De-Regulation or Re-Regulation? Changing Joint Regulation and Labour Market Policy in Italy during the Crisis

The paper argues that when we come to Italy many of the more common expectations regarding change in employment and industrial relations because of the current crisis tend to be out of tune. What did take place in Italy since 2008 appears to be more connected to the already existing and previously perceived problems and shortcomings in the functioning of the system than a direct effect of the economic crisis, although such crisis certainly hit severely the Italian economy: it accelerated, if anything, some changes, but it did not produce traumatic reforms to the system of joint regulation and employment relations, especially with respect to the private sector of the economy and manufacturing.

This is a country in which - consistently with the substantial voluntarism of the industrial relations system and infrequent direct intervention by the state - collective bargaining remained, and substantially still is, weakly regulated and largely dependent on shifting power relations between the two sides of the table. Thus, broad latitude for change was left to practices and informal arrangements. This meant, however, that, because of their strong following acquired and substantially preserved over time and even now,  the unions, and more generally the social partners, attained and maintained a relevant capacity of influencing policy-making in the social and economic fields. Not by chance, it has been emphasised that since the seventies labour market regulation continued to be characterised by a relative strong role of the social partners.

As to collective bargaining, with time the system assumed a bipolar character centred around two main negotiating levels, whose characteristics started to be distinguished in a more orderly way in the early nineties: the national industry or sectoral level – devoted to the recurrent definition of pay and conditions of an entire industry or sector – and the company or plant level – devoted to the negotiation over productivity pay and specific conditions within workplaces. However, while national sectoral collective negotiation (de facto covering about 80% of workers) remained, and still is, the most relevant method to define wages and working conditions,  company level bargaining didn’t ever reach the expected extension, continuing to be mainly concentrated within medium-to-large companies.  In principle, moreover, its formally strong dependence on the general norms established at the national sectoral level came to be seen by many employers as hampering the flexibility needs of firms facing the challenges of globalisation.

After having briefly outlined the main features of the tradition of labour regulation and industrial relations in Italy, the paper first illustrates how the crisis erupted in a context already characterised, at the economic level, by major shortcomings and, in the industrial relations scenario, by the exacerbation of unresolved problems and tensions with respect to the structure of collective bargaining and the representativeness of strong but competing and divided trade unions.

It shortly comments then the labour market reforms introduced by each new government since 2010, thus modifying more or less substantially – and without any involvement of the social partners in the decision-making - the welfare provisions for the unemployed and the regime for workers’ hiring and dismissal. Although intended to increase the labour market flexibility, these are measures that, at least immediately, had the unintended effect to make the system more uncertain for the employers, discouraging new employment. No significant measures were taken instead in the field of industrial policy.

Drawing on evidence based on analysis of existing official documents and  in-depth interviews to key representatives of both trade unions and employers’ associations at national and sectoral levels, the paper subsequently discusses the positions of the social partners on the effects of the economic crisis on joint regulation and labour market policy. It appears thus evident that the crisis influenced social dialogue and collective bargaining institutions, practices and outcomes in a rather complex way. First, both sides, at the central level, shared similar complaints regarding: the role played by the state, of which they criticised the absence of an industrial policy, the negative effects of each government’s tendency to modify the labour market reform of the previous one and each government’s scarce interest - when not open opposition - in involving the social partners in the labour market reform, thus encouraging their autonomous search for solutions. Some differences were instead observed, both within each party and between them, in their views on the best ways to approach the critical issues of the structure of collective bargaining and union representativeness. These are however topics on which important and unitary collective agreements were reached for the first time in the considered period. Moreover, it appears not confirmed the expected clear preference by the employers’ side for a substantial decentralisation of collective bargaining and a heavy reduction, if not demise, of the role of the sectoral agreement. 

Finally, on the basis of the results of case studies selected in the mechanical and chemical sectors, the paper provides with significant insights of practices within workplaces. Not only it is confirmed that company level negotiation did not increase as expected; more importantly, it emerges that  companies did not seem to have tried to take advantage of specific provisions regarding dismissals or the possibility of derogating from existing norms, as allowed by recent legislation, without the unions’ consensus. In the larger manufacturing companies, where it is more widespread, collective bargaining has mainly regarded forms of working time flexibility, or coordinated working time reduction. Solidarity contracts were revived, as a way to support the flexible use of labour needed by companies, at the same time protecting jobs. On the whole, the ways in which the parties tried to face the crisis do not exhibit significant innovation. The traditional practices of searching for ad hoc solutions within workplaces according to circumstances, making use of all available shock absorbers, did continue.

All things considered, despite a quite strong tendency by governments to intervene on the labour market by law, the collective bargaining practices have not been, at least up to now, substantially affected.