DECENTRALIZED BARGAINING AND MEASURES FOR PRODUCTIVITY AND CORPORATE WELFARE GROWTH IN ITALY
INDUSTRIAL RELATIONS IN EUROPE CONFERENCE (IREC) 2018
Sustainable labor markets:
social welfare and protec6on, working condi6ons, job quality and work-life balance
KU LEUVEN – CENTRE FOR SOCIOLOGICAL RESEARCH & INSTITUTE FOR LABOUR LAW 10-12 SEPTEMBER 2018, KU Leuven – College De Valk, Tiensestraat 41 - 3000 LEUVEN, BELGIUM
- Empirical evidence from administraSve data -
Achille Palio+a & Massimo Resce
Ac?vi?es carried out under the Na?onal Opera?onal Programme
for the implementa?on of the European Social Fund (ESF) “SPAO”
1. Collec?ve bargaining in Italy 2. Conundrum of labor produc?vity in Italy 3. Measures for dissemina?on of two-?er bargaining 4. Conclusions: some policy recommenda?ons Bibliography
INDEX
The INAPP cannot be held responsible for errors or any consequences arising from the use of informa6on contained in this paper.
The views and opinions expressed are solely those of the authors and do
not necessarily reflect those of the Ins6tute.
COLLECTIVE BARGAINING IN ITALY
Features of collective bargaining in Italy
4
The Italian model of collecSve bargaining involves two levels
First level Second level
NaSonal CollecSve Labor Bargaining
(CCNL) Decentralized bargaining
(Company or territorial level agreements)
minimum wage
link between pay and prices others issues:
- working Sme;
- work organizaSon;
- disciplinary disposiSons;
- etc.
performance related pay (PRP) other issues:
- corporate welfare;
- company parScipaSon;
- rent-sharing formulas;
- benefits;
- work life balance;
- etc.
5
A large number of countries adopted in the 1990s two-Ser bargaining structures or extended the scope of the exisSng ones.
Although the history and design of these structures differ considerably from country to country, a common factor behind these developments was the search for an organized or controlled decentralizaSon of collecSve bargaining, in which the so-called social partners, rather than moving from fully centralized to fully decentralized structures, opted for an intermediate soluSon.
In Italy the «Protocol» of 23 July 1993 expressly opened to forms of «decentralized bargaining».
One of the aims was to sSmulate producSvity growth in the second level of bargaining, by linking wages dynamics to producSvity.
This padern sSll today is hard to catch on.
In essence, naSonal collecSve agreements do not compensate the producSvity increases. This funcSon is delegated to decentralized bargaining (at company and / or territorial level), which can remunerate producSvity gains on the base of the achievement of producSon results (ie Performance-related pay).
The Protocol of 23 July 1993 and the two-tier bargaining
COLLECTIVE BARGAINING IN ITALY
CONUNDRUM OF LABOUR PRODUCTIVITY IN ITALY
The Italian labour productivity slowdown
6
The problem of produc?vity growth is a structural aspect of our economy.
In fact, since the post-war years up to the '70s, produc?vity growth in Italy has been more sustained than the European average, whereas from the 1990s to the present day it has collapsed compared to other European States.
ES11 - Defini?on
The entry into the euro area was progressive and did not occur for all countries at the same 6me. Therefore the
first 11 countries entered between 1999 and 2002 were taken into considera6on as Euro-System: Austria, Belgium,
Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.
The Italian labour productivity slowdown
7
There are several factors tradiSonally taken into account to moSvate producSvity growth (such as variables on the size of the company, those technological, demographic, insStuSonal, on the knowledge, etc.). In literature it is possible to recognize three interpretaSve strands about the causes of the flat trend of labor producSvity in Italy. These causes have occurred since the 1990s:
Protollo ‘93 (Ciampi) Paccheco Treu Legge Biagi Riforma Fornero Jobs Act
Euro + deficit spending China into the WTO
CONUNDRUM OF LABOUR PRODUCTIVITY IN ITALY
1) Adop?on of the euro and policies to reorganize public finances. Loss of the lever of the compe??ve devalua?on of the lira that supported exports. Containment of public spending with a consequent decrease in GDP.
2) Labor market reforms which, since the 1990s, increase the flexibility of workers entering. They generated wage modera?on and an increase in employment despite the stagna?on of the economy.
3) Globaliza?on and ICT revolu?on, which has increased interna?onal compe??on above all by emerging economies.
MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING The opportunities offered by two-tier bargaining
8
Decentralized bargaining remains the level where condiSons for a beder company-workers relaSonship can be made, which indirectly could result in increased labor producSvity.
Corporate Welfare Work-life balance Benefits
Par?cipa?on
The soluSons that can be developed in the second level are many: from corporate welfare, to company parScipaSon, to rent-sharing formulas, to producSvity bonuses on accessory wages, to performance-related pay, etc.
I n r e c e n t y e a r s , t h e Government has put in p l a c e a p a c k a g e o f incenSves aimed at rooSng the two-Ser bargaining in the firms, providing for a tax benefits regime for an ever-wider basket of services (scholarships for the children of employees, assistance to elderly relaSves, baby-sihng or gym voucher, etc.).
