2001 Annual Review for Italy

This record reviews 2001's main developments in industrial relations in Italy.

Political developments

The main political event during 2001 was the general election, held on 13 May. The centre-right coalition, the House of Freedom (Casa delle Libertà) - made up of Forza Italia, the National Alliance (Alleanza Nazionale), the Northern League (Lega Nord), the Christian Democratic Centre (Centro Cristiano Democratico, CCD) and the United Christian Democrats (Cristiani Democratici Uniti, CDU) - won a large parliamentary majority. It obtained 366 seats out of 630 in the lower house of parliament, the Chamber of Deputies, and 177 out of 315 in the upper house, the Senate. It thus formed a new government in June 2001, replacing the former centre-left administration. Silvio Berlusconi, the leader of Forza Italia, became Prime Minister.

In May 2002, around 10 million citizens will vote in local administrative elections in various Italian towns and provinces.

Collective bargaining

The year saw a number of developments in the coverage and scope of collective bargaining. For example, the first ever single national collective agreement was signed in July for the 1 million staff employed by 'professional offices'- ie the offices of employers such as lawyers, engineers and architects (IT0109196N). In April, a new national collective agreement for journalists was concluded after 18 months of confrontation. As well as introducing new rules on fixed-term employment and freelance journalists, the agreement for the first time covers online journalism (IT0104367F).

Attempts at defining new industry-wide agreements in sectors affected by liberalisation and privatisation processes (ie sectors where there was formerly only one state-run operator and thus no distinction between the company and sectoral agreement) continued in 2001. An important result was a new single sectoral agreement for the electricity sector (both generation and distribution) which was approved by employees and signed in September (IT0109197N). Negotiations on the definition of an agreement for water and gas distribution and on a new sectoral agreement in the rail sector were still under way at the end of the year. On the railways, despite continuing conflict in the sector during the year (IT0111201F), in November 2001 trade unions and the Italian State Railways (Ferrovie dello Stato, FS) eventually signed an agreement on some aspects of company reorganisation, performance-related pay and participatory procedures. The agreement included an explicit commitment to support a rapid conclusion of negotiations over a new sectoral agreement. By contrast, the parties' positions on a single industry-wide agreement for water and gas distribution still seemed quite distant from one another.

Pay

The National Institute of Statistics (Istituto Nazionale di Statistica, Istat) collects data for a sectoral bargaining panel, which includes 80 agreements covering some 11.5 million employees out of a total of about 15.7 million employees. At the end of November 2001, according to the Istat figures, a total of 66 industry-wide collective agreements on pay were in force, covering around 10.9 million employees, and accounting for 94.8% of the paybill covered by the panel. This compared with a total of 49 agreements in force at the same date in 2000, accounting for 63.2% of the paybill.

During 2001, 32 industry agreements were signed, covering around 7 million employees and accounting for 60.2% of the surveyed paybill. At the end of December 2001, the pay provisions of many industry-wide agreements expired, resulting in a decrease in coverage from 94.8% of paybill to 34.0% in January 2002, if no renewals were signed. This would especially affect sectors such as banking and insurance, transport and communications, building, public administration (including schools) and agriculture. In manufacturing, the chemicals sectoral agreement expired on 31 December 2001 (and a new accord was concluded in February 2002).

In November 2001, the general increase in collectively-agreed pay over November 2000 was 2.8%, according to Istat data. Over the same period, the actual inflation rate had been 2.3%.

During the year, the issue of wage increases led to a significant split between trade unions over the renewal of the pay terms of the metalworking sector agreement. The final deal with the Federmeccanica employers' association was signed in July by the Italian Metal-Mechanical Federation (Federazione italiana metalmeccanici, Fim), the metalworkers' federation affiliated to the Italian Confederation of Workers' Unions (Confederazione Italiana Sindacati Lavoratori, Cisl), and the Union of Italian Metal-Mechanical Workers (Unione Italiana Lavoratori Metalmeccanici, Uilm), affiliated to the Union of Italian Workers (Unione Italiana del Lavoro, Uil) - but not by the Italian Federation of Metalworkers (Federazione Impiegati Operai Metallurgici, Fiom), affiliated to the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil) (IT0107193F).

The reason for disagreement was essentially a different interpretation of the provisions with regard to 'admissible' pay demands of the July 1993 national tripartite agreement which regulates the Italian collective bargaining system. Fiom sought to use the sectoral agreement to give workers a share in sectoral productivity gains and took a stricter view on the recovery of past differentials between forecast and actual inflation than the other unions. Fim and Uilm maintained instead that productivity gains should be redistributed only through company-level agreements, notably through the performance-related pay bargaining introduced by the July 1993 agreement.

