, with a view to signing stable agreements, would probably be a key contribution to facing all the other pending issues. (Livio Muratore, Ires Lombardia, and Roberto Pedersini, Fondazione Regionale Pietro Seveso)

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