Italy: Multinational companies and collective bargaining

  • Observatory: EurWORK
  • Topic:
  • Published on: 01 July 2009



About
Country:
Italy
Author:
Manuela Galetto
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

The present study reports a limited influence of MNCs on the Italian collective bargaining agenda. The role of MNCs is not a leading one with regards to the industrial relations dimension. Though, according to some interviewees, MNCs are often seen as precursor in the introduction of new practices in terms of variable pay systems, human resource management (as it is the case, for instance, of policies of diversity management) and, most important, measures for health and safety at the workplace.

1. MNCs and collective bargaining: basic data

1) MNCs account for a significant proportion of private sector employment in many European countries. Please provide the following information according to availability:

a) proportion of private sector employment accounted for by MNCs, and recent change (e.g. since 2000)

b) proportion of manufacturing employment accounted for by MNCs, and recent change (e.g. since 2000)

c) proportion of service sector employment accounted for by MNCs, and recent change (e.g. since 2000)

Table 1. Proportion of employment accounted for by MNCs
Year Private sector Manufacturing   Services*
  Foreign-owned Home-based Foreign-owned Home-based Foreign-owned Home-based
2001     10.8%   5.1%  
2002     13.13%   5.4%  
2003     12.5%   5.7%  
2004     12.4%   6.1%  
2005-6-7-8     n.a.   n.a.  

Source: OECD Factbook 2008

* The OECD surveys exclude banking and insurance services

2) Please provide any available information on the breakdown of employment in multinationals between foreign-owned MNCs and home-based MNCs

Table 2. Breakdown of employment in MNCs
Year   Total Manufacturing   Services*
  Foreign-owned Home-based Foreign-owned Home-based Foreign-owned Home-based
1998 564,465          
2002 930,000          
2004 920,575          
2006 858,039 1,120,550** 526,730 871,367** 309,315 175,884**

Source: Italia Multinazionale, Rapporto 2007

** employees abroad working for Italian MNCs

The Italia Multinazionale report published in 2007 stated that 3,955 foreign companies were operating in Italy.

Table 3. Percentages of employees in Italy of foreign-owned MNCs by economic sector
Economic sector 2006
Manufacturing 61%
Utilities and construction 4%
Commerce 12%
Services to businesses 23%

Source: Italia Multinazionale, Rapporto 2007

Table 4. Percentages of employees in Italy of foreign-owned MNCs by country of origin
Country of origin 2006
Europe 60.5%
North America 33.4%
Japan 3.4%
Other countries 2.7%

Source: Ufficio Internazionale Fim-Cisl, 2006

3) What is the level of collective bargaining coverage amongst MNCs, and how does this compare with levels of collective bargaining coverage within the private sector? In the absence of precise figures, please provide an estimate of whether it is higher or lower than the average in:

  • i) the private sector overall
  • ii) manufacturing
  • iii) private services

The question of trade-union coverage in Italy is resolved by the erga omnes extension of national collective agreements to all companies in the sector concerned. Therefore, also the multinational companies, foreign-owned or otherwise, present in Italy, according to the productive sector to which they belong, are covered by the national agreement exactly like non-multinational Italian companies in manufacturing, services and the private sector overall.

4) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, are MNCs covered by sector agreements? What is the nature of the relationship between MNCs and sector agreements?

a) If Yes, do they mainly conform with the provisions specified in these agreements?

b) If No, do MNCs conclude their own company agreements? If so, what if any relationship do these company agreements have with the sector agreement?

As said above, the multinationals are covered by the sectoral collective agreement. According to the Agreement of 23 July 1993, national-level sectoral bargaining is flanked by a company level which deals with issues like supplementary wages, work flexibility (in its various forms, retributive, functional and organizational), management of the labour market and employment, etc.

One difference between multinationals and other companies is that the former almost always engage in company-level bargaining, while this is not the case of the other companies. In Italy, the share of workers covered by second-level bargaining is diminishing: around 3 million in the private sector, equal to around 40% of the total. Company-level bargaining is less frequent in SMEs (fewer than 250 employees), which in Italy represent a large part of the productive structure.

5) In countries characterised by single-employer bargaining arrangements for the manufacturing and/or private service sectors, to what extent are MNCs regarded by other employers as pattern setters for wage negotiations?