Moreover, in the final deal, Fim and Uilm agreed with Federmeccanica a pay rise which includes an element representing anticipated recovery of future inflation differentials - a provision which Fiom and Cgil regarded as likely to have a negative impact on the viability of future pay demands. The divisions between the metalworking unions persisted throughout the year and Fiom continued to campaign for reopening the negotiations, calling a one-day strike in November 2001 to support its demands (IT0111133N).

Working time

The issue of working time did not feature prominently in the 2001 collective bargaining round, although some agreements contained new provisions relating to both the length of the working week and working time flexibility. One such accord was the the new single agreement concluded in July in the electricity sector (IT0109197N). Under this deal, working time is set, for all companies, at 38 hours per week, though some companies which currently have longer hours will achieve this objective only by the end of the agreement's four-year term. In order to reduce recourse to overtime, the agreement also provides for the creation of an 'hours bank', allowing for variable working hours, following the example of many other national collective agreements. Overall, as in previous years, collective agreements set normal weekly working time at 36 to 40 hours.

Pay inequalities

The issue of pay inequality did not receive a great deal of attention in sectoral or company-level bargaining during 2001. However, studies published in March 2001 (IT0104181N) found that the gender pay gap remains substantial. Women are in general paid less than their male counterparts. In terms of average annual pay, female managers are paid 7.7% less than men, female middle managers 5.2% less and female white-collar workers 11.1% less. Further, the gender gap is more pronounced in the South of the country than in the North.

A study analysing initiatives to support equal opportunities between women and men at the workplace at three companies (Coop Toscana Lazio, IBM Semea and Electrolux-Zanussi), conducted in 2000, indicates that it is possible to narrow the gap between women and men in terms of access to jobs and career advancement, though important differences persist (IT0103279F). Other studies addressed the issues of gender discrimination in career development and of occupational segregation (IT0104183F), finding a substantial under-representation of women in all managerial posts.

Job security

The social partners's efforts to conclude agreements to foster employment creation and job security continued in 2001 at all levels. An example of an agreement at 'territorial' level was the 'social pact' for Catania, a town in Sicily, which was signed in February 2001 (IT0103177N). The agreement aims to help create new companies and facilitate the access to the labour market of people facing difficulties, as well as to enable the stabilisation of 'precarious' employment.

Another interesting agreement was signed in January 2001 by the Ministry of Industry and the Fim, Fiom and Uilm metalworkers' federations in order to support the mobility of workers between the South and the North of the country, with a view to coping with the increasing recruitment difficulties that many northern firms are experiencing (IT0102173N). The agreement seeks to set up a system to support companies in seeking personnel, and promote South-North mobility and investment in the South. The arrangement will be temporary, allowing workers to gain professional experience in northern plants before returning to work in a plant that the company concerned has meanwhile built in the South. The system will be applied on an experimental basis to Franco Tosi, an electro-mechanical company located in the North

In October 2001, an innovative agreement was reached at Electrolux-Zanussi, in which management and unions agreed to move the company's entire production chain for clothes-dryers from Nuremberg, Germany to Porcìa in Italy, under the condition that the company would be able to relocate the dryer operation to another country after 2005, should this become more economically convenient (IT0111136N). The company committed itself to hiring 320 new employees on a fixed-term basis for the duration of the project. Moreover, the agreement envisages the implementation of joint training initiatives to support the employability of workers hired on fixed-term contracts, and assistance to the workers in finding employment after the expiry of the temporary contract.

Training and skills development

A number of agreements concluded during 2001 contained provisions designed to improve training and skills development provisions. For example, the new accord concluded in February in the schools sector introduces training leave and allocates 1% of the total paybill to continuing training (IT0103179N).

Legislative developments

A major legislative development in 2001 related to fixed-term work. Negotiations among the Italian social partners on the transposition of the EU Directive (1999/70/EC) on fixed-term work led to an important split among the trade unions in March 2001, when the Cgil trade union confederation decided to leave the bargaining table (IT0104182N). However, in May 2001, a number of social partner organisations signed a joint statement on the transposition into Italian law of the Directive (IT0105282F). Of the three main union confederations, Cisl and Uil signed the agreement, while Cgil did not sign it and expressed its strong disagreement with the content of the joint document.

The government eventually transposed the Directive by legislative decree no. 368 of 6 September 2001, which followed the lines laid down in the social partners' joint statement. The new legislation generally reduces the constraints formerly imposed on fixed-term employment and makes its use more flexible for firms. One of the main changes is the elimination of the previous explicit listing, either by law or collective bargaining, of the specific circumstances in which the use of fixed-term employment was legal. The new law states only that workers may be hired on fixed-term contracts 'for technical, productive and organisational reasons or in substitution for absent personnel'. On the other hand, employers are now required to specify in writing the reasons for using fixed-term work for each employment contract. In addition, the new law: stipulates when the use of fixed-term work is not allowed; limits the possibilities of renewing contracts; confirms the principle of non-discrimination against workers on fixed-term contracts; introduces some training rights for the workers involved; and defines the role of collective bargaining in regulating fixed-term work.

