Labour games

first_imgLabour gamesOn 1 Jul 2002 in Personnel Today Twoassassinations, weekly union marches in Rome and a general strike in April: areItalians going to accept a modernised labour market? Lucia Graves looks at whatItaly has done to become more flexible and how far it still has to goWhenItalian university professor and economist Marco Biagi was shot dead justmetres from his home in Bologna earlier this year, it sent shockwaves throughItaly and the rest of the world. It was only three years since the terroristgroup Brigate Rosse gunned down an adviser to the previous administration,Professor Massimo D’Antona.  Biagiwas one of a team of researchers behind the White Paper on the job market inItaly, published in October last year, a paper that proposes far-reachingchanges to employment law. The most unpopular of these changes, which Italy’sunions have latched upon, is the suggested removal of Article 18, a clause thatmakes it virtually impossible for companies to dismiss workers unless they havecommitted a capital offence, but that unions say protects the worker againstunjust sackings.  Article18 has mobilised protesters on a scale not seen in Italy for several yearsbecause they feel the change in employment law would put their jobs on theline. Union-organised demonstrations in Rome have attracted up to a millionpeople at a time, coming to the capital from as far away as Trieste and Sicily.While some commentators dismiss this as a cynical union move, jockeying fornewspaper exposure and new members, it is an alarming sign of the times thatthere are about 10 professors working on employment law in Italy who have tolive with police protection. Biagi – catastrophically, had part of hisprotection removed in cutbacks last year. Biagi’sassassination has strengthened the Government’s resolve to press ahead with thechange of law on Article 18, but the power struggle between the Government andthe unions seems likely to continue well into the summer. How far are Italiansgoing to accept a new modernised labour market?”Italyhas the lowest general employment rate in Europe, the lowest level of femaleemployment, the highest level of long-term unemployment, and the most markedterritorial discrepancy,” says Biagi’s White Paper on the labour market(the Italian Government’s manifesto for its reforms). Italyhas one of the most protected and highly unionised workforces in Europe, andone of the least mobile. According to the International Monetary Fund, Italycomes 19th.out of 21 countries ranked by how dynamic they are,  It has one of the highest unemployment ratesat 9.5 per cent (2001), of which 8.3 per cent is long term compared to aEuropean average of 4.9 per cent, and it has one of the lowest officialemployment rates, 53.4 per cent (2000). Between 15 and 23 per cent (Istat,Censis) of the country’s workforce is working illegally, approximately doublethat of the average European country.”Oneof the problems facing Italy is a lack of competitiveness. This is based on anumber of issues – one of which is rigidity in labour relations,” saysGualberto Ranieri, vice-president of corporate communications at Fiat. Ranierithinks that one of the key reasons for Italy missing out on foreign investmentis this rigidity. While smaller firms have traditionally used illegal forms of flexibility,multinationals can’t afford to go down that route. Headof Manpower in Italy Maura Nobili says: “Companies with fewer than 15people have used home-grown methods to make themselves flexible but not illegalby not outgrowing the 15-person threshold. They have often used illegal workerswho therefore have had no legal protection. This has happened because thesystem is too rigid.”Newopportunities since the Treu lawThefirst sign of change in Italian industrial relations was the introduction ofthe Treu law in 1997. This opened up temporary employment – something that hadbeen banned since 1960. Colgate-Palmolivehead of HR Roberto Di Bernardini says: “The Legge Treu contributed tomaking Italy a little less medieval and backward. Temporary agency contractswas a big revolution. The chemical industries is a very innovatory, seasonaland experimental sector, and was one of the first to use these.” About 7per cent of Colgate-Palmolive workers are employed through agencies.Manpowerand other employment agencies now operate in Italy – even the enormous Fiatgroup has set up a temporary employment agency, Work Net, and numbers have shotup to 9.7 per cent of the Italian workforce in temporary positions, or nearly 2million working days a month. The advantage of temps to Italian companies arehuge, not just because they need seasonal and short-term contracts, but becausefull-time workers are exceptionally difficult and expensive to get rid of. Thepercentage of workers that are agency-employed is still very small: it can’texceed a percentage that is established by the union treaty, the ContrattoCollettivo Nazionale, and never exceeds the full-time workers. These however,were changes to the original Treu law, and may be modified in time.  