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In November 1999, Enel Spa, the publicly-owned Italian conglomerate operating in the electricity sector, floated around one-third of its capital on the Milan and New York stock exchanges. About 85% of Enel's employees took up the offer of shares. This partial privatisation of the company launched the most important phase in the liberalisation of the Italian electricity sector. Collective bargaining has played a significant role in defining the regulatory framework in which the restructuring of Enel, and in part the sector as a whole, will proceed.
The privatisation of around one-third of Enel Spa's share capital took place between the end of October and early November 1999, with flotation on the Milan and New York stock exchanges. The operation, the largest initial public offer in the history of international financial markets, enabled the Italian Treasury to collect around ITL 35,000 billion. The take-up of the offer was extremely high, with around 3.5 million requests. Among the subscribers to shares were 70,302 of the company's employees: a figure which represents more than 85% of the total group workforce at the end of June 1999.
The sale of a significant share of the state-owned utility has been an extremely important step forward in the transformation of Enel Spa, and it marks the beginning of the main phase of the liberalisation to be undertaken in coming months. A substantial contribution to the definition of the form that changes in the company and the sector will take has been made by collective bargaining. After legislative decree no. 79 of 16 March 1999, which transposed into Italian law EU Directive 96/92/EC concerning common rules for the internal electricity market, the parties have reached two important agreements:
- the protocol of 30 June 1999 on the group's industrial relations system and on guarantees for Enel workers affected by the restructuring process; and
- the agreement of 30 September 1999, designed mainly to protect workers leaving the group as a consequence of divestments due to the removal of Enel's monopoly (IT9910131N).
An interesting aspect of the privatisation of Enel has been the creation of an employee share-ownership scheme. The three sectoral unions affiliated to the main trade union confederations have promoted the setting up of an association of employee shareholders, although Fnle-Cgil is more cautious than Flaei-Cisl and Uilcem-Uil on the issue. Fnle-Cgil, in fact, emphasises that a clear distinction must be drawn between the role of trade union representation and the potential role of an association of shareholders. Uilcem-Uil and Flaei-Cisl, by contrast, believe that shareholding could become an important component in a system of workforce participation which may also be financial in character. In any event, since Italy has no specific legislation on the matter, at the moment the prospects that employee share-ownership will permit effective representation on boards and other corporate bodies are limited, as shown by similar experiences in other privatised enterprises (Telecom Italia and certain banks, for example).
Liberalisation and collective bargaining
The overall form to be taken by the liberalisation of the electricity generation and supply sector has been defined by a series of legislative acts approved during 1999. Legislative decree no. 79 of 16 March 1999 laid down the rules for the application in Italy of EU Directive 96/92/EC, setting a maximum ceiling of 50% for the generating or importing of electricity from 1 January 2003 onwards, and establishing a level of transfer of production capacity by Enel prior to that date. The decree states that, in order to offset the employment and social effects of the transformation, the Ministry of Labour and the Ministry of Industry shall "guarantee, during the start-up phase of liberalisation, the involvement of the social partners through appropriate forms of concertation". A decree from the President of the Council of Ministers, issued on 4 August 1999, approved the Enel divestment plan and defined the rules for transferring plants. Finally, a decree issued by the President of the Council of Ministers on 17 September 1999 assigned special powers to the Ministry of the Treasury with a view to the privatisation of Enel Spa. These powers include approval of the main shareholders of Enel Spa, entitlement to veto the winding-up, merger and transfer of the society and other operations of an extraordinary nature, as well as nomination of representatives on the board of directors and the board of auditors.
The impact of liberalisation and privatisation on labour relations has been substantial. An internal restructuring of the company is being combined with the transfer of a large part of production and the creation of a new electricity sector. For example, employment in the group was reduced by more than 20% between the end of 1994 and June 1999: a sizeable reduction indeed, although it was made relatively painless by the non-replacement of staff turnover and by a set of incentives for resignations and voluntary retirement. The trade unions concentrated on applying political pressure to determine the form taken by the reform of the sector, while focusing on collective bargaining in order to define a framework to regulate its internal transformation. Of particular importance regarding the latter point has been the protocol of 30 June 1999 (the concertation pact) signed by Enel, Flaei-Cisl, Fnle-Cgil and Uilcem-Uil.
The concertation pact of 30 June 1999
The protocol of 30 June 1999 establishes a system of company-level industrial relations "of high profile and based on prior consultation". It confirms the Enel "protocol on the industrial relations system" of November 1997, which introduced a system of company-level "concertation" (dialogue and consultation) based on two levels, central and decentralised, covering company strategies. The parties also make express reference to the contents of the national tripartite agreement of July 1993 (IT9803223F) and of the national tripartite pact for development and employment of December 1998 (IT9901335F).
