08 July 2016

By Sabrina Colombo and Ida Regalia, Dipartimento di Scienze Sociali e Politiche, Università degli studi di Milano

In the fourth piece from our EU Comparative Series, Italian academics Sabrina Colombo and Ida Regalia analyse the impact of Troika intervention on Italy's collective bargaining structure, employment law, and trade union rights.

Introduction: The traditional pattern of labour regulation

A distinctive feature of Italy’s labour relations system was – and to some extent still is – its informal nature (Cella, 1989). Over time, the bargaining system evolved along a two-tier structure, comprising the national industry (or sectoral) level devoted to periodic redefinition of industry-wide pay and conditions; and the company (or sometimes territorial) level, devoted to negotiation (usually ameliorative) on workplace-related issues. It was not until the fundamental tripartite agreement of 1993 that a sufficiently clear and steady specification was given to their respective competences and procedures.

In this context, has the economic crisis that hit the Italian economy in 2009 substantially modified this pattern of industrial relations? In this discussion, we draw on the results of an empirical investigation conducted in 2014.

The response to the economic crisis: the state of inter-sectoral collective bargaining and social dialogue

The crisis erupted in a context characterised by the persistence, indeed the exacerbation, of unresolved problems (Pedersini and Regini, 2013). Besides macroeconomic imbalances, productivity stagnation and rigidities in labour market regulation; the relationship between social partners was characterised by tensions and divisions, especially over the issue of greater decentralisation of collective bargaining (as called for by employers, and supported by the government).

Government intervened repeatedly with a series of measures and reforms, partly inspired by secret instructions received by the European Central Bank (ECB), with a view of cutting public expenditure, and of making labour market policies more “flexible”. Thus, under the Monti government, in 2011 the pension system was reformed, one of the outcomes being that working age was suddenly extended with far-reaching social and economic consequences for individuals and firms. In 2012, the Fornero reform aimed at modernising the labour market, at the same time making it easier for firms to hire and dismiss workers, but discouraging the use of precarious forms of employment, and devising a new and universal system of social shock-absorbers to be introduced gradually. Further interventions were made by the Letta government in 2013 to correct some major shortcomings of this last reform. In 2014 and 2015, new legislative measures, first to reduce youth unemployment, and more recently to completely reorganise the discipline of the contract of employment have been proposed and are being enacted by the Renzi government.

With some exceptions, such interventions did not directly affect collective bargaining. They influenced, however, the general climate of social dialogue and were considered a symbolic attack on workers’ rights and trade unions’ power (Colombo and Regini, 2014), especially since they radically modified the emblematic article 18 of the Workers’ Statute, which established the right to reinstatement of workers who were illegitimately dismissed.

As for the social partners’ response, tensions and divisions resumed among the trade unions on controversial issues, the most important of which was the reform of collective bargaining.

However, when the technocratic government intervened directly with a law: art. 8 of law 148/2011, to permit decentralised “proximity agreements” outside of sectoral collective agreements (and even the law), the social partners interpreted this as an unrequested and undesired interference in their autonomy. The new agreements allowed for the “flexibilisation” of labour relations pursued through negotiation at company or territorial level. The law thus gives decentralised agreements, reached by representative partners, the right to derogate (even worsening conditions) not only from the discipline negotiated at national level, but also the legislation ensuring worker protection on a wide range of issues (Garilli 2012). The law explicitly aims at encouraging the decentralisation of collective bargaining by empowering the local-level industrial relations actors.

Following this move, social partners responded with an inter-union agreement on productivity (November, 2012), which further specified the potential for decentralised bargaining and envisaged the assignment of ‘full autonomy’ to second-level agreements.

The state of collective bargaining

Recent data shows (Istat, 2014) that during the crisis, the traditional backbone of Italian collective bargaining structure – i.e. the industry-wide national agreement – continued to maintain its prominent role and wide coverage. Public opinion and that of mainstream economic and academic circles was largely in favour of strong decentralisation of collective bargaining, if not the outright abolition of sectoral agreements. These ideas were further strengthened by media coverage and by the decision of Fiat in 2011 to exit from employer association Confindustria and the sectoral association Federmeccanica.

However, as it emerged, somewhat surprisingly, in our investigation, this does not seem to correspond fully to the positions of the employers’ associations – at least within Confindustria – much less the trade unions. Opinions differed among sectors, but many key contacts interviewed during our research had a substantial interest in maintaining the important role of sectoral agreements. These were eventually transformed into leaner normative frameworks, coupled with a more determined resort to company-level collective bargaining, as well as forms of direct participation in the organisation of production by workers.

Company level bargaining continued to be rather limited in terms of both diffusion and innovative capacity, however. Our key informants stressed that company level bargaining has reached a deadlock. Agreements are still being reached, but their number is not increasing – in fact, it is decreasing – and such agreements are not innovative in character.

Conclusion: employers, trade unions and the state in the new panorama of labour relations

One might finally conclude that in Italy – in contrast to many, if not most, other European countries – the crisis influenced social dialogue, collective bargaining institutions, practices and outcomes quite marginally. The social partners, including the unions, substantially maintained their previous organisational strength. Despite a rather strong tendency of the governments to intervene in the labour market by law, collective bargaining practices have not been substantially affected by the recurrent legislative reforms.

However, a significant change did occur regarding the more general role assumed by the state. In the medium term, this may also eventually result in a deep, unexpected transformation of the labour relations system towards the tendency to intervene unilaterally.

In fact, during the crisis – within a general context characterised by substantial avoidance of tripartite agreements and the explicit involvement of the social partners in the political and economic arena – governments, legitimised by crisis-induced urgency and external pressures, repeatedly and successfully intervened, either through reforms of the labour market and social policies, or through enactment of measures targeted to indirectly influence the behaviour of organisations involved in industrial relations.

Somewhat paradoxically, and contrary to many predictions of the decline of the role of national states in a globalised economy, in Italy the capacity of governments to intervene in their own right, by law, appeared to be reinforced during the crisis.

This may finally lead to an erosion from inside, rather than outside, of the traditional voluntarist and informal labour relations system. The actual outcome is, however, uncertain. It is most likely that the government will introduce a statutory minimum wage. Functions and features of the industry-wide collective agreements will thus have to be realigned. The rest will depend on the capacity of the social partners to coordinate efforts and successfully take up a proactive role.