Labour Reform
A PLAQUE marks the spot in Rome
where Professor Massimo D’Antona was assassinated in 1999 by the Red Brigades.
D’Antona was killed because he was working, for a centre-left government, on plans for greater
flexibility in Italy’s
labour market. Marco Biagi, who took up his standard, was murdered by the same
group three years later.
These two killings testify to the degree of resistance to reform in a
country in which a jobs-for-life culture is entrenched. They also demonstrate
the size of the challenge Mario Monti’s technocratic government faces as it
seeks to change not only the labour market, but also Italians’ entire attitude
to work.In recent weeks, the government has been trying to alter ideas by saying the unthinkable. On February 1st the prime minister caused uproar by decrying the “monotony” of holding the same job forever. His employment minister, Elsa Fornero, said that anyone offering an indefinite contract was selling “illusions”. The interior minister, Anna Maria Cancellieri, said her compatriots were stuck in an era when employees worked “in the same city alongside Mummy and Daddy”.
The outcry prompted by such remarks is perhaps understandable. Youth unemployment is running at over 30% (see chart). Many young people who would love to leave their hometowns cannot do so because they need a stable job before older Italians will rent them a flat, let alone give them a mortgage.
In effect, young Italians are finding themselves trapped in the lower tier
of a two-tier labour market that was created in 2003, when Silvio Berlusconi’s
government first allowed employers to offer short-term contracts with few of
the benefits or guarantees of permanent employees. Article 18 of the 1970
Workers’ Statute, for example, gives permanent employees a right to
reinstatement if they are unfairly dismissed. But the courts have proved so
generous in their definition of what is unfair, and so slow to reach decisions,
that employers say this makes individual workers almost unsackable.An even bigger obstacle is created by the failure of successive governments to spur economic growth and to shape an enterprise culture in which younger people can move easily and profitably between firms. This week Italy lapsed once more into recession, with the news that GDP had fallen by 0.7% in the fourth quarter of 2011, after a 0.2% decline in the third.
Talks on labour reform between the government, the unions and employers, which resumed on February 15th, have so far avoided tackling Article 18 so that progress can be made on other issues. Various compromises have been floated. The government appears ready to concede on income-support benefit (currently young Italians who have never worked have no right to welfare payments). And there is talk of suspending Article 18 in the early years of employment or of restricting its application to cases of discrimination by employers or misconduct by employees.
But time is short. The parties backing the Monti government want to deal with labour-law reform before campaigning starts for local elections in May. The prime minister has set March 31st as the deadline for an agreement. So far the biggest and most radical of the trade-union groups, the CGIL, has not shown its hand.
When it does, there could be political as well as economic repercussions. The CGIL has close links with Italy’s biggest centre-left group, the Democratic Party. The party’s leader, Pier Luigi Bersani, has promised that he will accept anything that is agreed to by the CGIL. But the bigger issue is how far his party would back Mr Monti’s government if the CGIL were to refuse to make any sort of a deal on Article 18.