Italy: Latest working life developments – Q3 2017
Two agreements on new rules governing industrial relations and representativeness, incentives for measures promoting work–life balance, and consultations on possible amendments of the pension system are the main topics of interest in this article. This country update reports on the latest developments in working life in Italy in the third quarter of 2017.
Unions agree new rules on industrial relations and representativeness
On 7 September 2017, the Italian General Confederation of Labour (CGIL), the Italian Confederation of Workers’ Unions (CISL) and the Italian Union of Labour (UIL) signed two agreements covering the unions’ representativeness and industrial relations with Confesercenti – one of the largest employer organisations covering SMEs in the tertiary sector.
The agreement on representativeness is similar to those which have been endorsed by the same unions since 2014 with other employer organisations representing large firms, SMEs and cooperatives.
It confirms that collective agreements will be valid for all employees if signatory unions exceed the 50% representativeness threshold, measured by selected indicators, and that only unions reaching a 5% threshold will be entitled to bargain. These rules will be implemented once criteria for measuring the indicators have been defined with the institutions that receive and elaborate the relevant data. The agreement on industrial relations follows similar agreements involving employer organisations representing SMEs and cooperatives.
The agreement keeps the national level of bargaining as the dominant one, while also regulating issues that can be derogated at firm or local level. It also extends the duration of national collective bargaining agreements (NCBAs) from three to four years.
The social partners also agreed to promote mergers amongst jointly managed funds in order to improve their efficiency, and the take-up of private welfare and variable pay at decentralised level which benefit from generous tax and social security contributions’ relief.
Support for measures to promote work–life balance
On 13 September 2017, the government approved a decree earmarking €110 million to support measures to encourage a better work–life balance, in line with the relevant provisions introduced by the Jobs Act on an experimental basis for the 2016–2018 period. The decree grants social security contribution relief for employers adopting or extending measures that target at least 70% of their staff, and which follow decentralised collective bargaining agreements.
In order to be eligible, measures must cover two of the following three areas, with one of the first two being mandatory:
- parenthood (such as vouchers for baby-sitting services or e-learning and coaching services for mothers returning to work after maternity leave);
- work organisation (including the adoption of flexible working time schemes and teleworking);
- private welfare.
The relief can be granted only once for each employer and cannot exceed 5% of the wage.
Consultations on possible changes to pension system
After the implementation of the first phase of consultations between the government and unions on pensions, leading to the adoption of early retirement schemes, a new round of consultations took place between July and September 2017.
The focus has now been on possible adjustments to the rules on the calculation of pension benefits, and on the retirement age. Currently, pension benefits for those having worked from 1996 are calculated on the sole basis of paid contributions, with a serious risk of a shortfall for people who have precarious career patterns. At the same time, the retirement age for old-age pensions is automatically increased with life expectancy, reaching 67 years by 2019. However, the parties involved are far from reaching an agreement on changing this.
The government proposed selective amendments to increase the means-tested income support for pensioners on a low income, up to about €600 from the current €450 per month, regardless of contributions paid, and the enlargement of the scope of early retirement schemes. Unions tabled a broader set of proposals, including the reduction of the retirement age for mothers and people taking care of dependent relatives, as well as a variable retirement age according to the impact that different occupations have on life expectancy. They also propose adjusting income support for pensioners in line with the number of years for which social security contributions have been paid.
By 20 October 2017, the government was expected to define the resources available to possibly adjust the pension system in the Budget Law. Nevertheless, as long as strong redistributive policies are not taken into consideration, the possibility to steer towards a more socially sustainable system is undermined by financial constraints (Italy has the second largest public debt in the EU as a share of GDP, at 132.6%).
The Budget Law should also earmark additional resources to grant an average €85 wage increase for the three million public employees who have had their wages frozen since 2010. This amount was agreed in a framework agreement signed by the government and unions in 2016, and is the reference for negotiations on the renewal of public sector NCBAs, which have just started.