This is not the case of Italy

2. MNCs and change in national systems of collective bargaining

1) To what extent have MNCs been a source of recent change in the agenda and outcomes of collective bargaining in respect of any of the following issues. Please distinguish between manufacturing and private services:

In Italy at national level, foreign-owned MNCs have not been leading players in this regard. Instead, a major contribution has been made by Italian MNCs like Fiat, Ilva, Indesit, but also by the local associations of industrialists (Assolombarda, the Unione Industriali of Turin, etc.). This is partly due to Italy’s collective bargaining system: minimum conditions are defined at national level and then company-level bargaining uses them as a basis. The novelties introduced by the MNCs described below, in fact, concern company-level bargaining.

a) payments systems? If so, please elaborate and give examples.

The variable wage was introduced in Italy in the second half of the 1980s, mainly in enterprises with state shareholding and the multinationals. Hence the MNCs have brought innovation in terms of new pay arrangements.

Nevertheless, there have been cases in which a proposal by an MNC to give stock-options to the employees has been refused by the latter. This happened at Tenaris-Dalmine (an Argentinean-owned MNC in the metallurgical sector) at the end of the 1990s.

b) working time arrangements? If so, please elaborate and give examples.

According to a trade unionist long engaged in bargaining within the metalworking sector’s European Works Councils, innovations in terms of working time are more evident in SMEs than in large enterprises, where flexibility, if it exists, is annualized.

Nevertheless, the Orlando Group (Italian-German, a leader in the production of semi-finished copper articles) following closure of its plant in Liguria, avoided excessive commuting by employees to their new workplace (the company’s other plant Serravalle) by concentrating their working time into three days a week with daily shifts of 12 hours.

c) flexibility arrangements (other than working time)? If so, please elaborate and give examples.

Since the early 2000s there have been no particular innovations in terms of flexibility within MNCs compared with the rest of Italian companies. MNCs, like other companies, have undergone restructuring processes which have involved the social actors.

d) handling restructuring? If so, please elaborate and give examples.

Interesting in regard to restructuring is the case of Electrolux (a leading Swedish multinational which manufactures household appliances at 6 plants in Italy with around 8000 employees), which in February 2008 concluded an agreement which envisaged, amongst other things, the closure of the company’s plant at Scandicci (Florence). The agreement provided, however, that the plant was to be sold to Futura Energia (controlled by an Anglo-American investment fund). The plant would be converted to production in the field of renewable and solar energy. Besides the provision of social shock absorbers, Electrolux undertook to invest in the plant’s conversion, the start-up of its new activity, and the protection of employment (IT0810039I).

Another case, which concerns the entire pharmaceuticals sector and not one MNC in particular, has proposed a solution to ‘prevent’ crisis and possible restructuring. The Welfarma agreement (IT0812019I) is a ‘trilateral’ accord involving the trade unions, industry representatives and the Ministry of Labour. The pharmaceuticals sector in Italy consists essentially of multinationals (only 31.2% of companies in the sector are Italian-owned), many of them American and British. The agreement provides for an alternative, optional, procedure that companies can activate in the case of numerous dismissals of pharmaceutical company representatives for their outplacement in the labour market. A company which decides to use the procedure can rely on the assistance of the local trade unions and the public employment agencies in their zone. Nevertheless, the agreement, even though original, has shortcomings signalled by the associations of pharmaceutical company representatives, which were not consulted when the agreement was being defined.

2) Are any of these changes associated with MNCs headquartered in particular countries? If yes, which countries?

The literature on the MNCs in Italy emphasises that it is mainly American multinationals that have introduced, for instance, stocks options. Other companies have forms of variable pay linked to performance by a mechanism of personnel ‘ranking’ said to have been “introduced on the example of the American MNCs and whose objective is to individualize the employment relationship” (Pulignano 2006).

From the point of view of restructuring, according to reports by actors in the metalworking sector, French-owned companies are those which seem mostly to adopt a ‘preventive’ approach which also favours solutions and accords that are advantageous to workers. In companies like Schneider and Alstom, for example, transnational negotiations have foreseen the retraining of certain personnel with a view to production conversion.

The Scandinavian and German firms have also taken a generally more conciliatory approach, but it is difficult to determine the extent to which this prevails over the ability of the local social actors to influence the bargaining.

3) Are MNCs introducing new issues onto the bargaining agenda? If so, what are these new issues? (Examples might include equality and diversity practices; environmental issues; new employee participation practices; teleworking.)

In recent years MNCs have introduced bonuses, although these are discretionary pay increments linked to the company’s performance/profitability. In the already-mentioned case of Tenaris-Dalmine, this policy has been implemented in all the group’s plants, albeit in different ways.