One of the most high-profile and controversial developments of the year was the presentation by the new government, in October 2001 of a 'White Paper' containing a wide range of proposed legislative reforms in the labour market and industrial relations areas (IT0110104F). During the debate over the implementation of the White Paper, the government presented to parliament a 'proxy law' (whereby parliament is asked to delegate to the government the power to legislate on an issue) on labour market reform, which included proposals to modify the current legal rules on individual dismissals. Despite their different approaches towards the government's White Paper, the three main trade union confederations reacted unanimously to what they saw as an attack on workers' rights and organised a strike towards the end of the year (IT0112127N). Subsequently, further government initiatives in the fields of tax and pension reform increased the unions' criticism and led to the calling of a series of joint strikes against the government's proposals at the beginning of 2002 (IT0201108N).

The organisation and role of the social partners

In March 2001, at a conference held in Parma, the Confindustria employers' confederation presented a document entitled 'Actions for competitiveness', which contained its proposals to relaunch the Italian economy (IT0104185F). The main measures were:

• reform of the pension system;

• an increase in labour market flexibility by relaxing constraints on recruiting and dismissing workers;

• reduction of the tax burden for companies; and

• reducing the size of the 'irregular' economy.

The Parma meeting was also important in that it took place during the general election campaign and highlighted many similarities between the programme of the centre-right coalition and Confindustria's demands. This convergence, highlighted by Mr Berlusconi, obliged Confindustria's president to stress that the employers' organisation is politically neutral.

In June 2001, the Cisl union confederation held its 14th national congress (IT0107191N), which confirmed Savino Pezzotta as general secretary. The main issues debated at the congress included the confederation's relationship with the new centre-right government and with other union confederations, particularly in the light of emerging differences with Cgil. Mr Pezzotta stressed the need to react cautiously towards the new government, stating that it should be judged according its proposals and actions. Moreover, he affirmed that social concertation between the government and the social partners can continue to play an important role in the future.

The relations between unions in 2001 were characterised by a certain degree of disagreement. This was illustrated by the fact that the joint statement on implementing the fixed-term contracts Directive (see above under 'Legislative developments') and the metalworking sectoral collective agreement (see above under 'Pay') were both signed by Cisl and Uil but not by Cgil. However, in autumn 2001, the opposition to some government initiatives in the fields of labour and social policy (see above under 'Legislative developments') led to a united reaction by the unions and reduced the emphasis on their different points of view.

Industrial action

From January to November 2001, according to Istat provisional data, a total of 650,000 working days (5.2 million hours) were lost due to industrial action. This level of conflict was broadly the same as the previous year (down only 1.0%). The great majority of strikes were held in connection with collective agreement renewals (73.1%) or other economic or 'normative' demands (12.4%). About two-thirds of all strikes took place in the metalworking sector (where some 440,000 working days were lost), which experienced difficult negotiations over the renewal of the sectoral agreement (see above under 'Pay').

Towards the end of the year, some of the government's initiatives on reforms of the labour market, the pension system and the fiscal system (see above under 'Legislative developments') met with strong opposition from the unions, which called a series of strikes (IT0201108N).

National Action Plan (NAP) for employment

The 2001 Italian National Action Plan (NAP) for employment, in response to the EU Employment Guidelines, was issued by the centre-left government at the beginning of May (IT0106369F), a few weeks before the general election was held, on 13 May. In general, employers were largely satisfied with most of the processes related to the drawing up and implementation of the 2001 NAP, while trade unions were generally less satisfied. The new centre-right government which took office in June drew up an additional document and subsequently presented it to the European Commission without any consultation with the unions.

Company restructuring

The Italian national airline Alitalia was hit by the air transport crisis following the 11 September 2001 terrorist attacks in the USA (IT0111103N) and the company subsequently drew up a restructuring plan which involves more than 5,000 redundancies (IT0201178F). The negotiations on measures to deal with this situation were still underway at the end of the year. In the autumn of 2001, the labour and welfare minister, Roberto Maroni, announced that he would not permit the use of 'social shock absorbers' (which cushion the effects of redundancies and restructuring in some sectors), such as the wages guarantee fund, in Alitalia's case and that special measures would not be introduced for Alitalia.

In December 2001, the motor manufacturer Fiat presented a major reorganisation plan (IT0201107N), whereby 18 plants around the world will be closed, two of them in Italy. Fiat will use the wages guarantee fund to manage the redundancies which will occur in Italy, and will reduce recruitment of both temporary agency workers and those on fixed-term contracts.

During 2001, no modifications of the legislation on collective dismissals and industrial restructuring took place. Reform of the 'social shock absorbers' has been on the government's agenda for a number of years, but its linkages to the labour market and the pension system reforms have hindered any progress, since negotiations with the social partners on these two issues have proved particularly difficult (see above under 'Legislative developments').

