BULLETIN OF COMPARATIVE LABOUR R

We dedicate this Bulletin to the memory of Professor Marco Biagi, who was brutally murdered on March 19^th 2002 before his house in Bologna.

We hereby want, in the first place, to express our deep feelings of sympathy and sorrow to his family for which no words can be found.

Also, for his many friends and colleagues and especially for those, who have had the immense honour and privilege to work closely with him, the grief and loss go beyond words.

Marco was an outstanding academic with an enormous intellectual and human capacity. Over the last 20 years, Marco had successfully built up a network of colleagues and friends, promoting teaching and research over the boundaries.

Hundreds of students - worldwide - attended the Summer Schools for Industrial Relations he organised during so many years in Bologna.

He was the guiding force behind the very successful world conference, organised by the International Industrial Relations Association in Bologna in 1998.

The last years, Modena, his University, had become the Mekka for Comparative Labour Law and Industrial Relations, where Conference after Conference was set up, trying to build bridges between all the actors involved, looking for appropriate answers for the challenges, with which our world of work is confronted.

Marco brought many of us together, be it in the Club of Labour Law Journals, he was chairing or in the framework of the International Journal for Comparative Labour Law and Industrial relations of which he was the very dynamic and enthusiastic editor.

Marco's advice was sought after by the highest authorities, international, European and in his own country, where he served various Ministers of Labour and tried to help formulate policies adapting the law of the land to the new realities of the information society. This has proved to be fatal.

We will remember Professor Marco Biagi forever as a good friend, an excellent scholar, a devoted teacher and above all for his charm and hospitality.

By publishing the white paper on the labour market policy in Italy. Proposals for an active society and quality employment, to which he contributed extensively, we want to communicate his "last" ideas on modernising the Italian Labour Market in a European perspective as well as his views on the Europeanisation of Industrial Relations, especially the Quality of the European Industrial Relations benchmarked in the global perspective, a paper he co-authored for the European Foundation of Living and Working Conditions[1].

Professor Roger Blanpain,
President of the International Society for Labour Law and Social Security

INTRODUCTION

This White Book purposes to allow all the institutional and social actors to gain an insight into the Government’s deliberations in view of a confrontation that is to look for solutions backed up as much as possible by consensus.

These different interlocutors are now called upon to appraise this White Paper with respect to both its analytical dimension and its prepositional and design aspects. The Government is going to organize a number of debate sessions to probe into the individual issues with a view to getting to an improved understanding of the reciprocal points of view and, hopefully, specific agreements.

At the end of the confrontation phase, the Government reserves the right to evaluate the issues on which an agreement was reached, as well as those where no significant convergence of analyses and proposals was reported. Whatever the case, the outcome of this debate process is definitely going to be taken into account in the subsequent phase, when the legislative initiatives to be later presented in Parliament are going to be worked out.

Hence, the Government purposes to innovate the confrontation methodology even before the very scope of its contents. This decision was taken in the light of the most recent experiences of social dialogue in Italy. Indeed, further to the major agreements of 1984, 1992, and 1993, the dialogue between institutions and social partners witnessed what appeared to be a decline towards ritual and ineffective forms of confrontation.

The European Council in Lisbon and, later on, the European Council in Stockholm have resolved that, in the forthcoming decade, the European Union has to attain a sustainable economic growth that is to guarantee a considerable increase in the employment rate, to improve the employment quality, and to attain greater social cohesion. Italy, in particular, has a number of reasons to accept this challenge.

As a matter of fact, Italy is the European Country with the lowest employment rate in general terms and, in particular, in terms of women, the highest long-term unemployment rate, and the most marked territorial gap. The recommendations made by the European Union to Italy, within the context of the Luxembourg process, had underlined since 1998 the inadequacy of the policy that had been implemented until then and the want of measures that were likely to improve to a considerable extent the characteristics of the Italian labor market. This is the reason why, taking indeed the European guidelines as a starting point, the Government intends to see, with the presentation of this White Paper, to a lawmaking program addressing the promotion of an active society, with improved employment opportunities for all, an improved overall quality of employment, and more modern rules governing the organization of employment relationships and labor markets.