Diversity management is another policy addressed to the personnel that can be mainly found in MNCs like for instance IBM, Microsoft, ABB, L'Oreal, Accenture, Autogrill, Jassens Cilag, Vodafone, Bosch, Henkel, KPMG, etc.

4) Are any of these new issues associated with MNCs headquartered in particular countries? If yes, which countries?

They do not seem to be concentrated by country of origin nor sector but such practices are better developed in MNCs rather than in small business.

5) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what has been the role of MNCs in opening up greater scope for company negotiations? Please distinguish between developments in manufacturing and private services.

a) are company negotiations mainly confined to issues on which sector agreements

  • i) provide openings and/or a framework?
  • ii) establish minimum standards or conditions?

No, negotiations within MNCs vary and they usually tend to go beyond the minimum levels established at national level, although there is no rule.

  • b) are there company negotiations on issues which are not addressed by sector agreements? If yes, please give examples.

The contents of company-level bargaining within MNCs in Italy have been described by some interviewees as ‘precursors’ of certain trends. Vocational training, for example, is an aspect in which MNCs invest more on average than other firms, also given the quantity of resources usually available to them and the frequent presence of R&D centres within the group.

  • c) are there any instances of company negotiations resulting in breaches of provisions in sector agreements? If yes, please give examples.

Italian labour law does not allow bargaining in derogation to the national agreement or in terms detrimental to provisions established at national level, and this applies to all companies in the country.

6) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, are there any recent examples of MNCs:

  • i) leaving a sector agreement? If yes, please give details.

As stated above, company-level collective bargaining must refer to the nation-wide sectoral agreement.

  • ii) placing new operations or sites outside of the coverage of the sector agreement(s) which apply at existing sites? If yes, please give examples.

However, there are examples of MNCs which would prefer to refer to the agreements covering other sectors because of their more favourable provisions (for the company). Ericsson (Swedish), which produces communications hardware and software, currently refers to the metalworkers’ agreement but wants to switch to the telecommunications workers’ agreement. On the one hand, this is understandable in view of the various ‘borderline’ productive areas between the two sectors, but on the other, the telecommunications agreement sets standards lower than those of the metalworking agreement.

7) In countries characterised by single-employer bargaining arrangements for the manufacturing and/or private service sectors, is there any evidence of the practice of ‘double-breasting’ by MNCs? (Double-breasting is when companies recognise trade unions for collective bargaining purposes at longer established sites, but not at more recently opened ones.) If yes, please indicate the extent of the practice and provide examples.

This is not the case of Italy

3. MNCs and the cross-border dimension to collective bargaining

1) Is there evidence of MNCs using comparisons of labour costs, flexibility and performance drawn from company operations in other countries in the course of local company negotiations? If yes, please give examples when answering the following:

  • i) in which sectors does this typically occur?

According to the trade unionists interviewed and involved in negotiations within MNCs, comparisons among plants of different countries are frequent. This happens in the manufacturing sector especially, where competition on costs is greater.

  • ii) what is the geographical focus of the comparisons (e.g. western Europe, eastern Europe, Asia, worldwide)?

There does not seem to be a particular ‘geographical focus’. The ACC metalworking company, which belongs to the Electrolux group, is for instance present in Europe (Italy, Spain and Austria) and China. When bargaining takes place, comparisons on working time are often made with other European countries in order to try and change the organization of shifts and the average duration of the work schedule (so as to increase working time).

Another frequent comparative element is workplace health and safety. As we shall see below, this is an area of transfer of good practices. It attracts more attention, the higher the risk of accidents, so that it is especially recurrent in negotiations at MNCs in the metallurgical sector.

  • iii) what is the impact of these comparisons on the outcome of local negotiations?

There is no evidence of a direct relationship between the comparisons made and the results in terms of new working conditions bargained within companies.

2) Is there any evidence of threats to relocate operations influencing the agenda and outcomes of local company negotiations? If yes, please give examples when answering the following:

  • i) in which sectors has this occurred?

This has happened mainly in manufacturing. In Italy, more than by MNCs, threats of relocation have been made by SMEs, which are particularly attracted to the countries of Eastern Europe (numerous Veneto SMEs, for example, have transferred part of their production to Romania).

  • ii) what are the destination countries / regions of the global economy for any threatened relocations?