Employee participation

There were no particular developments in the field of employee participation during 2001. The issue of financial participation is still topical and from time to time has drawn the attention of the broader public. This has often happened when the reform of the end-of-service allowance (Trattamento di fine rapporto, Tfr - a portion of a worker's pay set aside by the employer and then paid as a lump sum at the end of the employment relationship) has been addressed, with a view to supporting the development of pension funds. A significant development was the employee financial participation scheme launched by Rinascente, one of Italy's main large-scale retail companies, at the end of May 2001 (IT0107192N). This was the first time that an Italian company had offered its workers shares on particularly favourable terms, granting a guaranteed yield higher than that available on the general market. The unions nonetheless harshly criticised the initiative, largely because they regard it as a mere financial operation, with no effects on actual workers' involvement and participation. They also expressed concerns that the use of the Tfr to purchase shares for employees in this case might hinder the workers' chances of participating in supplementary pension schemes.

New forms of work

There were a number of developments during 2001 in the area of new forms of work. In addition to the new law on fixed-term contracts (see above under 'Legislative developments'), in July 2001, a national collective agreement on telework in small and medium-sized enterprises was signed by the Italian Confederation of Small and Medium-sized Industry (Confederazione italiana della piccola e media industria, Confapi) and Cgil, Cisl and Uil (IT0108194N). This was the first national intersectoral agreement signed on this topic in Italy; hitherto, telework had been regulated either at sectoral or company level. The experimental agreement, which runs until 2003, covers teleworkers' rights and organisational aspects and delegates to sector-level bargaining the definition of some aspects of the regulation of telework, including working time.

Total employment increased during 2001: labour force survey figures for October 2001 showed a growth of 1.2% compared with October 2000. Among dependent workers, there had been an expansion of open-ended employment (up 3%) and a reduction of fixed-term employment (down 4%). Part-time workers accounted for 8.5% of all employees, a decrease of 0.4 percentage points when compared with 2000.

According to Confinterim, the main employer's association for temporary work agencies, during the first half of 2001, the number of workers hired on a temporary agency work contracts amounted to 236,072 (up 3.5% on the first half of 2000) and represented the equivalent of 70,845 full-time posts. Some 61% of these workers were men and the average age was 28. Temporary agency work was most widespread is metalworking (29.5% of all agency work). The duration of 80% of temporary work contracts was less then six months. On 30 June 2001, the number of temporary work agencies operated by the 60 authorised companies stood at 1,572.

Other relevant developments

In October 2001, the government issued a White Paper on the labour market (see above under 'Legislative developments'), which presented an analysis of the situation and outlined the objectives of the government for the next five years in the field of labour regulation and policies, as well as the general measures envisaged to fulfil its goals. In the area of industrial relations, two particularly important points were highlighted in the White Paper :

• a shift from 'social concertation' to 'social dialogue', which in practice means a lower commitment by the government to reaching an unanimous agreement with social partners on the issues discussed in tripartite negotiations; and

• an invitation to the social partners to consider revising the collective bargaining structure in order to increase its decentralisation.

Discussion with the social partners on the content of the White Paper was interrupted when the government decided to launch labour market reform initiatives in mid-November 2001 (see above under 'Legislative developments').

Outlook

Industrial relations developments in 2002 will be characterised by the development and outcome of the confrontation between unions and the government which developed in late 2001. There are at least three inter-related issues which may be strongly influenced by the outcomes of this situation.

First, if the government and the social partners are not able to reach a joint solution, an increase in the level of conflict in industrial relations may follow and a continuation of the collaborative approach in this area may be very difficult. The consensual conditions which made company restructuring through collective bargaining feasible without major conflict in the 1980s and enabled the establishment of a successful incomes policy in the 1990s may be endangered.

Second, mobilisation against the government's initiatives may provide the basis for overcoming the divisions which emerged in the trade union movement during 2001 and renew their commitment to united action. However, the real test for this will come from the actions that follow the mobilisation phase and from the unions' ability to make a breakthrough in the apparent stalemate in relations with the government.

Third, developments will contribute to defining the meaning of the shift from 'social concertation' to 'social dialogue' which has been announced by the government. In other words, the outcome of the confrontation may help to define a new balance between the involvement of social partners and the exercise of the government's autonomy in the field of labour and social policies, which may be acceptable to all the actors involved. This may result in an agreement, possibly informal, on the procedures which will make this new form of social dialogue viable and consistent.

If this new equilibrium in the relationship between the government and the social partners is to be attained, other features of the Italian industrial relations system may be reconsidered. Among them, the revision of the collective bargaining structure, including the role of incomes policy, and a new balance between industry-wide and decentralised bargaining may become the next focus of the debate.