Italy: Latest working life developments – Q4 2016

Measures to make retirement more flexible, a new collective agreement for the metalworking sector, newly published employment figures and planned referendums on mini-jobs and subcontracting are the main topics of interest in this article. This country update reports on the latest developments in working life in Italy in the fourth quarter of 2016.

Budget Law provides for early retirement 

Act no. 232/2016 (known as the 2017 Budget Law) introduced three early retirement schemes as part of a framework of measures addressing retirement rules and pension benefits, agreed following a long consultation with trade unions. The three schemes, aimed at people aged 63 or over with no more than three years and seven months to statutory retirement age, are as follows:

  • social advance pension payment (anticipo pensionistico sociale, special APe);
  • advance pension payment (anticipo pensionistico, general APe);
  • temporary supplementary advance annuity (rendita integrativa temporanea anticipata, RITA).

Specific categories of disadvantaged people will have access to the special APe, which is funded by the state. The general APe can be accessed by other workers upon taking out a 20-year loan to pay back the anticipated sum, as well as a life insurance policy subsidised by the State. Finally, workers enrolled in supplementary private pension schemes will have the opportunity to apply for RITA – an advance pension payment subject to a 15% maximum taxation rate.

The Act also eliminated the cap on the value of supplementary pension contributions that are exempt from income tax. This measure is likely to promote paritarian pension funds (that is, those jointly managed on a parity or equal basis) in collective bargaining agreements.

Renewal of collective agreement in metalworking sector

On 25 November 2016, social partners in the metalworking sector entered into a new national collective bargaining agreement (NCBA). The NCBA is the first to be jointly signed by the three main sectoral unions after a seven-year dispute.

The agreement set out new rules for wage increases, which should amount to €51 per month by the end of 2019. The increases will be lower than in the past as they will take into account the fixed pay elements that are agreed at company or individual level from 2017 onwards.

Employers will pay a further average €40 monthly sum per employee to cover aspects such as:

  • increased contributions to a paritarian health fund and to the paritarian pension fund (whose coverage is now mandatory for all employees);
  • training;
  • flexible benefits such as private welfare schemes set out in company-level collective bargaining agreements.

Ongoing debate on effects of the 2015 Jobs Act

Political debate continues to focus on the likely effects of the Jobs Act and of incentives to hire under open-ended contracts, introduced in 2015.

To help clarify the issues, the public institutions responsible for labour market data issued a joint report on 28 December 2016. The report confirms an absolute increase of employment (a rise of 239,000 or 1.1%, according to survey data) on an annual basis. It also shows that the increase in the number of permanent employees was higher than the rise in temporary employees (increases of 489,000 and 54,000 respectively, according to administrative data) on an annual basis. However, figures for the third quarter of 2016 showed a quarterly reduction in employment (a fall of 14,000 or 0.1%) and a greater rise in temporary (83,000) than permanent (10,000) positions over the quarter. The report also confirmed a steady increase in mini-jobs (voucher-based working arrangements), with 109 million vouchers sold, an increase of 34.6% on an annual basis.

New government and forthcoming referendums

Following the rejection on 4 December 2016, by means of a referendum, of the constitutional reform promoted by the government, the President of the Council of Ministers, Matteo Renzi, resigned. A new government was sworn into office soon after, led by the former Minister of Foreign Affairs, Paolo Gentiloni.

Forthcoming political debate is likely to be influenced by the referendum petitions filed by the Italian General Confederation of Work (CGIL) on the following issues:

  • unfair dismissal regime
  • mini-jobs
  • joint liability in subcontracting, including the role played by collective bargaining.

At the time of writing (11 January 2017), the Constitutional Court had ruled the latter two referendums admissible (they are expected to be held in the spring), but rejected the one on unfair dismissal.

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