Because the threats of relocation mainly concern the manufacturing sector, the destination countries are those that can guarantee lower labour costs (trade unioninsts interviewed most often quoted Eastern Europe and Asia).

  • iii) what has been the impact on the outcome of local negotiations?

In MNCs, more than the threat of relocation, it has been necessary to manage processes of relocation. Siemens Italia, for example, has been taken over by Nokia, and design and production have both been transferred to Asia.

3) Is there evidence of MNCs seeking to introduce so-called ‘best’ practices and/or corporate policies from their operations in other countries in the course of local company negotiations? (This may arise through the use of benchmarking.) If yes, please give examples when answering the following:

  • i) in which sectors does this typically occur?

The comparing of accident rates takes place as part of comparison/competition between the productivity and efficiency of different plants. However, figures are difficult to compare because of differences in surveying and recording methods among countries, as well as their different legislations. The American MNCs seem most attentive to workplace health and safety measures because of their insurance system, which penalizes those responsible for workplace deaths or accidents. ABB, for example, has had to sell a whole division to pay damages for asbestos-related diseases. Since these insurance systems take account of the risk of deaths or injuries, these must be reduced as much as possible

  • ii) is the process linked to the use of comparisons of labour costs, flexibility and performance or other Human Resouces policies (if so, please specify)?

No information came out of the interviews with regard to this topic.

4) Do MNCs employ significant numbers of posted workers (e.g. amounting to more than 5% of the workforce)? If yes,

  • i) in which sectors does this typically occur?
  • Ii) are these posted workers covered by local sector and/or company agreements?

It has not been possible to obtain precise figures. Workers posted to a certain country, regardless of the provenance of the company that has hired them, work under the conditions stipulated for that country.

5) Are there any instances where MNCs headquartered in your country have engaged in transnational negotiations at either European or global levels? If yes, please provide details of the MNC(s) concerned and the issues addressed.

The Indesit MNC has been the first in Italy to introduce a transnational agreement on fundamental rights and to sign an International Framework Agreement on rights applied throughout the company’s production chain world-wide. The problem is how to control the chain of sub-suppliers. International negotiations have also been requested within the PIAGGIO group, but without a positive response. The same request has also been made at Brembo and included in the bargaining platform for the renewal of the Fiat agreement. The majority of these companies are mainly engaged in re-organization, so that these issues are of secondary importance.

4. MNCs and the social partners

4a. Employers

Are MNCs affiliated to the main employers’ organizations at cross-sector and sector levels?

Yes.

To what extent are MNCs regarded as key players within the main employers’ organizations at cross-sector and sector levels?

As said at the beginning, the MNCs are not leading players in Italian industrial relationships, where the key roles are instead performed by local actors.

Are MNCs also organized in country-of-origin specific assocations (e.g. American or German Chambers of Commerce). If yes:

Do these associations intervene on industrial relations issues? If yes, please provide details.

The Chambers of Commerce of several countries are present in Italy, among them those of Great Britain, the United States, China, Germany, and Japan. However, these associations perform commercial functions rather than being involved in industrial relations.

4) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what influence do MNCs exercise over sector negotiations? For example, how far are MNC personnel involved as lead negotiators for employers’ organizations?

See question 2.

5) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, what, if any, kind of reforms to sector agreements are MNCs proposing? For example, are they pressing for:

  • i) limited reform, with modest extension of scope for company bargaining within sector agreements? If yes, please give examples.
  • ii) extensive reform, under which sector agreements are confined to establishing either minimum standards or a basic framework governing a few key issues? If yes, please give examples.

It does not appear MNCs propose changes to national sectoral agreements.

6) In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, is there any indication of the advantages or disadvantages that MNCs perceive in continuing to be party to sector agreements?

As seen in the case of Ericsson, it is likely that, for reasons of economic convenience, MNCs are tempted like other enterprises to move to sectors without overly binding standards on working conditions. However, what has happened to Indesit gives cause for thought. In recent years the company has opened four plants in Poland, a greenfield country for investments which guarantees, amongst other things, a ‘union-free’ productive environment A fatal accident occurred at one of the plants, and the reactions were such to induce the company to consider the convenience of having trade-union representatives at its plants in Poland as well.

4b. Trade unions

How have trade unions responded to the impact of MNCs on the agenda and outcomes of collective bargaining? Please give examples.

