Social partners sign pact for development

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In June 2003, after five months of negotiations, the Confindustria employers' confederation and the three main trade union confederations (Cgil, Cisl and Uil) signed a pact aimed at relaunching development, employment and competitiveness in Italy. The agreement focuses on research, training, the South of Italy and infrastructure, and seeks to influence the government's future economic policy.

It is 13 years since the three main trade union confederations - the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil), the Italian Confederation of Workers’ Unions (Confederazione Italiana Sindacato Lavoratori, Cisl) and the Union of Italian Workers (Unione Italiana del Lavoro, Uil) - and the main employers’ confederation, Confindustria, last signed a bilateral agreement without the intervention of the government. The last agreement of this kind was signed in 1990 and concerned labour costs and dispute prevention. However on 19 June 2003, the social partners signed a pact for development, employment and competitiveness, following five months of negotiations which began in February 2003, owing largely to the persuasion and mediation work of the Cisl general secretary, Savino Pezzotta. (IT0303102N).

The signature of the agreement by the three union confederations is widely regarded as a positive sign of a possible change in the relations between the social partners, which have recently taken diverging positions (IT0305204F and IT0303101N). The pact is also seen as highly innovative because it is the result not of any exchange of concessions between the partners, but rather of a new method adopted by the social partners aimed at influencing political decisions. The context is Italy's current economic stagnation, with GDP growth close to zero. According to the trade unions and Confindustria, Italy's reduced economic growth is caused by a lack of competitiveness in international markets. Through their agreement - achieved despite their profound divisions - the social partners seek to take responsibility for ending this situation by identifying shared priorities. The pact deals with only some of the aspects of a complex economic situation, and the four organisations, as stressed in the agreement itself, still hold different positions on government economic policy. However, these diverging positions did not prevent them from reaching a positive common agreement.

The pact was presented to the central government, parliament, and bodies representing lower levels of government - the Conferenza Stato-Regioni (regions), Union of Italian Provinces (Unione Province italiane) and National Association of Municipalities (Associazione nazionale dei Comuni) - to be used as a starting point for future agreements. The signatories of the pact propose that the government use the agreement as the basis of its next economic and financial planning document (Documento di programmazione economica e finanziaria, Dpef) and the 2004 budget law.

The pact for development, employment and competitiveness identifies research, training, the South of Italy (Mezzogiorno) and infrastructures as the four priority areas for the country’s economic and social development.

Contents of the agreement

The social partners, in the pact's introduction, highlight its dual aim: to consolidate industrial relations practices aimed at achieving economic development and employment growth: and to propose detailed solutions on some specific subjects. The partners call for the development of public policies aimed at strengthening competitiveness through investments and measures which can create the conditions for a growth in average company size. According to the agreement, it is necessary to strengthen the Italian productive model, which is essentially based on small and medium-sized companies, the majority of which are not able to sustain the technological innovation processes required by globalisation. The social partners believe that Italy's existing 'productive assets' could be improved by making greater use of the sectoral joint 'observatories' established by national sectoral collective agreements, and of similar bodies run by the Ministry for Productive Activities. Moreover, the social partners ask the government to strengthen the role of the Employment Committee (Comitato per l’occupazione) established by the Prime Minister's office, which should 'analyse, anticipate and intervene in the event of company or sectoral crises'.

Research

Research activity, the pact states, should provide Italy with 'an autonomous innovation capacity resulting from new technological knowledge'. This objective can be achieved through improved public and private research activities, based on evaluation of the most successful projects, and through the allocation of more economic resources. Public funds for research activity should be gradually increased, reaching 1% of GDP in 2006, or between EUR 6 billion and EUR 14 billion depending on GDP growth. EU funds should be used, together with national funds, to support this development effort. The research sector will have to meet the companies' demands for innovation, and the social partners thus call for the creation of a network involving all those research centres where companies will be able to find the 'non-material resources necessary to innovate products and to achieve competitiveness'.

The measures proposed in the agreement relate to: improving the efficiency of the public research and higher education system; increasing the number of researchers and technicians; developing an 'excellent' system of education and training; and identifying the strategic sectors which should receive investment funds (such as healthcare, the environment, energy, agriculture, food and beverages, and culture). Public demand for good and services should be reorganised in order to foster the development of innovative solutions. The private research system should benefit from a more efficient system of public incentives. Finally, public incentives and tax exemptions should be activated to encourage those companies which invest in research and innovation and those involved in high-technology sectors.

Education and vocational training

Italy has the EU's lowest proportion of high-school diploma holders (42% of the adult population) and the highest school drop-out rate (30% of those aged between 14 and 19 years). In their new pact, the social partners propose achieving the following objectives by 2010:

• 85% of young people aged 20 years should have obtained an educational or training diploma or a vocational training certificate;

• the adult participation rate in education and training should be increased by 30%;

• the number of companies investing in training should be increased by 30%;

• the school drop-out rate among students aged between 14 and 19 should be cut by 50%.

These objectives should be achieved through the following structural interventions:

• development of career and training guidance organisations and tools;

• creation of an integrated system involving education, training and the world of work, which should include continuing training for adults;

• development of higher technical training;

• adoption of specific criteria for the various vocational and training needs analyses conducted by joint bodies;

• strategic development and use of the resources allocated for continuing training and simplification of the procedures for requesting regional funds; and

• realisation of a decentralised, flexible and simple system for the accreditation of training organisations.

According to the social partners, these issues should be negotiated with the government and in particular the regions, which have responsibility for education and training. The partners have thus committed themselves to strengthening regional joint bodies in this area.

The pact also provides for the establishment of a joint body to negotiate the impact of the agreement on the issues strictly related to relations among the social partners. The partners have furthermore agreed to create a technical joint group responsible for developing a thesaurus defining the most important training concepts.

