Report examines labour market trends

Download article in original language : IT0312305FIT.DOC

In December 2003, the Censis research centre published its annual report on the social situation in Italy. It finds that the labour market is becoming increasingly rigid. Unemployed people are finding it harder to enter the labour market, while those in employment are less likely to leave it or to move between positions or jobs. Temporary employment plays a key role in labour market entry, and many workers remain in this type of employment for long periods. Finally, many people find jobs through family and friends.

Since 1967, the Social Investments Studies Centre (Centro Studi Investimenti Sociali, Censis) has published an 'Annual Report on the social situation of the country' (Rapporto sulla situazione sociale del Paese). The Censis annual report is considered, together with the annual report of the Central Statistics Office (Istituto Centrale di Statistica, Istat), as one of the most reliable and complete instruments with which to interpret the employment and social situation in Italy. Among its various sectoral analyses, the Censis report examines the development of the labour market in the light of developments in the country during the past year. Part of the report is also based on a series of interviews conducted with people in order to ascertain public opinion on recent social trends. Some of the main findings of the 2003 report (XXXVII Rapporto sulla situazione sociale del Paese 2003), published in December, are highlighted below.

Main trends

Since 1998, the year in which employment began to grow again, the total number of people in employment has risen by 6.8% from 20,435,000 to 21,829,000 in 2002, while unemployment has decreased by 21.2%. Although this is a positive trend, states the Censis report, it has been due less to greater mobility and openness of the labour market than to consolidation in the sense of less movement in or out of employment and unemployment (described as 'coagulation' and 'immobilism'). Over the 1998-2002 period, in fact, the number of labour market entrants decreased by 8.6% (falling from 1,420,000 in 1998 to 1,298,000 in 2002) with a parallel fall (-1%) in the number of labour-market exits, voluntary or otherwise. The table below sets out Censis's views on current key trends in the Italian labour market.

Source: Censis calculations on Istat, Ministry of Welfare and OECD data

According to the report, greater external 'impermeability' of the labour market is progressively being matched by an 'immobilisation' of positions within the market. The Italian system is still extremely rigid, with low levels of internal mobility. In fact, the increase in the total number of movements within employment - the 'rotation rate', ie the ratio between changes of job or type of work and the stock of employed persons at the beginning of the period, which rose from 11.5% in 1998 to 13.5% in 2002 - confirms that the increased dynamism of the labour market is due solely to the introduction of greater flexibility into the system. The only 'mobile' component, in fact, is the one consisting of temporary workers.

Moreover, the trend towards 'positional coagulation' within employment, states Censis, seems bound to increase even further, given that demand for occupational mobility among Italian workers is constantly decreasing: whilst 6.4% of people in employment (1,318,000) were in search of another job in 1998, the percentage had fallen to 5.5% (1,194,000) in 2002. This diminution in the desire for change apparently does not stem from job satisfaction, but instead from a real difficulty in finding jobs which are better (in terms of pay, responsibility and prestige) or simply equivalent to the ones presently held.

The interviews conducted by Censis with a sample of the public also suggest that the employment created in the past five years has not been 'good' employment in terms of quality. In fact, the employment created:

• has been sustained by measures which reduce employers' social security contributions (according to a recent monitoring survey by the Ministry of Labour, 14.5% of dependent employees are employed under such schemes);
• has not increased knowledge and skills - ie it has not created a positive relationship between the professional growth of workers and their occupational positions; and
• is largely temporary in nature. In Italy, 9.8% of employed people work on fixed-term contracts, and 46% of them are aged over 36 (and therefore presumably destined to remain in that situation for a long time).

The role of the family

The Censis report finds that the family plays an ever more active role in the labour market, orienting and conditioning the behaviour of its members: 'The family now seems to be the main, if not the only, investor in the labour market.' It is the family that: invests in the education of its children from childhood to maturity; seeks out increasingly rare employment opportunities; and supports its children, economically and in other ways, when they reach maturity.

According to the 2003 Issp-Censis survey, the family, together with the 'friendship network', is still the main channel of labour market entry in Italy, with some 29.7% of respondents stating that they have found jobs thanks to their families, through a close relative (19.3%) or a distant relative (10.4%). When the percentage of people who say that they have been helped by a friend or a family acquaintance to find a job (33.1% in total) is added, the proportion of those supported by the family network (restricted, extended and friendship-based) reaches 62.8% - a surprising figure which has no equivalent in any other European country except Spain.

Furthermore, the parental role is increasingly tending to extend beyond childhood towards becoming permanent, Censis finds. The result is that, year on year, the number of young Italian adults living with their families is increasing: since 1993, the percentage of unmarried young people (aged 18-34) still at the parental home has risen from 55.5% to 60.1% (2001 figure).

Commentary

Comparison of the performance of Italian labour market with those of the other European countries once again shows that Italy is distinguished by general backwardness - mainly as regards employment levels and participation rates (especially among women in the southern regions of the country), but also as regards the role of the family and friends as preferential channels for labour market entry.

Moreover, the figures provided by the Censis annual report seemingly confirm the increasing rigidity of the Italian labour market, in the sense of internal 'coagulation' and increased 'impermeability' towards the outside - ie towards the jobless, the majority of whom are in long-term unemployment. These dynamics inevitably accentuate the distinctive features of the system, further reducing turnover among the employed and among job-seekers (always low in Italy), and also turnover in internal labour markets (which has always been largely in line with that of the other European Union countries).

Some new labour market entries consist of temporary contracts ('intermittent' or fixed-term), which for some years have accounted for around two-thirds of all contracts on which young people find employment. This entry flexibility often becomes permanent flexibility: according to the statistics, in fact, the longer a worker remains in temporary work, the greater the likelihood that he or she will do so permanently. The recent law no. 30/2003 reforming the labour market (IT0307204F) will lead to a further proliferation of fixed-term contracts, and for older workers as well, given that it tends to reinforce these types of contracts in the employment relationship.

Finally, the Italian labour force has an average level of education, and therefore of vocational training, among the lowest in Europe. In 2001, only 53% of the 21.5 million workers surveyed by Istat possessed an educational qualification equivalent to at least an upper-secondary school or vocational training certificate (in Germany the percentage was almost 80%). It therefore seems imperative, from the point of view of both enterprises and workers, to raise the level of vocational training among large numbers of the latter. To this end the government should promote appropriate continuing training programmes by offering incentives to firms. (Livio Muratore, Ires Lombardia)