Dispute over 1,000 white-collar redundancies at Fiat

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Late 2005 and early 2006 has seen conflict and negotiations over how 1,000 surplus white-collar staff are to be made redundant at Fiat, the Italian motor manufacturing group. Fiat management and trade union have asked for the workers, mostly aged over 50, to be placed on a 'long mobility' scheme, providing income support until they reach retirement age, while the government has proposed a special programme of labour market reintegration.

Since December 2005, company management, the firm's unitary workplace union structures (Rappresentanze Sindacali Unitarie, Rsus) (IT0309304T) and the government have held numerous meetings to decide how to shed 1,000 'surplus' workers at the Fiat motor manufacturing groups. The employees concerned are mainly office workers, 700 of whom work in Turin while the rest are employed at the company’s other Italian plants. Under a deal reached between Fiat and the government two years ago, the surplus workers have been placed on the Wages Guarantee Fund (Cassa Integrazione Guadagni, Cig) until 20 February 2006, when the benefit from the Fund will cease. Many of these surplus workers are aged 50 or over. A normal 'mobility' procedure (a scheme intended to facilitate the worker’s re-entry to employment - IT0311306T) would affect their pension entitlements, because according to the new eligibility requirements introduced by a recent reform of the pensions system (IT0409101F), they would have a two-year shortfall in their social security contributions. Consequently, the Fiat management and trade unions have asked the government for an exemption from the pension reform provisions and the placement of the redundant Fiat workers aged 50 and over on a so-called 'long mobility ' programme (mobilità del lavoro). This request has been subject to negotiations for several months.

'Long mobility' and reform of the pensions system

Redundant workers on 'long mobility' receive income support until they reach retirement age. The allowance is paid by the Italian Social Security Institute (Istituto Nazionale per la previdenza Sociale, Inps) for the first three years (four years if the company is located in the South) and thereafter by the company, which also pays the worker’s pension contributions. Eligible for long mobility are redundant workers with at least 28 years of paid-up contributions (and aged less than 57 for men or 47 for women), or those who are no more than five years short of entitlement to an old-age pension. Hence, under what is known as the 'Maroni reform' of the pensions system (named after the Minister of Welfare, Roberto Maroni) - which has raised the pensionable age from 57 to 60 with 35 years of contributions - a redundant worker is eligible for a contributions-based pension after 10 years of mobility, rather than seven, as previously. (The 'short mobility' system is different. Trade unions and the company have 45 days to reach agreement. The redundant worker receives 100% of the benefit paid by the Cig for the first year, and 80% thereafter. The allowance is paid for a 12-month period, which may be extended to 24 or 36 months according to whether the worker is over 40 or 50 respectively.)

This 'short circuit' between different policies ('long mobility' and new pension scheme requirements) has generated conflict and provoked numerous strikes at Fiat - mainly in the final months of 2005. It has also given rise to an interesting debate between Fiat and the government.

The government has ruled 'long mobility' out of the question and declared its determination not to grant concessions 'especially to those who have already received numerous favours in past decades'- this being the expression used by Minister Maroni with reference to the 'welfarist' policies characteristic of past periods of Italian industrial policy. The reason for the government’s stance seems to be less concern about the economic cost of long mobility and exemption from pension requirements, than an intention to introduce a 'welfare to work' approach to the management of redundancies, an approach which may become the rule in the future.

Events at Fiat are closely related to developments in the metalworking sector as a whole, for various reasons (IT0411305F). First, negotiations on renewal of the metalworking sectoral collective agreement (IT0509205F) have only just concluded after severe industrial conflict throughout the country. Second, it is likely that the long mobility scheme for surplus workers, or the scheme proposed as an alternative, involving the labour market reintegration of workers in mobility (see below), will not only involve Fiat but will also be extended to other companies in the sector that request it.

