Italy: Increasing fragmentation in collective bargaining at sectoral level

The increasing fragmentation of sectoral agreements in Italy is highlighted in a report, released in November 2017, by the tripartite National Economic and Labour Council. It adds that decentralised bargaining increasingly deals with performance-related pay and welfare benefits. Although this overall picture cannot be viewed as representative, it does shed light on recent trends.

Introduction

The report on labour market and collective bargaining 2016–2017 (PDF), released by the tripartite National Economic and Labour Council (CNEL) in November 2017, provides an up-to-date picture of the spread and features of collective bargaining agreements in Italy. The report covers national collective bargaining agreements (NCBAs), setting terms and conditions of employment, minimum wage levels and industrial relations rules at sectoral level, as well as decentralised agreements signed at territorial or company level, complementing provisions set out by the NCBAs, especially in relation to pay and work organisation, and specifically addressing cases of firms in crisis and restructuring.

As well as CNEL’s national repository of NCBAs, the report’s sources include the following:

  • the repository of agreements setting out performance-related pay and requesting the relevant tax relief, managed by the Ministry of Labour and Social Policies
  • the repository of decentralised agreements collected by the Italian Confederation of Workers’ Unions (CISL)
  • data on decentralised bargaining from the National Institute of Statistics (Istat), analysed by Fondazione Giuseppe Di Vittorio (FDV) – the Italian General Confederation of Labour’s (CGIL) national institute for historical, social, and economic research

The overall picture of decentralised bargaining agreements cannot be considered as representative due to its partiality and fragmentation, yet it helps to shed light on some interesting recent trends.

Growing fragmentation among sectoral agreements

A total of 844 NCBAs, in force since June 2017, are registered at CNEL, up 15% from June 2015 (734) and up 46% from June 2013 (580). Figure 1 provides details on the disaggregation of data at sectoral level, highlighting how the growth is transversal to the different sectors of activity.

Figure 1: Number of NCBAs in force per month at sectoral level

 

Source: CNEL (2017)

The only exceptions are the transport sector, where a process of aggregation of NCBAs addressing contiguous activities is in place, and the public administration, which is covered by rules on representativeness that prevent overlaps between collective agreements, and where collective bargaining negotiations have resumed only recently after a freeze effected in 2010.

The classification of sectors follows the nomenclature adopted by NCBAs. Although there are similarities with the Statistical Classification of Economic Activities in the European Community (NACE), NCBAs generally refer to sectors with a wider scope. This is especially the case for the chemical sector (which includes the chemical and pharmaceutical industry, as well as the production of energy, rubber manufacturing, plastic, leather, glass, and ceramics), and for the trade sector (which covers several service activities as well as the wholesale and retail trade).

CNEL acknowledges that the number of NCBAs could be overestimated as, although 367 NCBAs have formally expired, CNEL considers them to be in force if it has not been notified otherwise by the social partners, since they may remain valid as long as they are not replaced by new agreements.

In this respect, it should be taken into account that conflicts over the validity of NCBAs may arise between the social partners too, leading to sectoral overlaps between NCBAs. For instance, a social partner that signed an expired NCBA but not its renewal may claim that the former continues to apply to its members.

However, the disaggregation of data by signatory unions points to a strongly fragmented pattern. NCBAs signed by at least one of the three largest union confederations – the CGIL, the Italian Confederation of Workers' Trade Unions (CISL), and the Italian Labour Union (UIL) – account only for 33% of the total number of NCBAs, with the lowest share in the trade, agriculture, and construction sectors. The share of NCBAs signed by at least one of the confederations is higher in the entertainment industry, and in the utilities and public sectors.

The share of NCBAs signed by the largest employer organisation, the General Confederation of Italian Industry (Confindustria), is just 11%, although this indicator does not take into account NCBAs signed by other relevant large organisations, such as those covering small enterprises and cooperatives.

Decentralised collective bargaining: welfare measures on the rise

The report’s chapters on decentralised bargaining highlight a growing presence of company-level agreements, although with disparities due to company size, sector of activity, and geographical area.