There is a long and winding road ahead of us if, by 2010, we are to approach the European target of an employment rate ranging around 70 per cent that allows an extensive employment of human capital. A variety of factors must contribute to the attainment of this goal: from a more intensive participation in the labor market of youths, women and older persons, to a better integration of the disabled, a greater recourse to self-employment and any other form of independent employment, and the surfacing of all forms of irregular labor, with special attention to the situation being experienced in Southern Italy.

In any event, the actions that should be promoted through the proposals included in this White Paper are by no means a replacement of the economic policy, tax policy, and industrial policy instruments that are to guarantee a steady growth pattern. In particular, this document has been worked out in keeping with the object of a progressive reduction of the tax and contribution charges weighing on labor, this being an anything but secondary lever to increase employment and improve the conditions of low-income earners. A similar approach has been adopted with respect to the guidelines for the reform of the social security system. Any increase in the employment rate determines an increase in the number of taxpayers, thereby contributing to a reduction of the negative impact resulting from current population trends. Therefore, the labor policies outlined in this Paper have the specific task of doing away with those economic or normative obstacles that reduce the occupational intensiveness of the economic growth, particularly in Southern Italy.

While defining the new regulatory hypotheses, we endeavored to get to a joint adoption of both the flexibility and security criteria, thereby overcoming that sterile contraposition of ideological approaches that has led to the paralysis or failure of a number of reforms.

The labor policies may not leave aside the characteristics and differences of the relative local labor markets in a Country featuring great contrasts. We need to build a general reference context allowing for the adoption of different measures in differing situations, acknowledging and enhancing the diversities and specificities of regional dimensions, indeed with a view to recomposing any dualism. Therefore, in order to attain the anticipated goals, it would seem that definite importance should be attached to the realization of a federalist setup even in the matter of labor markets and employment relationships.

The labor unions and the entrepreneurs’ associations are fundamental actors in the social dialogue, and the Government intends to enhance their responsible autonomy through a frequent recourse to direct negotiations based on their horizontal subsidiarity. Besides, they are also a means leading to a growing responsibility on the part of both the enterprises – through instruments of self-discipline – and the workers – through referendum-related and participatory instruments.

These policies are steered by the values of the social market economy, the fundamental labor principles that make up by now the “acquis communautaire” and, quite naturally, the fundamental guidelines for a socially sustainable global development included in the conventions and recommendations of the International Labor Organization. All this, however, is fully in keeping with the fundamental principles set out in the Italian Constitution and resulting from numberless decades of elaboration of the constitutional and legitimacy jurisprudence.

Executive Summary

A greater correlation between product growth and employment growth, as well as a greater recourse to the atypical work schemes resulting from the flexibility-oriented measures introduced as of 1997, point to the existence of conditions conducive even in Italy to the creation of a dynamic, efficient and fair labor market.

In any event, with an employment rate that in 2000 is still at 53.5 per cent, Italy still reports a considerable delay with respect to all the other European countries. The main reason of this Italian gap is ascribable to Southern Italy, which lags over twenty percentage points behind the average EU levels in respect of both the overall and the female-related figures. Notwithstanding the above, even the regions in the Center-North of the Country report employment levels that keep on being lower than the average EU levels (59.9% vs. 63.3% with respect to overall employment, and 48% vs. 53.4% with respect to female employment).

The territorial gap is compounded by generation-type problems. Although the prospects of youths for a rapid access to the labor market have improved in recent years, thanks to schemes allowing for a greater flexibility, they are nonetheless still characterized by difficult processes of transition from school to work, from work to training, and from training to work. The older workers, penalized by the want of incentives to continue their working activity and seemingly unaffected by the flexible contractual schemes that have been adopted, keep on reducing their official quota in the working population. Although women have reported a more sizable employment growth in the last five-year period, particularly in the Center-North, they keep on meeting with difficulties in their access to and permanence in the labor market.

The unemployment rate in Italy has been progressively decreasing, and it is assumed that it will keep on doing so in the forthcoming years. In any event, we are still facing a serious long-term unemployment problem. Actually, the unemployment rate in this segment is 8.3 per cent, while the European average is 4.9 per cent. This proves the ineffectiveness of preventive actions and highlights the risk of social exclusion faced by those who lose their job.

This is the reason why an interconnected strategy combining context actions, that are liable to trigger processes extending the productive base and increasing productivity, with the introduction of flexible labor market schemes, and the surfacing of the hidden economy, seems likely to trigger economic development and regular employment growth. Hence, there are great opportunities that need to be turned to advantage as well as situations that are susceptible of improvement through the implementation of labor policies and macroeconomic policies affecting both the demand and the supply side, even within a macroeconomic context characterized by a straitened economic situation.

If the creation of more jobs and job opportunities represents an ambitious goal for the forthcoming years, we need nonetheless to see also to an improvement of the employment quality. In Italy, an “unsatisfactory” quality is inherent in employment differentials but, in particular, in the broad area of the black, irregular and hidden labor that contributes to the creation of conditions of social exclusion and underutilization of the human capital. A flexible labor market needs to improve the quality as well as the quantity of jobs, to see to a more fluid match between the goals and desires of enterprises and workers, and to allow individual workers to seize the most profitable job opportunities, avoiding that they might remain entrapped in situations exposing them to the risk of social exclusion.

The structure of the Italian social spending points to a considerable pension burden and a low incidence of unemployment and welfare benefits in favor of persons in working age (disability, household, housing, and welfare proper). This is but a result of the rigidity governing employment relationships and, in particular, the prevalence of measures protecting existing relationships. Besides, there are still no structural measures that are likely to promote the labor demand and supply of lower-income earners, and no incentive schemes that are likely to extenuate poverty-related effects in the population sectors considered at risk.

The experience gained in the European countries that were more successful in reforming the labor market shows how important it is, even for Italy, to have access to a new arrangement of the system of incentives and relief benefits and their regulation, contributing to the attainment of a balance between flexibility and security. The ultimate object of such a system must be to increase employment and decrease any form of precariousness, thereby preventing the onset of dangerous social fractures among generations, as characterized by younger segments that have access to the labor market through flexible contracts and an older and less dynamic population that remains with traditional contracts of employment.

Central and local institutions and social partners are requested to work out a system of labor policies based no longer on individual jobs, but indeed on employability and the labor market. In Italy, what prevents a proper operation of the labor market is also an inefficient match between labor demand and supply. A mere four per cent of those who find a job do so through a public employment service, while private employment services fail to take off owing to the existing normative constraints. Besides, we still lack a suitable information system based on acceptance standards that promote a rapid match between requirements, services, and contractual solutions.

It is necessary for the actions that are to raise the employment rate to be developed in keeping with the European Employment Strategy provided for by the Luxembourg process. It is a question of adjusting the “open coordination” method to the new institutional setup that is emerging in Italy and that entrusts Regions and local governments with more political responsibility. A definition of the general goals, a verifications of the state of implementation of the policies, an appraisal of the aims that have been attained, and an exchange of good practices represent the major elements of a new method that the Government, in agreement with all the parties concerned, intends to launch.

Besides, as the new federal setup affects also the regulation of both the labor market and the employment relationships, it may enhance this intervention method. The concurrent legislative authority of the Regions relates not only to the labor market but also to the regulation of employment relationships. In its dialogue with Regions and social partners, the national legislator will have to step in with a normative framework, but it will be up to the individual territorial contexts to build a regulatory system that is likely to enhance the differences of local labor markets and get over the current stratification of the legal system.

In addition to a strengthened vertical subsidiarity, we need to re-qualify the decision-making responsibility of the social partners and guarantee an effective horizontal subsidiarity. The model of the social dialogue, as regulated and experimented at a Community level, represents the most convincing reference point for a renewed methodology in the relations between institutions and social partners even at a domestic level. The dialogue between institutions and social partners must take on the form of an instrument aiming at the attainment of progressive agreements that may be rapidly turned into policies addressing quantified and, therefore, controllable objects. At times, global negotiations end up into general global agreements that can hardly be implemented, just as it happened in the second half of the Nineties.

As laid down by the Treaty of the European Union, the major task of the social dialogue is the transposition of Community directives, particularly when the latter result from a Community-wide social dialogue. In any event, the need to modernize the labor market calls for a high quality transpositive process that is to prevent the surreptitious introduction of those elements distorting competition – even to the detriment of the acknowledging Country – that the European directive planned on doing away with. Besides, one should not neglect the fact that the transpositive process should keep into account the characteristics of the local labor markets within the context of the new federalist setup.

The changes that affect the organization of work, and the growing pressure towards an enhancement of individual capacities, are transforming the employment relationship. This furthers the experimentation of new forms of regulation, making it possible to get to regulatory setups that are really in keeping with the interests of the individual worker and the specific expectations reposed in the latter by the employer, within the context of an adequate social control. From the point of view of collective bargaining, this may mean a strengthening of its premium role, as in the directive on the European Works Councils (EWC), while from the point of view of regulations, it may entail the introduction of “soft laws” designed to direct the activity of their targets in relation to objectives rather that behaviors. It is necessary for the legal system to be based more and more on a management by objectives rather than on a management by regulations.

The greater “softness” of the laws entails also an improved organization of the normative system that is to see, on the one hand, to the enactment of a Labor Consolidation Act aimed at streamlining and clarifying the entire regulatory setup and, on the other, to the draft of a “Work Statute” providing for a suitable rearrangement of the protections in relation to the matters being considered, notwithstanding a body of fundamental rules that apply to all the employment relationships.

A reform of the instruments may not leave aside a sound measure addressing the labor justice sector. As the trial holding time substantially turns into a denial of justice itself, it emphasizes the serious state of the labor justice in Italy. An efficient labor market requires that disputes be rapidly settled. We have to find new ways to administer justice, considering also European experiences, such as the setting up of arbitration boards that are likely to settle any dispute within a short time period.

To have recourse to new rules does not necessarily imply the issue of new laws. Indeed, it implies the experimentation of new voluntary codes of conduct within the logic of a corporate “social responsibility”, as recently highlighted by the Green Paper of the European Commission.

An active society is the context needed for the development of human resources. The quality of employment is the new dimension we have to consider. The Government deems it necessary to see to the implementation of measures designed to increase the quality of our labor market, keeping into account the characteristics and peculiarities of the Italian situation. In Italy, the first policy conceived to guarantee the quality of employment is an action plan that is to combat the hidden economy and allow it to come into the open. To this end, the Government has worked out at once a “massive therapy” that this White Paper intends to support even further.

While the attainment of higher employment levels is not exclusively dependent on the labor policies outlined below, the latter need to ensure that we make the most of our economic growth, increasing the employment opportunities of individuals and the employment intensiveness of our economic development. Hence, we need to strengthen the market capabilities for an efficient operation, freeing the market from the economic and normative inefficiencies that, over the years, have prevented it from using its potential in full. It goes without saying that this must not entail a curtailment of protections and safeguards but, indeed, their shift from the guarantee of a job to the insurance of full employability throughout one’s working, therefore reducing the periods of unemployment or the waste of human capital.

A number of actions are being proposed within this context. Firstly, a definite acceleration should be imparted to the measures that may promote an efficient and equitable match between demand and supply. On the one hand, by acknowledging the guidelines of the European Union, we have to pursue in a determined manner the modernization of the public employment services, in full compliance with the competences of Regions and Provinces. On the other hand, we have to endeavor to create a stable system conducive to greater competition between the public and private sectors. This calls for a thorough review of the laws introduced to regulate the role of private undertakings dealing in various capacities with the mediation between labor demand and supply, as well as the promotion of private undertakings dealing with a number of functions.

Secondly, it would seem that the school-work-training transitions require that emergency actions be taken. This object may be attained increasing the quality of the training offer through actions affecting the demand side, but also through a renewed public initiative, since the market fails to give the best results when is left on its own. After all, just as public resources finance the innovation process, the same must be done in respect of lifelong learning, by supporting the demand for it. In the meantime, Government and social partners need to see to a thorough reform of the mixed-cause contracts, particularly with reference to apprenticeship, delving into the aspects of the quantity and quality of off-the-job training. Within this context, the apprenticeship instrument may be enhanced as a market-training tool, while on-the-job training contracts may be conceived as an instrument to attain a focused worker’s entry within a firm.

