Italian government launches financial intervention package

On 31 May 2010, the Italian government launched a decree designed to ‘create financial stability and promote economic competitiveness’. It sets out cuts in public spending of €24.9 billion over the next two years. Ministers hope this will lower the ratio between deficit and GDP from 5% to 2.7%. Italy’s largest trade union, Cgil, horrified that the decree suspends the renewal of all collective agreements, organised a general strike on 25 June to protest against the measures.

Decree’s main proposals

The main measures set out in Decree No. 78/2010 (in Italian) are outlined below.

Collective bargaining and salary in public administration

  • All renewals of collective agreements in the public sector will be suspended for 2010–2012.
  • Salaries for public administration employees will be frozen from 2010 until 2013.
  • The collective agreement renewals for the 2008–2009 biennium cannot determine pay rises above 3.2%. This will also be applied retroactively to agreements that were stipulated prior to the introduction of the decree. The norm will not be applied to the public security sector, the armed forces and the fire service.
  • For school personnel, seniority payments to teachers, set out in collective agreements currently in force, will be partially suspended from 2010 to 2012. The Ministry of Education and the Ministry of the Economy will decide whether to grant any payments on an annual basis after consulting the main train union organisations.
  • The portion of any salary that exceeds €90,000 will be reduced by 5%. Any sum above €150,000 will be reduced by 10%. The measure will be in force from 1 January 2011 and remain valid until 31 December 2013.
  • There will be a block on automatic salary increases and rises in seniority payments between 2011 and 2013 for magistrates, state lawyers, university lecturers, military personnel, the police force and the diplomatic corps.

Hiring in public administration

  • From 2011, public departments (except in research and education) will have their budgets for fixed-term contracts slashed to 50% of the amount allocated in 2009. According to data from the Annual Report of the State General Accounting Department for 2008 (Conto Annuale della Ragioneria Generale dello Stato (709Kb PDF)), there are more than 140,000 workers with a fixed-term contract in the affected sectors.
  • The turnover limit in the public administration foreseen in Decree No. 112/2008 (in Italian) will be extended. From 2010 to 2013, the budget available to hire people on open-ended employment contracts will be a maximum of 20% of the total expenditure used to cover the costs of personnel retiring the previous year. In 2014, the limit will increase to 50%.

Central and local administrations

  • There will be a €13 billion reduction in funds for the regions and local bodies. These are mainly allocated for public transport, incentives for enterprises, public construction work, road networks and other public services.
  • Spending on National Health Service workers will be cut by more than €1.5 billion in 2011 and 2012.
  • A 10% saving in public spending is forecast through shutting down, re-organising or merging 27 bodies such as the National Institute for Occupational Safety and Prevention (ISPESL), the Social Affairs Institute (IAS) or the Social Security Institute for the Maritime Sector (IPSEMA).

Pensions

  • Retirement will take place 12 months after reaching pensionable age. There are currently two exit ‘windows’ per year for contribution-years based pensions and four for old-age pensions; now there will be only one.
  • Pensionable age will be adjusted according to life expectancy calculated by the Central Institute of Statistics (ISTAT). The first adjustment will be on 1 January 2015 and will increase the age limit by a maximum of three months. The second adjustment will occur in 2019 and then every three years.
  • The pensionable age for women in public administration will be increased from 61 to 65 years from 1 January 2012 (IT1007039I).

Economic competitiveness

  • Tax relief is envisaged by the decree, for example, on that part of workers’ salaries linked to productivity. These tax reductions will be defined by the government, ‘following consultations with the social actors’.
  • There is encouragement for new enterprises in southern Italy, with zero taxation on production activities, and there are fiscal and administrative benefits for enterprise networks.
  • European enterprises will be able to operate in Italy maintaining the fiscal regime of their country of origin.
  • There will be incentives, such as tax relief, for researchers to return to Italy from abroad.

Social partner reactions

The main trade unions reacted differently to the government decree.

The managing committee of the General Confederation of Italian Workers (CGIL) organised a general strike on 25 June and various other days of protests at sectoral level. It considers the government has acted wrongly because there are no measures included in the decree to sustain employment, growth or development. Furthermore, the committee thinks the decree is unfair, penalising employees, local bodies and socially disadvantaged people.

However, Raffaele Bonanni, General Secretary of the Italian Confederation of Workers’ Unions (CISL), believes the measures are necessary and, despite disagreeing with some aspects of the decree, says that trade unions managed to obtain some significant concessions from the government.

Luigi Angeletti, General Secretary of the Union of Italian Workers (UIL), considers the decree ‘inevitable and necessary’. However, he does not agree with the measures affecting public service workers, and for this reason employees belonging to the Public Administration Workers’ Union (UIL-PA) took part in a one-day strike on 9 July.

Various other strikes were organised by firefighters, National Health Service workers and magistrates.

Emma Marcegaglia, President of the General Confederation of Italian Industry (Confindustria) considers the government manoeuvre to be positive. She stated, however, that greater interventions are required to stimulate ‘growth, research, innovation and tax relief for second-level bargaining’.

Sofia Sanz, Cesos

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment