Italy: Active labour market policy reform gets underway

​The Italian government has introduced reform of active labour market policies as part of the 2014 ‘Jobs Act’, aimed at stronger coordination by public and private actors at local level. The reform is expected to foster the better matching of labour demand and supply, but its effectiveness could be hampered by several factors.

Introduction

The Jobs Act labour market reform (‘JALM’ for the purposes of this article) was passed by the government of Italian Prime Minister Matteo Renzi  on 14 September 2015. The legislation aims to reorganise active labour market policies and to support their coordination at national level. JALM is part of the reform process of the entire labour market introduced by the ‘Jobs Act’ (Law 10 December 2014, No. 183), which contained criteria for subsequent legislation concerning dismissal procedures, governance and functioning of passive labour market policies, coverage and features of unemployment benefits, reduction of administrative burdens on firms, reshaping of employment contracts, simplification of labour inspections, and the promotion of work–life balance.

JALM should result in a more streamlined coordination of employment services at national level, currently designed and implemented at regional and provincial level within national guidelines set in accordance with the Italian Constitution.

Main features of the act

Coordination of labour policies and creation of ANPAL

Under JALM, the government is committed to periodically defining labour strategies and policy targets with the agreement of the regions and autonomous provinces in the State–Regions Conference.

A new institution, the National Agency for Active Labour Market Policies (ANPAL), will start operating in 2016. Up to 395 workers will be transferred to the new organisation from the Ministry of Labour and Social Policies (whose Directorate-General for Active Labour Policies will be closed) and from the Institute for the Development of Vocational Training of Workers (ISFOL), the public organisation tasked with conducting research and evaluation on labour policies. ANPAL will also take ownership of Italia Lavoro, a joint-stock company owned by the Ministry of Economy and Finance, whose mission is to promote and provide employment services.

The main task of ANPAL will be to coordinate and monitor labour policies implemented by the Network of employment services, including:

  • the National Institution for Insurance against Accidents at Work (Inail) for the job placement of people with disabilities;
  • the National Institute of Social Security (INPS) for the provision of public incentives and income support instruments;
  • ISFOL;
  • Italia Lavoro;
  • all the actors delivering employment services at local level, including Public Employment Services (PES), private employment placement agencies, paritarian funds, Chambers of Commerce, universities, and secondary schools.

Coordination will also be achieved by managing the relevant National Operational Programmes and by providing guidance on European Social Fund Regional Operational Programmes.

ANPAL will define the minimum level of services to be guaranteed by local administrations and public employment services (PES) and, notably, will intervene directly in their management if they fail to meet the minimum level of service. ANPAL will also support or manage outplacement initiatives concerning workers at companies in crisis, particularly those negotiating collective dismissals or needing access to Wage guarantee funds. ANPAL is also expected to attain the ambitious target of deploying and managing an integrated digital system on labour policies, connecting different databases and information currently produced mainly by INPS, the regions, and the PES. The new digital system will collect information about:

  • employment relationships;
  • participation in training courses;
  • training being offered;
  • provision of unemployment benefits.

The government anticipates that this reform will:

  • help overcome the current fragmentation of information among national and local authorities;
  • improve the matching of labour demand and supply;
  • better monitor and evaluate the actual implementation and outcomes of labour policies.

Data will also be made available to research institutes for independent evaluation, although steps will be taken to make sure the data do not identify individuals.

Linking active and passive labour market policies

The labour market reform aims to strengthen the link between active and passive labour market policies. There will be penalties for people supported by wages guarantee funds and unemployment benefit claimants if they are absent without justification from meetings with their tutors or from training courses, or if they refuse an ‘adequate job offer’.

The definition of ‘adequate job offer’, introduced by the Monti-Fornero reform (Law 28 of June 2012, No. 92), will be replaced by a ministerial decree and will take into account:

  • whether the role is appropriate for the jobseeker’s skills;
  • workplace–home distance;
  • duration of the unemployment period;
  • minimum level of proposed wage (at least 20% more than the amount of the latest unemployment allowance received). 

PES employees who do not enforce the rules will also be penalised.

The reform also revises the rules of the employment services provision voucher, introduced by Legislative Decree No. 22 of 4 March 2015. Now only workers who get the New Social Insurance Provision for Employment (NASpI) and who have been unemployed for more than four months will be entitled to receive the voucher which they can use with a public or private employment service provider, as they choose. The voucher can be used by workers as payment for participation in a tutoring programme, possibly involving training, aimed at helping them find a job. The payment to the provider will be mainly results-based,  when the tutoring or training ends. PES will define its amount depending on the beneficiary’s actual employability and using a common methodology to be defined by ANPAL.

Reaction of social partners

Social partners generally agree on the need to strengthen the role of active labour policies in the Italian labour market. However, they have expressed doubts on whether the reform can achieve its goals in the absence of additional resources. They have also called for PES staff to be adequately re-trained.

Most of the social partners were also against the introduction of public coordination and monitoring of paritarian funds. They insist that these funds should be used only for the purposes defined by collective bargaining.

Commentary

The new features of the labour market reform may benefit workers who are between jobs, incentivise benefit claimants to find a job, and help workers faced with losing their job to get a new one. The achievement of the first target depends on the actual ability of ANPAL to develop a functional connection between the existing databases, and to improve employment services.

The anticipation that stricter rules on benefit claimants will lead to increased employment and reduced public spending is rather flimsy. Currently claimants are covered only for a limited period and their payments decrease gradually; meanwhile, there is little evidence that the training offered to job seekers or the services provided by PES and by other employment service providers are effective.

The re-employment of workers may be improved thanks to the voucher for employment services, which entitles individuals to choose both the provider and the kind of service to be received, triggering some competition between employment service providers.

However, the effectiveness of these proposals will really depend on the ability of the government to overcome some of the structural obstacles to economic growth. These include constraints on production such as expensive energy bills, weak transport links in the south of the country, lack of finance for companies,  and limits on consumption growth. Italy still lacks a universal protection scheme against poverty, and the inadequacy and instability of the income of lower-paid workers is both a pressing social problem and a factor that dampens economic demand.

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