Thirdly, we must proceed to set up a comprehensive system of active and preventive policies leading to a sweeping reform of social relief benefits and employment-oriented incentives. As this reform appears to be closely connected with an overall rebalance of the social protection spending, it will have to proceed in a gradual manner, as the required financial resources will become actually available. Furthermore, one needs to bear in mind that such a reform fits within the action plan for a progressive reduction of the tax and contribution burden weighing on labor. An important qualitative element shall be represented by the involvement of the beneficiary who will be required to look actively for a job following a pathway, that may also have a training nature, to be agreed upon in advance with the public employment services. In any event, even if automatic tools should be preferred in respect of both the passive and the active measures, the public and private employment services must see to the prevention of abuses and an increase in the actual selectivity of given instruments, promoting an effective recourse to the said instruments by weaker groups.

The limited participation of women in the Italian labor market represents, as previously pointed out, a situation that causes our Country to lag considerably behind with respect to European standards. The labor policies that are going to be adopted need to keep this peculiarity into account and remove first of all those external factors that affect in a negative manner the decision of women to engage in a working activity. Besides, a definite effort must be made to reconsider all the policies taken as a whole with a view to strengthening occupational and career opportunities for women. It is a question of taking definite actions not only for reasons of social equity but also for improving the effectiveness of the labor market and its quality.

To draw the labor demand and supply together is one of the fundamental decisions inspiring this White Paper. It is a principle that should also be applied to the immigration phenomena that, until now, Italy has merely experienced without being able to program them in a suitable manner. As confirmed by a number of recent surveys, there is a risk that an unchecked immigration might lower the quality of the labor market, as it contributes to the hidden economy. Besides, it engenders dangerous frictions on the social level as well as with respect to the access to the fundamental citizenship rights. By providing for a close connection between contract of employment and stay permit, the bill that has been drafted and the subsequent measures are likely to contribute to the definition of a more transparent and efficient labor market allowing nationals of third countries to be placed in regular employment. Indeed, this will ensure that the utmost attention is paid to those third-country nationals already registered in the lists of the public employment services who are still looking for a job, thereby guaranteeing the conditions for peaceful social living. In addition to promoting processes of social integration, the growing recourse to self-employment among migrant workers may contribute to the perpetuation of crafts that are otherwise doomed to disappear.

Labor market and organization of work are evolving with greater and greater speed, while employment relationships lag behind. Indeed, the regulatory system that is still being used in Italy is no longer able to acknowledge and govern the transformation currently under way. Much more than a simple party to an “employment relationship”, today’s – and particularly, tomorrow’s - worker is a collaborator who works within a “cycle”, no matter whether it is a project, a mission, a task, a phase of the productive activity, or the worker’s life. An occupational career is marked by cycles where phases of work in dependent employment and self-employment may alternate, hypothetically spaced out by intermediate forms and/or periods of vocational training and re-training. The legal-institutional framework and the relationships created by the social partners, such as labor legislation and industrial relations, need to acknowledge these transformations as they take place and ease their management.

In view of the above, considerable changes must be introduced into the system governing the Italian labor market, seeing to a thorough modernization of both the organization of work and the employment relationships, hopefully in agreement with the social partners. The introduction of the new law provision governing fixed-term contracts represents an initial example of these actions.

A qualitative improvement of the employment relationship must be attained through a proper use of the open-ended contract, preventing the recourse to entry-related flexibilities in order to pass round constraints and protections provided for the outflow-related flexibility. Therefore, it would seem expedient to promote its use, particularly in respect of the transformation of fixed-term contracts, as well as to overcome those normative obstacles, if any, that may hinder the recourse to this type of contract that has fundamental relevance to guarantee an active society based on the quality of employment.

There is an urgent need for corrective measures to do away with the normative obstacles that still hinder an easy recourse to those flexible contract schemes that have been used to a considerable extent in all the European countries without giving rise to situations of social exclusion or a low employment quality. Within this context, an effort must be made to improve the fruition of part-time contracts by working on the so-called “elastic clauses” and the “reporting” institute. As for interim contracts – which have to be regulated on a level with temporary contracts of employment – we need to improve their function as a tool promoting a demand and supply match. More generally, it would seem advisable to set off on a comprehensive reform of the discipline governing the intermediation of manpower, even in the light of the labor externalization processes, in compliance with labor protection conditions.