The first point concerns the features of the agreements governing performance-related pay. Starting from 2016, collectively agreed pay, which is linked with productivity, profitability, quality, efficiency and innovation targets, benefits from tax relief if the agreement is submitted with a request for this to the Ministry of Labour and Social Policies. Higher rates of tax relief are envisaged for pay provided as welfare benefits and for agreements planning to involve workers in work organisation.

As of 30 November 2017, some 27,914 requests had been filed by employers. Of these requests, 15,139 concerned agreements that are still in force. The majority of requests link performance-related pay with productivity targets (78.4%) and profitability targets (57.7%), while only 9.4% involve innovation targets. Requests including welfare benefits account for 33% of the total, whereas plans aimed at involving workers account for just 13.3%. The majority of agreements cover northern and central regions: Lombardy and Emilia-Romagna alone account for 46.2% of requests.

The qualitative analysis of 100 agreements selected from among those requesting tax relief provides some in-depth information, although this cannot be taken as representative of the whole sample. The report's main findings are set out here.

  • The agreements do not set out any strategy for targets to be achieved, in terms of work organisation or production processes.
  • Welfare benefits include a wide array of in-kind payments, such as incentivised loans, fuel or meal vouchers, or reimbursement of expenses for children’s education.
  • In some cases, welfare measures top up or complement statutory leaves, (for instance by extending paternity leave or leave for victims of gender-based violence) or by introducing leave for other circumstances, such as the birth of a grandchild or medical examinations.
  • Many companies detach at least a share of welfare benefits from the attainment of the target, thus favouring the stability of the support provided.
  • On work organisation, some agreements entered into by large service-sector companies introduced forms of ICT-based mobile work on an experimental basis and, in some cases, targeting specific categories, such as pregnant women or workers with disabilities. The analysed agreements generally preceded the approval of Act No. 81/2017, which provides for this way of working.

The growing attention on decentralised bargaining for pay and welfare matters is also reflected in the findings of the CISL observatory on decentralised bargaining (OCSEL), covering 2,094 agreements for 2015–2016, and 1,601 for the 2013–2014 period (mostly signed at company level). The share of agreements addressing wage and welfare soared from 23% to 43% and from 10% to 20%, respectively, between the two covered periods. Other areas featuring remarkable increases are working time (from 12% to 19%) and union rights (from 14% to 19%). However, agreements addressing firm restructuring or crisis fell from 62% to 37%.

The majority of agreements cover the secondary sector, mainly metalworking (28%), chemicals (20%), and construction (12%). The agreements are concentrated in northern Italy, which represents 70% of the sample, as against 27% of other areas (3% of agreements are not ascribed to any area since they represent group-level agreements).

The picture of decentralised agreements is complemented by a secondary analysis on Istat data, carried out by FDV. The data cover companies active in the secondary and tertiary sectors, staffed with at least 10 employees in 2012–2013. The analysis highlights that decentralised agreements are applied by only 21.2% of companies, the rate of application increasing with firm size, from 8.8% of small enterprises, to 69.1% of those staffed with 500 or more employees.

NCBAs include a safeguarding clause establishing a ‘guaranteed’ wage element to be paid in lieu of performance-related pay whenever the latter is not agreed upon by companies. However, these provisions are applied by only 29.5% of the companies concerned.

Commentary

The CNEL report confirms the risk of competition on the ground of labour costs and labour rights, triggered by overlaps between NCBAs. In order to address this, in 2011 the social partners set out rules on the measurement and certification of unions’ representativeness. Nevertheless, these provisions still suffer from delays in implementation.

The report also seems to confirm the increasing attention attached by decentralised agreements to additional pay and welfare measures. However, the uptake of these measures, strongly incentivised by public funding, runs the risk of increasing inequalities between workers, not only at geographical level. The report’s chapter on the gender pay gap suggests that decentralised bargaining may exacerbate wage differentials between men and women, especially because there are more women in part-time jobs and in low-productivity sectors.

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