The main points of the agreement are the following:
- confirmation of a systematic concertation system involving prior and/or periodic consultation in order to foster agreement between the parties and aimed at making "Enel's objectives of efficiency and profitability consistent with social and employment needs";
- definition of the timetable for the discussion of the industrial plan for the restructuring of the Enel group;
- joint commitment to establishing a new sectoral agreement which would involve the other employers' associations in the sector. According to the protocol, the industry-wide agreement should: a) prevent unfair competition based on wage and normative differentials across firms; b) provide social guarantees for Enel employees transferred as a result of divestments; and c) contain provisions in line with the national pact for development and employment of December 1998 which take account of flexibility needs and the valorisation of workforce capabilities and skills. Envisaged for this purpose is "second-level" company bargaining on performance-related pay, in order to combine productivity and profitability with forms of economic participation;
- confirmation that the collective agreement for employees in the electricity industry will be applied to all employees of the Enel group. When this is not possible, due to the specific activities of companies belonging to the group, the collective agreement to be applied will be chosen after discussion with the national unions, but the company supplementary healthcare and pension schemes for the electricity industry will still apply;
- a commitment to a programme of continuing training drawn up jointly with the trade unions. The specific aim of this programme will be to sustain internal mobility within the group through retraining in the core business or in diversified activities. The company pledges to take every action necessary to reduce the impact on employment of the reorganisation and to foster infra-group mobility. Particular attention will be paid to guaranteeing equal opportunities and to retraining female workers. In certain situations, the company may also favour the outplacement of workers, on a voluntary basis, through the creation of cooperatives;
- a commitment by the company to begin "insourcing" processes where possible and to restrict contracting-out;
- the planning of no fewer than 1,000 new recruitments over the next three years; and
- when evaluating bids submitted for divested plants, the company pledges to consider the guarantees offered by the purchaser regarding employment and collective bargaining arrangements.
Finally, a special joint committee will review the agreement every four months.
Agreements on divestments
Another important step towards defining a bargained framework for corporate restructuring is the agreement of 30 September 1999 (IT9910131N). This agreement lays down rules covering the sale of company branches as part of the liberalisation of the electricity sector. In a sense, it completes the protocol of June 1999, which concerned workers who will remain within the group. The agreement of 30 September, which was also signed by the Ministry of Industry, introduces a "social clause" intended to protect employment levels until 31 December 2004, and to maintain present bargaining arrangements at least for three years, and in any case until a new sectoral agreement has been signed.
The agreement was reached after trade unions critical of the government's approval of Enel's divestment plan had called for industrial action in order to obtain guarantees for the workers involved. To back their demands, the unions had announced a four-hour nationwide strike throughout the electricity industry (with another four hours of strike action distributed on a regional basis). The strike was then called off when agreement was reached.
Subsequently, on 5 November 1999, agreements were signed defining the rules (as regards employment relations and collective bargaining arrangements) for the transfer of production plants both to the companies that will remain in the Enel group and to the three companies which - under the Enel divestment plan approved by decree of 4 August 1999 - will be sold to private sector organisations as part of the liberalisation of the sector.
A total of 5,057 employees, including middle and senior managers, will be transferred to these three companies (Eurogen, Elettrogen and Interpower). The agreements provide for the application in their entirety of the "concertation pact" of 30 June and the "social clause" in the agreement of 30 September to the personnel concerned. More specifically, the following are expressly guaranteed for employees in the three companies: coverage by collective bargaining in force within Enel; entitlement to enrol in supplementary Enel healthcare and pension schemes; and the right to the internal mobility provisions set out in the Enel's collective agreements in the event of lay-offs.
The only issue left to deal with is that of the middle and senior managers to be transferred to the three companies. While there are no difficulties regarding workers at plants, the problem of transferring personnel from the group's central structures is more complicated.
The position of the trade unions
All three main sectoral unions, Flaei-Cisl, Fnle-Cgil and Uilcem-Uil, consider the contents of the agreements of 30 June and 30 September 1999 fully satisfactory. However, they express contrasting opinions on the application of the agreements and the company's behaviour. Fnle-Cgil declares itself substantially satisfied with the changes introduced and considers them to be in line with the creation of a sectoral industrial relations system which would include private companies. Uilcem-Uil and Flaei-Cisl have taken up a more critical position. Both federations point to difficulties in creating a full-fledged concertation system, arguing that the company tends to act unilaterally and seeks to bypass prior consultation. According to Uilcem and Flaei, the problem could be exacerbated by Enel's excessive fragmentation into distinct companies acting autonomously. Flaei is especially critical of the way in which the liberalisation and privatisation of Enel Spa has been handled.
Commentary
Industrial relations in Enel and the electricity industry as a whole are passing through a phase of great importance. On the one hand, it is necessary to reorganise Enel so that it can operate in a competitive, albeit closely regulated, market. On the other, it is necessary to draw up a set of rules which apply to all the firms operating in the sector.
For Enel and the trade unions the changeover is a highly complex process which requires the abandoning of a "public" sector mentality in both management of the company and its industrial relations. The joint endeavour of the company and unions to devise a new industry-wide collective agreement which includes private operators means that the aim should be to introduce an industrial relations model similar in many respects to that typical of private industry - less rigid and less "protected" than the previous system, which had developed behind the shield of a monopoly position.
The company's unilateral stance, denounced by some unions, may be due to its desire to gain the decision-making latitude necessary to operate in a competitive market. At the same time, in order to take full advantage of an innovative structure of industrial relations, it seems important that corporate initiatives should be discussed within the concertation framework established by the agreement of June 1999.
To date, collective bargaining has always been able to deal with difficulties arising in relations between the parties at Enel. Important agreements have been reached, especially as regards workforce guarantees on bargaining coverage and job protection. Today, these institutional arrangements face a more difficult test: liberalisation of the sector and the creation of shared rules jointly with private operators. If this crucial phase is to be completed successfully, it is important that the trade unions should grant the company leeway to set objectives and strategies, and that Enel should acknowledge the importance of consultation and concertation with the unions to strengthen corporate decisions and build consensus around them. The stakes are high, especially if an industrial relations system based on advanced forms of concertation is to find acceptance among the private organisations which will operate in the electricity market, in order to become the "model" for a future sectoral agreement (Roberto Pedersini, Fondazione Regionale Pietro Seveso).