On the other hand, we need to provide for new contractual schemes. The latter need to “clean out” the labor market of the improper use of a few instruments having an elusive or deceptive function with respect to the laws safeguarding work under an employment contract and, at the same time, to keep into account changing productive and organizational requirements. As regards this subject, it seems advisable to point to the proposal of introducing an “intermittent work” scheme, as well as a “work by project” scheme. The former would allow a number of individuals to receive a minimum pay for their availability, and the actual pay would subsequently be raised in relation to the hours actually worked. The latter is a form of para-subordinated independent work, where the most significant component is indeed represented by the implementation of a project with specific requirements in terms of time schedule but also service quality. These measures aim at making a clean sweep of the coordinated and continuing cooperation schemes that are quite often the source of fraudulent abuses.

More than any other major European Country, Italy is characterized by an extremely high territorial dispersion of its unemployment rates, matched by something close to a territorial homogeneity of wage levels. We are a definitely “equalitarian” Country in our pay strategies, but extremely unequal from the point of view of labor market conditions.

This situation would also seem the result of a collective bargaining system that maintains centralization characteristics that are not suited for ensuring a flexibility of the wage structure capable of adjusting to productivity differentials and answering to the different market disequilibria. The feeble link existing between corporate productivity and local labor market on the one hand, and wages on the other, leads to lower employment levels. Moreover, the scarce growth, the high unemployment, the high tax burden, and the very contractual model defined by the 1992-1993 Agreements – that outlived the conditions it had been conceived for – have led to an all but gratifying evolution of real wages net after tax, thanks also to the increased tax pressure on labor.

The increase in the employment rate and the decrease in the employment gap between North and South may also result from the mobility of workers and enterprises, furthered by a more marked differentiation of the respective real wages.

Therefore, it would seem advisable for the social partners in the first place, and the national and local institutions in their capacity as employers, to consider the opportunity of reviewing the current contractual setup in order to endow it with greater flexibility. This may be attained by strengthening the decentralized bargaining and binding it more closely to the places where productivity gains are reported, even considering the specific conditions of the labor market.

All of Europe witnessed a participatory evolution of industrial relations, on the assumption that this was to contribute to an increase in the competitive potential of the enterprises and the economic system of the Country as a whole. Within this context, in the face of the challenges confronting us in terms of modernization of the organization of work and valorization of the human capital, the relations between the social partners must develop even in Italy in an increasingly more participatory sense even in the transposition of Community directives. An initial but important goal relates to the directive on the European Society, that will have to identify the ways and means to get to a suitable regulation of the rights to information and consultation, conforming the exercise of the managerial prerogatives to a logic of transparency and mutual trust. In any event, it is quite likely that a greater development of the participatory dimension is going to relate to the issue of the financial participation of workers and, in particular, the so-called employees’ share ownership scheme.

During the past decade, the recourse to strike actions as a way to settle conflicts among the parties has witnessed a progressive loss of relevance. In any event, this occurred particularly in the industrial sector, while behaviors disrespectful of the needs of users and consumers surfaced in such fundamental services as the transport sector. The reform of the law during the past legislature is likely to lead to braver decisions on the part of the Guarantee Commission, with special reference to the “objective rarefaction”, that is a criterion that guarantees users suitable intervals from one strike to the next, and the conflict cooling procedures, starting from the compulsory consultative referendum.

Besides, we will need to verify the possibility of promoting the prevention and settlement of collective labor disputes through new and more efficient bodies having special but not exclusive competence in the handling conflicts in the basic services.

[1] We are grateful to the Foundation for the permission to publish the study.

[2] Rome, October 2001

This White Paper on the labor market was drawn up by a working party coordinated by Maurizio Sacconi and Marco Biagi, and comprising Carlo Dell’Aringa, Natale Forlani, Paolo Reboani, and Paolo Sestito.