Alitaliauses 50 temps, but there are security and training problems in the specialisedaerospace industry. Giovanni Giacomelli, vice-president of HR for itsengineering and maintenance division, explains: “For the engineering andmaintenance division we need lots of time to train workers, from five to nineyears. Some things in our offices are not aeronautical and we think we could beless rigid. There are also problems of safety that stop us using temporaryworkers.”  Thecompany makes use of short-term contracts for call centres and other seasonalwork. SwissRe Italia is also looking for specialists. Its HR head Roberto Savini Zangrandisays it wants a culture of loyalty. It took on just six temps in the past twoyears, out of 300 employees in Italy.  “Ifyou take lots of people on short-term contracts there is an understanding ‘youdon’t want me forever’. Our business is to get them to stay faithful to ourcompany, so we don’t want that.”  ButZangrandi acknowledges that temps have freed-up seasonal work. “It helpsin running short-term contracts, as there was lots of bureaucracy and costs totake people on short-term contracts. You can now be flexible and legal. Beforethe change in law we took people on short-term contracts where possible,otherwise we use overtime. But overtime is complicated in Italy, limited toabout 90 hours a year per head.”  Tempsare paid at least the same as the corresponding permanent employees andcontracts can be extended four times, up to a total of 24 months. Employmentcompanies put 4 per cent of the gross salary into a government-run fund fortraining programmes. And they have to deal with all the tiresome bureaucracythat the firm otherwise has to contend with. Manpower’s revenues rose  35 per cent in 2001 in Italy.Sogovernment action was needed. It decided to concentrate on small firms as theseform the majority of businesses in Italy. There are 2.9 million firms withfewer than 15 people, and it is these firms that will often have the unofficialemployees that the state wants to get into the open. But Maura Nobili, head ofManpower Italy, suggests that the government’s move on Article 18 for smallfirms is the start of something bigger: “It is the first step to modifyingit for all firms.  It won’t happenimmediately.”Terminationof contract, Article 18 of the Statuto dei lavoratori (1970)Thisis the article that ties firms not to sack individuals without ‘just cause’ andhas been causing union disturbances in Italy. The Government is proposing tosuspend the article for four years for employees whose contracts are movingfrom short term to permanent, those who are becoming legitimate employees andpaying taxes and for firms that want to expand beyond 15 employees, thethreshold at which the article kicks in. If you believe Manpower’s Nobili, thisis the start of something bigger: “It is the first step to modifying itfor all firms. Even if it won’t happen immediately.”  Manpowersays: “Italy has the most complex, restrictive laws allowing fordownsizing.” Currently, if you fire without ‘just cause’, you have torehire the employee and pay damages. This is well in excess of most otherEuropean countries, and the proposed change in law will affect only smallcompanies or those with fewer than 15 people. Even then, Nobili says, firmswill be asked to pay a one-off severance fee. “It is going to be difficultfor a small company to pay 18 months salary,” he says.Colgate-Palmolive’sDi Bernardini says that in 2001 there were less than 2,000 individualdismissals in Italy. “It is not often used because you have to go tocourt, it takes up to four years, and if at the end the judge decides there wasno just cause, the worker gets his job back and you have to pay a back salaryfor the whole period.”Nobilisays: “In Italy the work contract is removed from the quality of the workachieved and insures the worker for life, because in companies with more than15 workers the contract can only be broken for grave motives – such a theft andfraud.” SwissRe’s Zangrandi says: “The problem is that without Article 18 you canimagine circumstances in which the right to dismiss could be abused.” Hegives a hypothetical example of a garment factory whose floor manager