Italy: Reforms to system of unemployment benefits

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The Italian government reformed the system of unemployment benefits in March 2015. It linked payments more closely to contributions and slightly increased their coverage. This was generally welcomed, but there have been criticisms about the financial sustainability of the new system, and the failure to cover all categories of employment relationships.

The government acted after approving the Jobs Act in December 2014, which gave it the authority to reform labour legislation on issues such as:

  • protection against dismissals;
  • forms of precarious employment;
  • active and passive labour market policies;
  • reconciliation of work and family life.

Background

The Jobs Act (Law 10 December 2014, No. 183) replaces many provisions of the Monti-Fornero reform and of the current labour law framework.

The government’s intention was to:

  • reduce the dualism of the Italian labour market;
  • promote the use of open-ended contracts;
  • increase the coverage of unemployment benefits.

On 4 March 2015, the Decree no. 22 replaced the previous system of unemployment benefits, strengthening the link between the benefits and the amount of past paid social security contributions. It also aims at bolstering measures  helping those without work to get jobs. .

New type of unemployment benefits 

The decree introduced a new type of unemployment benefit for employees losing their job: the New Social Insurance Provision for Employment (NASpI), which replaced the previous systems (ASpl and the miniASpl) from 1 May 2015.

During 2015 and 2016 NASpI will run in parallel with the mobility allowance, an unemployment benefit payable to workers in specific sectors, until the allowance ceases on 1 January 2017.

The decree also provides for:

  • an experimental unemployment benefit for dependent self-employed workers (DIS-COLL) (see Table 2 below);
  • an experimental means-tested income support targeted at workers who are no longer entitled to NASpI, have children, or are close to retirement age (ASDI), which will be equal to 75% of the last NASpI payment for a maximum of six months;
  • a voucher for the provision of employment services.

The voucher will be allocated to workers being unfairly dismissed or hit by collective dismissals in order to help them find new jobs. The value of the voucher will be associated with the employability of the individuals, and will be paid to employment agencies once the individual is in a job again.

Further reforms are expected. These will:

  • strengthen links between access to unemployment benefits and participation in active labour market policies;
  • establish a national agency in charge of managing employment services, active labour market policies and unemployment benefits;
  • streamline the provisions governing the Wages Guarantee Fund (CIG). 
Table 1: Unemployment benefit for employees losing their job
 

New regime

Previous regime (applying to employees losing their job up to 30 April 2015)
  New Social Insurance Provision for Employment (NASpI) Social Insurance for Employment (ASpI) MiniASpI (allowance similar to ASpl but with less stringent requirements)
Access requirements 13 weeks of social contributions in the four years before termination of employment, and at least 30 working days in the 12 months preceding the termination of employment.

The first social contribution payment must have been made at least two years before the beginning of the period of unemployment.

12 months of social contributions in the two years preceding the start of unemployment.

13 weeks of insurance seniority during the 12 months preceding the beginning of the period of unemployment.
Duration

Half the number of weeks for which social contributions were paid in the four years before the start of unemployment. The weeks which already gave rise to the payment of the benefit are excluded from the computation of its duration.

Maximum duration is 24 months in 2015 and 2016 (18 starting from 2017)

In 2015, the duration ranges from 10 to 16 months depending on age (from 2016, these values were to be increased by two months). Half of the number of weeks for which social contributions were paid over the 12 months preceding the beginning of unemployment.
Amount:

75% of the first €1,195 of wages

25% of wages over €1,195

The maximum allowance is €1,300. The benefit decreases by 3% each month starting from the fourth month.

75% of the first €1,195 of wages

25% of wages over €1,195

The maximum allowance in 2015 is €1,167. The benefit decreases by 15% after the first six months and by a further 15% after 12 months.

75% of the first €1,195 of wages

25% of wages over €1,195

The maximum allowance in 2015 is €1,167.

Table 2: The new unemployment benefit for dependent self-employed workers (in place only for workers losing their job in 2015)
DIS-COLL (specific unemployment benefit for dependent self-employed workers)
Access requirements

Three months of social contributions paid from the beginning of the year preceding the start of unemployment, until the beginning of the period of unemployment.

One month of social contributions paid during the year when unemployment occurs.

Duration Half of the number of weeks for which social contributions were paid from the beginning of the year preceding the beginning of the period of unemployment until the beginning of the period of unemployment. The maximum duration cannot exceed 6 months.
Amount

75% of the first €1,195 of wages

25% of wages over €1,195

The maximum allowance is €1,300. The benefit decreases by 3% on a monthly basis starting from the fourth month.

Political debate

There was robust political debate on the introduction of the Jobs Act. Most of it focused on the new regulation on dismissals applying to open-ended contracts. However, the changes to the rules on unemployment benefits also triggered reactions from political parties.

Members of the opposition parties Five Star Movement (M5S) and Left, Ecology and Freedom (SEL) said the new provisions failed to cover all types of employment relationships.

Some members of these parties asked the Senate to reject the act in the final vote, alleging the Constitution had been breached because of the reduction of protection from dismissal and the failure to include self-employed workers in the categories eligible for the unemployment benefits. The Senate Chamber approved the act, for which the government asked a vote of confidence. Both the parties are currently endorsing proposals for laws to introduce universal minimum income schemes in Italy.

The right-wing opposition parties, however, argued that the increased coverage of the new unemployment benefits was not financially sustainable. Forza Italia said the state and Italian companies would face greater costs. In fact, though the reform is to be funded by resources which have already been assigned to ‘social shock absorbers’, the act allows the government to adopt measures aimed at allocating additional resources should the available funds not be able to cope.

Reaction from social partners

The new provisions were generally welcomed by employers’ organisations. However, the main employer confederation, Confindustria, asked for the law provisions to be made clearer, especially to clarify how they interact with previous legislation. The Italian Enterprise Network (R.E TE.), the coordinating body of the main Italian confederations representing small and medium enterprises, praised the act’s objectives but said the ASDI was too costly. It also urged the government to bring in regulations ensuring benefit conditionality with the participation in active labour market policies and to guarantee public financial support to social shock absorbers provided by paritarian institutions.

Unions, especially the Italian General Confederation of Workers (CGIL), criticised the new system of unemployment benefits, saying the decree had not made them truly universal and particularly failed to adequately cover quasi-subordinate workers and seasonal workers, the latter risking to have the duration of the benefit halved as a result of the substitution of the age criteria with the contribution criteria in the computation thereof. The unions also asked for a longer maximum duration of NASpI and for the mobility allowance to be increased in 2015 and 2016 in line with the more favourable provisions of NASpI.

A full overview of the position of social partners is available on the Senate web pages detailing the Jobs Act and the implementing decree on unemployment benefits (in Italian).


For a complete overview of the Jobs Act reform, please see our articles addressing: the new dismissal regime, the reform of temporary unemployment benefits, the reshaping of employment relationships,  the rationalisation of inspection activities, the reorganisation of active labour market policies, the new rules on job tasks, measures targeting economically dependent self-employed work.

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