New collective agreement signed for public sector executives

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In October 1999, the Italian public sector bargaining agency, Aran, and the trade unions signed a national collective agreement for public sector executive officers in regional and local government. The main issues covered by the deal include the introduction of consultation and dialogue procedures, the possibility of termination of the employment relationship by mutual consent, pay increases and decentralised bargaining provisions.

On 14 October 1999, the public sector bargaining agency, Aran and the sectoral trade unions affiliated to the Cgil, Cisl and Uil confederations - Fist,Funzione Pubblica and Enti Locali respectively - signed a national collective agreement for public sector executives (dirigenti pubblici) in regional and local government and other local public sector bodies. Under the agrement, local bodies will enjoy greater autonomy in the management of employment relations with their executive officers. The agreement - which covers 13,000 executives employed by regions, municipalities, chambers of commerce and public welfare charitable institutions - also represents a step forward in the current reform and decentralisation process for the public administration.

The most important aspect of the agreement concerns the introduction of the possibility of termination of the employment relationship by mutual consent - previously not permitted. In order to obtain this mutual consent, local administrative bodies will be allowed to offer executive officers a financial incentive equivalent to two years' pay. Such termination will be possible for regional and provincial officers only in the event of restructuring or reorganisation of the relevant body. The termination of the employment relationship must be subject to consultation and dialogue ("concertation") and must be communicated to the local trade union organisations, which will be able to ask for a meeting in order to discuss the issue.

The agreement also renews the industrial relations system, regulates the right to information and the rules for conducting decentralised collective bargaining, and introduces concertation procedures on specific subjects. Concertation involves meetings held on the request of one of the parties in order to negotiate over issues linked to the identification of: performance-related pay parameters; objective-related pay criteria; and the systems to be used to assess the executives' performances. Decentralised bargaining will concern:

• the guidelines for vocational training programmes;

• the criteria for the allocation of the financial resources available for performance/objective-related pay; and

• problems linked to health and safety at work.

In order to guarantee the continuity of public services, executive officers will not be able to strike over issues subject to decentralised bargaining.

For decentralised bargaining purposes, local bodies which employ fewer than five executives will be able to join together to sign a single integrative territorial agreement, by creating a sort of consortium.

The agreement provides for a monthly pay increase of ITL 136,000. Furthermore, local bodies will also be allowed to allocate more economic resources to give executive officers extra payments, up to a maximum of 1.2% of each local body's relevant budget. A consistent share of these resources will be allocated to performance-related pay, which rewards the results achieved by the executives on the basis of the objectives assigned and of appropriate assessment systems.

The parties reacted positively to the agreement. Carlo dell'Arringa, president of Aran, said that the employment relationship between local bodies and executive officers is undergoing a "privatisation" process. Stefano Parisi, general director of the municipality of Milan, underlined the positive effects that performance-related pay might have on the quality of work and performance. He also stressed that the new remuneration process can go in either direction: "those who do not perform well will have a pay reduction."