couldmake instant dismissals without giving a reason. What if he used the power todemand sexual favours?DiBernardini agrees that it opens up the possibility of “indiscriminatedismissal – it is too risky”. He thinks Italy is not ready for a change inlaw on Article 18, instead, he wants to redefine and expand ‘just cause’. Hesays: “Scrapping Article 18 is too extreme, the ambit of just cause needsmodification. It could take in low productivity when people don’t work or areaway from work, for example.”Giacomellitold globalHR: “If it extended to all companies, it would be useful. Ifworkers knew they could be sacked no doubt they would work harder.”CollectiveredundancyItalyhas a crisis collective redundancy procedure: the Cassa Integrazione procedureworks when there is a flux in demand and the Government funds workers to stayoff until the crisis passes. But welfare in Italy is almost non-existent forformer employees of small firms, something that the Government is starting toaddress only now. Itlooks like the Government has a long way to go to make Italy’s employmentmarket more flexible in a legal way, running the gauntlet of public opinion. Aswell as making it easier for firms to take people on (and dismiss them) it isgoing to have to take in urgent welfare reforms – something that is inprogress, and possibly create work arbitration systems. Is it going to be moretempting for multinationals to set up in Italy in the near future? CISLspokesman Pierpaolo Baretta says no: “Normally what creates jobs is not areduction in working hours, or freedom to sack people: it’s investment.” Italy’scomplex employment lawsStatutodei Lavoratori (1970)Containsfamous Article 18 that said that in companies with more than 15 employees,workers who are sacked without just cause would be reintegrated into thecompany and financially recompensed.CassaIntegrazioneIfa company is in crisis the state will pay up to 80 per cent of a worker’ssalary for up to six years while the worker is sent home. There are no controlson this. Di Bernardini says: “Get rid of it.”WhitePaper on the job market in Italy (Libro Bianco sul mercato del lavoro)Thisdoes not explicitly mention Article 18, but Marco Biagi told Panorama, anItalian current affairs magazine, that his objective was to get over Article 18as it allowed protectionism of those in work, while it gave no help to thoseoutside the world of work, whether unemployed or young people looking for work.Biagi’s paper ends hoping for a bigger participation of workers in the life ofthe company and for the introduction of referendums for strike action in publicservices. ContrattoCollettivo NazionaleEverysector negotiates contracts every two years on working hours, salaries,percentage of temps allowed and so on, which are across the board. Biagi’sLibro Bianco suggested some individual contracts, but CISL is against itbecause the worker would have less power negotiating directly with the businessthan through a union. “I am obliged to do this, if I wanted a meritocraticsystem I’d have to take supplementary money and give it just to those who Ithought deserved it,” Di Bernardini says. Nobili says the result isillegal workers: “Companies continue to use forms of ‘grey’flexibility.”  WelfareThereis no minimum wage in Italy and, outside the Cassa Integrazione procedure,there is a very small unemployment benefit that runs for just six months. DiBernardini says: “A welfare reform could make Article 18 moreacceptable.” UnionsItalyis more than 50 per cent unionised; the main unions have 13 millionmembers.  There is even a union forcompany directors. The unions negotiate the Contratto Collettivo Nazionale. Thestart of this year saw a huge number of working hours lost to strikes overArticle 18 and other contractual disputes: 3.7 million in January and Februarycompared to 200,000 for the 2001 period. A CISL spokesman, one of the big four unions, told globalhr: “Ithink the battle is bigger than Article 18. We need to find ways to reduce problems,such as arbitration procedures, that we do not have in Italy. We need to makejudicial processes faster so that things happen within three months.”Furtherinformation–Manpower’s A Code of Ethics for Temporary Work from Crora, the centre ofresearch on business organisation, at Bocconi University. Launched March 2002.–Biagi’s Libro Bianco sul mercato del lavoro in Italia is available at–Some useful links in the University of Modena and Reggio Emilia’s website Previous Article Next Article Comments are closed. Related posts:No related photos.last_img

Leave a Reply

Your email address will not be published. Required fields are marked *