Trade unions have long been present within MNCs and, regardless of their country of origin, they have traditionally taken active part in negotiations. They therefore take a mainly participatory style to almost all issues raised. They do not always accept innovative proposals, as in the case of the rejection of stock options at Tenaris Dalmine, but this refusal is not due to the fact that the innovations have been proposed by an MNC.

In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, how have trade unions responded to attempts by MNCs to broaden the scope of company negotiations? Please give examples.

The have responded in line with the participatory style just outlined.

In countries characterised by multi-employer bargaining arrangements for the manufacturing and/or private service sectors, how have trade unions responded to any attempts by MNCs to:

  • i) leave sector agreements? Please give examples.

There are no cases of a national sectoral agreement being ‘abandoned’.

  • ii) place new operations or sites outside of the coverage of the sector agreement which applies to existing operations? Please give examples.

The trade unions are well aware of the limits imposed by law on operations intended to elude obligations with regard to workers and, especially in the case of MNCs, where the unions are almost always present, they are natural interlocutors in change processes.

In what ways have trade unions responded to the use by MNCs in local, company negotiations of:

  • i) comparisons of labour costs, flexibility and performance?

The trade unions are the first to be interested in the cost of labour at other plants. Sometimes, as in the case of codes of behaviour, they have been the first to start negotiations to ensure an adequate wage at all plants (also in particularly disadvantaged countries).

  • ii) threats to relocate? Please give examples.

The trade unions may respond to threats to relocate by, among other things, threatening industrial action. But in the long period, as testified by some interviewees, more than threats, the unions find themselves faced by an accomplished fact. If anything, relocations (already decided) ‘are softened’ by attempts to reduce job losses to the minimum.

The conversion of Electrolux’s plant at Scandicci is an example of how a decision on closure can be implemented successfully.

Are there instances where trade unions have targeted specific MNCs because of public, media or political interest in their practices? If yes,

  • i) have they involved political exchange, involving mobilization of popular sentiment against foreign companies as political leverage to gain concessions from government (e.g. the cases of Alstom in France and Alitalia in Italy)? Please provide examples.

In the case of Alitalia, the trade unions were already massively present in the company. There are no examples of cases where the trade unions have intervened in a company following media coverage of an event. If anything, the unions publicize practices within companies so that the latter are induced to revise them.

The campaign to raise awareness of the working conditions of call-centre operators was launched by the workers themselves. The trade unions only intervened subsequently, activating a series of institutional (collective bargaining) channels to gain a contract more favourable to the workers.

  • ii) have new industrial relations actors, such as NGOs, been involved in such campaigns? Please give examples.

No information is available on this topic.

Are trade unions in MNCs engaged in compiling their own cross-border comparisons of working conditions etc. at sites in different countries? If yes, please give examples.

Yes, particularly if there is a European Works Council at the MNC. In this case, it is easier for the workers’ representatives to compare and access information concerning the group as a whole.

Are national and local trade unions involved in European-level negotiations with MNCs on any issues? If yes, please give details.

StMicroelectronics is a French MNC also present in Italy. It occupies 154th place in the classification of multinationals world-wide. Its European Works Council has launched a project for an ethical code defining the company’s behaviour not only in Italy or France, but also in countries where there are problems concerning human rights, trade-union rights, and working conditions. The code provides for negotiations on a world-wide scale which have involved all the trade unions in countries where the company has production sites.

More generally, do trade unions have policies aimed at developing the cross-border and European-level dimensions to collective bargaining in MNCs?

Transnational policies are being developed, albeit with some delay. According to the interviewees, the main priority is creating networks of representation among different sites, to then begin negotiations on issues such as workplace health and safety, respect for the environment, etc.

5. Commentary by the NC

The report shows little direct role of MNCs influencing both the present and past collective bargaining agenda in Italy. However it has to be noted that some new elements have been recognized as having been introduced by MNCs, like the “stock options” system for employees, strong attention for the training of employees at all levels and the themes of diversity management.

It should be underlined that there is very little literature focusing on MNCs as players of the industrial relations arena and little study and data on the presence of MNCs in Italy. The only survey reporting data on MNCs is the quoted “Italia Multinazionale”, available on line at the web-site of the Italian Institute for the foreing commerce ( http://www.ice.gov.it/editoria/Italia Multinazionale 2006 - Sintesi.pdf).

Also Pulignano V., (2006), “Diffusion of Employment Practices of US-Based Multinationals” (in British Journal of Industrial Relations, 44:3) has been quoted in the present report.

Manuela Galetto, Fondazione Seveso

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