Reactions

The negotiations at Fiat have highlighted the diversity of relationships among the bargaining actors and their respective goals. At one level, the confrontation has been between the trade unions and the company, as illustrated by the following statement by Giorgio Airaudo, general secretary of the Italian Federation of Metalworkers (Federazione impiegati operai metallurgici, Fiom), affiliated to the General Confederation of Italian Workers (Confederazione generale italiana del lavoro, Cgil): 'Our grievance is with the company, which we ask to suspend the wage guarantee fund, and we say no to dismissals.' There is also a 'tripartite' level of confrontation where the unions and Fiat are at odds with the government over their request for long mobility and derogation from the pension reform law until 2008. Instead of the traditional benefit for mobility, the government’s response has been to propose a special programme of labour market reintegration for the 1,000 Fiat employees concerned, the details of which are being defined and will be discussed by the social partners. The need for such discussion has been stressed by the president of the General Confederation of Italian Industry (Confederazione Generale dell’Industria Italiana, Confindustria), Luca Cordero di Montezemolo, who intends to examine the proposal jointly with the unions.

It is likely that the government's programme will comprise re-employment and activation measures, together with income support until the age of retirement. Since this is a government provision (it is not yet decided whether it will take the form of an ad hoc decree or an amendment to decrees currently undergoing approval), long mobility will not only involve the 1,000 Fiat workers but will extend to include all surplus personnel in the metalworking sector, a total estimated at between 5,000 and 8,000 workers (in the cases of bankrupt firms or ones in temporary receivership, the income support will be paid by the state). As for the resources to finance the project, Minister Maroni has said that those allocated by the 2006 state budget law will be used: 'There is EUR 480 million to be used for the derogation fund and to support worker relocation.'.

The programme proposed, therefore, 'does not consist of early retirement or long mobility, but something different which enables workers aged over 50 to re-enter the labour market by providing them with income support until they find new jobs'. Moreover, Minister Maroni has affirmed, this is not a 'bridge solution' which simply postpones the problem for some months.

It is envisaged that the activation measures will involve outplacement services, both public and private, the local authorities, and the Italia Lavoro agency. The under-secretary for welfare, Maurizio Sacconi, has stated that sanctions will be applied to workers on the programme who refuse to accept jobs equivalent to their old ones, and he has stressed that their recruitment by new employers will be less costly, because for three years they will 'bring the subsidy with them'. It should be emphasised that the income support changes the mobility mechanism: the worker receives 80% of his or her last wage for the first year of support, and 80% of this last amount thereafter.

Commentary

The proposed redundancy of 1,000 surplus workers at Fiat has been one of the more difficult issues in recent Italian industrial relations. Whilst this problem is not an isolated occurrence in the history of Italy’s largest car manufacturing group, it has aspects that link with important changes in Italian welfare provisions - primarily reform of the pensions system - and new features of a labour market undergoing transformation in both Italy and most western industrialised countries. Corporate reorganisations no longer involve only the blue-collar workers traditionally associated with the 'Fordist' industrial system, but to an increasing extent they involve white-collar workers as well.

In the Fiat case, the government has countered a request for long mobility, which is a passive labour market policy, with the reverse proposal of an active labour market policy. This is not a new development if we consider the changes now under way in labour market policies throughout Europe. But at Fiat it represents a break with the tradition of measures to deal with the company’s redundancies, and more generally with all welfare measures of the past. What is required as a consequence is a different interpretation of the relationships between government and firm, among the actors themselves, and between the firm and the local context. The regional administrations and local authorities now frequently intervene in local-level economic and development issues to countervail the globalisation of productive processes that sometimes cause those same issues.

The Fiat dispute also links with the question of the employment of workers aged over 50. Raising employment levels in this age group was one of the main objectives set in the EU Lisbon strategy by the European Council (EU0504203F), and by means of its proposed re-employment scheme, the government has been able to combine the two requests (a solution for long mobility and the requirement set at Lisbon). This concerns the effectiveness of the activation measures implemented at Fiat, although analysis of this aspect is beyond the scope of this feature.

Although the tone of the debate has been moderate, the devising of a national industrial policy is nevertheless urgent. As noted, the pay part of the metalworking national collective agreement has only just been renewed after severe industrial conflict, highlighting the more general problem of chronic delays in agreement renewals and the difficulties of a bargaining system now in need of restructuring. Although reform on such a large scale is unlikely in the immediate future, necessary at least is constructive debate on industrial policy and national-level bargaining. (Manuela Galetto, Ires Lombardia)