Italy: New industrial relations rules for SMEs in manufacturing and services

In November 2016, a new agreement reformed rules for industrial relations covering SMEs  in the industry and service sectors, fine-tuning provisions on decentralised bargaining and paritarian institutions. It also introduces a system to assess unions’ representativeness.

Introduction

On 23 November 2016, the social partners signed an agreement reforming rules on industrial relations.

On the workers’ side, the organisations involved were:

• Italian General Confederation of Labour (CGIL);
• Italian Confederation of Workers’ Trade Unions (CISL);
• Union of Italian Workers (UIL).

On the employers’ side they were:

• Confederation of Small and Micro Craft Enterprises (Confartigianato);
• National Confederation of Crafts and Small and Medium Enterprises (CNA);
• Confederation of Autonomous Artisans’ Trade Unions (Casartigiani);
• Confederation of Free Italian Handicraft Associations (CLAAI).

The agreement covers small and medium-sized enterprises (SMEs) in the industry and service sectors, more specifically those involved in construction, manufacturing, retail, cosmetics, communications, cleaning and road transport.

Union proposals

The agreement comes after CGIL, CISL and UIL presented a proposal document, in January 2016, aimed at modernising the Italian industrial relations system. The proposal focused on three pillars of industrial relations.

• Collective bargaining. The document opts to maintain the existing consolidated structure of collective bargaining, with the national level setting out consistent rules covering workers of a specific sector and decentralised agreements possibly adapting such rules to a specific context. It suggests that collective bargaining should pay more attention to protecting self-employed workers and employees involved in subcontracting, as well as to the role played by paritarian funds and private welfare.
• Industrial democracy. The document sets the goal of encouraging workers' participation at company level, both in terms of decision-making processes and of sharing economic results.
• Rules. The document is aimed at implementing the assessment of unions’ representativeness necessary for collective bargaining agreements to be valid, according to the rules agreed in 2014 with employer organisations representing large companies and cooperatives in the industry and service sectors. The unions now propose adapting and extending such rules to collective bargaining for SMEs, as well as measuring the representativeness of employers’ organisations.

After making these proposals, the unions started negotiations with their employer counterparts, closing some of them successfully. The agreement covering SMEs is particularly significant both for its contents and the fact that it indirectly affects about 1.5 million workers.

Previous industrial relations developments in the sector

 Collective bargaining covering these sectors has traditionally been structured along a national and a decentralised level. There are two points of particular significance arising from the 2008 reform.

• National collective bargaining agreements (NCBAs) define unions’ rights and employment conditions for the sectors covered, while having exclusive jurisdiction over collective bargaining rules, unions’ rights, the definition of minimum wage levels, classification of job tasks and other topics as mandated by law.
• Decentralised collective bargaining agreements, usually signed at regional multiemployer level, establish rules on performance-related pay as well as adapting employment conditions in order to meet specific sectoral and local needs.

Both levels of agreements include interconfederal agreements with a cross-sectoral coverage and are in charge of, respectively, defining rules governing industrial relations and the wage structure, and adapting rules to the local context.

In addition, by means of a series of interconfederal agreements signed between 2008 and 2010, the social partners initiated a process of reorganisation and enlargement of the coverage of paritarian institutions. The role of these institutions is particularly significant, especially in relation to income support and vocational training.

The social partners also launched a process of merging collective bargaining agreements for different sectors to make rules more consistent across different activities.

Key aspects of the 2016 agreement

The new agreement builds on the positive outcomes of the 2008–2010 interconfederal agreements. It goes further by setting out an assessment of unions’ representativeness, as explained below.

Collective bargaining

In the 2016 agreement. social partners substantially confirmed the jurisdiction of the national and decentralised levels of collective bargaining.

The main changes concern the possibility for the social partners at interconfederal regional level to implement initiatives aimed at promoting decentralised bargaining, as well as the introduction of the possibility for NCBAs to set out rules on workers’ participation in corporate decision-making processes.

In addition, collective bargaining can now also take place at company level, replacing decentralised multiemployer agreements, whenever allowed by such agreements.

The process of streamlining NCBAs will continue by merging core provisions on:

• unions’ rights;
• paritarian institutions;
• employment contracts;
• wage levels in four areas – manufacturing, services, construction and transport.

The remaining provisions will continue to be dealt with separately for each sector.

As for procedures on renewing collective bargaining agreements, social partners agreed to engage in further negotiations on:

• the timing of bargaining rounds;
• peace clauses;
• sanctions in case of non-compliance with rules.

The 2016 agreement does not set a benchmark for negotiating wage increases, which up to now have been bound to inflation indicators. Instead, it states that social partners should define criteria reflecting social and economic performance at sectoral level.

Role of paritarian institutions

The parties agreed to adopt measures to strengthen the role of paritarian institutions in:

• health and safety at work;
• vocational training;
• unemployment benefits;
• private welfare.

Particular attention will be paid to pension and healthcare funds, as social partners aim to discuss solutions to tackle the low rates of enrolment by eligible employees.

Representativeness criteria

The 2016 agreement also lays down the basis for assessing unions’ representativeness in SMEs. This will be calculated according to:

• membership rates;
• elections of works councils (only in companies with more than 15 employees);
• benefits provided by paritarian institutions (overseen by union branches at local level).

These indicators will be averaged to calculate each union’s representativeness rate in all covered sectors. A 5% representativeness threshold must be reached by unions to be entitled to bargain, while a 50%+1 threshold will determine the applicability of NCBAs and of decentralised collective bargaining agreements to all the workers they refer to.

Over the next few months, social partners should reach agreements with the institutions in charge of collecting, summarising and disclosing the data used to determine representativeness: the National Institution of Social Security (INPS) and the National Council for Economy and Labour (CNEL).