Infrastructures

Given its geography (with numerous mountains, islands etc), Italy requires substantial infrastructures, and those currently available are regarded as inadequate and as hindering the country’s competitiveness. According to the social partners, current major European projects provide a notable opportunity to deal with Italy's infrastructure modernisation needs. These European projects (such as the Lione-Torino-Milano-Venezia-Trieste high-speed railway lines) must be accompanied by national actions aimed at filling the existing infrastructural gaps and at developing infrastructures to connect the various regions. These interventions should include the modernisation and development of the energy-supply system. In particular, the social partners call for consultations to discuss the problems of energy supply, the reorganisation of the water-supply system and broadband electronic communication. Infrastructure development should be accompanied by a system guaranteeing the lawfulness of the public tendering process and the quality of contracting companies, as well as safeguarding working conditions.

According to the social partners, the problems resulting from the current decentralising reform of Chapter V of the Italian Constitution (IT0212107F) - relating to possible conflicts between the competences of the regions and of the central government, and to coordination between the actions of the government and of the regions - need to be overcome before investing in infrastructure development.

The partners have also decided to focus attention, through a local awareness campaign, on the environmental and social impact of infrastructural works, promoting the environmental impact assessment scheme promoted by the EU. Within this framework, the partners will, for example, call on the government to reclaim polluted industrial sites and manage water resources correctly

South of Italy

The pact proposes structural interventions in the Mezzogiorno, which suffers from obsolete railways and roads and is currently unable to sustain development and competitiveness. Material investments should be accompanied by 'non-material' investments such as training and research initiatives, by measures to encourage investment (in particular in terms of providing credit), and by measures to promote legality in all activities, public safety and the efficiency of the public administration. Financial incentives need to be reorganised in order to promote local entrepreneurial activities and attract new Italian and foreign investment. According to the social partners, 'local programme agreements' (accordi di programma) should be used at local level to enlarge economic and social partnership, as well as a new local development promotion tool known as the 'localisation contract' (contratti di localizzazione), which aims to attract domestic and foreign investment.

Finally, the agreement states that the government's 'multiannual financial plan', which defines forecast public expenditure until 2008, should include stable allocations for the Mezzogiorno area not lower than 45% of forecast total spending.

Reactions

The social partners are very satisfied with the agreement. According to Antonio D’Amato, the president of Confindustria, 'the pact marks a turning point in Italian industrial relations.' Guglielmo Epifani, the general secretary of Cgil, hopes that the pact 'could contribute to cooling down conflictual social relations'. According to Mr Pezzotta, the general secretary of Cisl, 'the most important novelty of the agreement is that the Italian trade unions now consider competitiveness as a worker-related issue.' Luigi Angeletti, the general secretary of Uil, called the pact a contribution 'which the government will have to use to define its political guidelines'.

Commentary

The pact recently signed by the social partners is very important for the development of the Italian industrial relations system in terms of both its contents and its political significance. The agreement brings to the government’s attention the problems of competitiveness and development. The measures proposed by the pact involve the relaunch of the 'real economy', strengthening the basis of the Italian productive system.

During the past few years, the attention of the government and social partners has focused on the economic requirements and conditions of the stability pact accompanying EU Economic and Monetary Union. However, the recent decrease in productive investment has contributed to worsening Italy's competitiveness. The stagnation of the Italian economy is very clear, with a record downturn in industrial production of 1.7% during the first five months of 2003 and 7% on an annual basis up until May 2003. Manufacturing, which represent the core of the Italian economy, has been hardest hit by the situation, with production down 12.6% in the leather and shoes sector, 11.5% in textiles and garments. 10.6% in chemicals, 10.3% in transportation goods, 9.4% in rubber and plastics, and 8.5% in machinery. The downward tendency in industrial production has reduced GDP growth forecasts for 2003 from 0.8%-0.9% to a maximum of 0.5%. The fall in industrial production results both from declining domestic consumption and decreasing exports. In 2002, Italian exports decreased by 2.8%, with a reduction in world market share of between 3.9% and 4.0%, despite the overall growth in the world market, which is forecast to continue in 2003 (3%) and 2004 (6%). The fall in exports in 2003 will, it is predicted, be equal to 0.5% of Italian GDP.

The pact represents a serious effort by the signatories to influence the choices that the government will have to make in the near future when drafting the 2004 budget law. It also represents a positive step forward in industrial relations terms, even if it is unlikely to be enough to improve the overall situation significantly. The negotiation of the pact indicates a change in the attitudes of two of the main social partner organisations - the Cgil trade union confederation and the Confindustria employers’ confederation.

Since its 2001 congress (IT0104185F), Confindustria has sought to establish a privileged relationship with the government regardless of overall relations with the other social partners. Such an approach now appears to have been put to one side. Confindustria has probably realised that the 'lobbying' approach is not longer useful in influencing the government and that the realisation of many business interests requires the social consensus provided by an agreement with the trade unions.

For its part, Cgil seems to have ended the most severe phase of its conflict with Confindustria, and the new pact represents the occasion for it to leave aside isolation and to resume negotiations with the government, and to end the differences with the other two union confederations which followed the latters' signature of the July 2002 tripartite 'Pact for Italy' agreement on the labour market, the tax system and the South of Italy (IT0207104F, and the recent referendum on dismissal rules (IT0307101N).

However, it will soon become clear how much the industrial relations situation has really changed. The agreement on economic priorities cannot hide the profound differences between the trade unions and Confindustria as regards the reform of the pension system (IT0305102N), and the fact that Cgil views tripartite agreements with the centre-right government as unacceptable. According to many observers, it is very likely that the new agreement will be isolated case, rather than the start of a new period of concertation between the social partners and the government. (Domenico Paparella and Vilma Rinolfi, Cesos)