Produc?vity
The new incentive measures for decentralized bargaining
MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING
9Taxa?on
period Amount limit for tax benefits Income limits
2016 2,000/2,500* € 2015 income not exceeding 50,000 € 2017 3,000/4,000* €
2016 income not exceeding 80,000 €
*:companies that involve workers in the organiza6on of work
PRP 5 goals
produc?vity profitability quality efficiency innova?on
workers par?cipa?on corporate welfare Other goals
2016/2017 Since 2008 the Italian law has expected forms of variable wage tax reducSon.
StarSng from 2016, ajer an experimental phase, the measure was reacSvated
making important changes compared to the past.
A new repository
10
The incenSve system has sSmulated, from May 2016 to August 2017, the deposit of more than 25 thousand second-level contracts.
REPOSITORY
Measure monitoring was also envisaged, by compiling a special instrument for collecSng summary data:
the Repository acSvated by the Ministry of Labour (ML), whose data were processed by INAPP.
The data obtained from the Repository, like all administraSve data, have been verified by INAPP and linked with other datasets (Asia - Sisco) to increase the quality of informaSon.
Below are some analyzes extracted from the preparatory works for the
«Rapporto sul mercato del lavoro e c o n t r a d a z i o n e c o l l e h v a 2016-2017» (CNEL in collaboraSon with ANPAL and INAPP).
MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING Therefore the applicaSon forms considered
valid for processing are 23,063.
Applications distribution
11
82%
18%
Firm level Territorial level
Applica?ons 23,063
Recipients/Beneficiaries Average Total
215 4,948,813 Value of the bonus
Total Average 6,354,528,956 € 1,284 €
Firm level 18,897 Territorial level 4,166
MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING
Applications distribution
12 3,045
2,031 3,345
2,648 3,498 4,330
No answer
Up to 15 emp
loyees From 16 to 49 From 50 to 99 From 100 to 249 250 and over
Firms’ size
562
1,757 823
371 294
359
No answer
Up to 15 emp
loyees From 16 to 49 From 50 to 99 From 100 to 249 250 and over
Firms’ size
Firm level
Territorial level
2,341 91
9,893
288
6,284
No answer Agriculture Industry strictly speaking Construc?on Services
Sector of economic ac?vity
MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING
406 55
895 445
2,365
No answer Agriculture Industry strictly speaking Construc?on Services
Sector of economic ac?vity 8,146
6,157
3,103
1,491
North-West North-East Centre South and Islands Geographical district
989
2,331
639 207
North-West North-East Centre South and Islands
Geographical district
Welfare measures and Workers’ proFit sharing
13 3,6 0,8
95,7
Workers’ profit-sharing
13,13
6,00
80,87
Welfare measures
no answer Yes No
MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING
Only 13% acSvated corporate welfare measures.
Access to welfare services sSll seems to represent a problem.
When considering corporate welfare programs, firms' size sSll makes the difference.
Access modaliSes could be solved by creaSng a network among the interested firms.
This could be easier between firms of the same industrial district or by joining private groups specialized in a sector, which have already set up and offer on the market a plaqorm of services at an acceptable price.
In all these cases, however, such services plaqorms would be sustainable only with high scale volumes.
Even less are the pracSces of Workers’ profit-sharing:
almost 4%
Unlike corporate welfare, the theme of profit-sharing does not occupy a relevant posiSon in the public opinion and in that of the experts of the sector.
This is very well reflected in the data, where it does not even reach 1% among firms that registered local-level agreements.
The lack of interest toward this aspect certainly consStutes a missed opportunity.
It sSll an important theme that could really develop in the
upcoming future.
Details on the geographical distribution of Firm level contracts
14
In the field of two-Ser bargaining, company level bargaining represents the prevalent type with approximately 82% of the applicaSons filed to the ML.
The territorial distribuSon of the company level bargaining appears with clear characters already from the first reading. In fact, most of this requests came from the central-northern regions, while in the southern Italy were much lesser.
In parScular, about 4.6 million
beneficiaries are divided into 44.1% in the North-West, 28.3% in the North- East, 20.1% in the Center and 7.5% in the South and Islands.
MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING
Regional incidence of firm-level bargaining
15
Among the determinants that most affect the acSvaSon of company bargaining there is the dimensional aspect: the propensity to acSvate company contracts increase as the company size increases.
The dimensional impact augments more clearly considering the number of overall beneficiaries involved in the measure.
MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING This correlaSon
between the size of the company and the
propensity for company bargaining is one of the most used moSvaSons to jusSfy the low level of second level
bargaining in the South, due to the high
presence of small and micro companies in this geographic area.
Details on the distribution by company size of Firm level contracts
16
In reality, in the “South and Islands” the demand coming from micro and small companies (ie with up to 15 employees and from 15 to 50) is the lowest demand of all the other areas.
MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING
Distribu?on of shares rela?ng to employment and
recipients per firms’ size and geographical area Incidence of recipients over employees per firms’ size and geographical area
This scarce tendency can be explained with the crowding-out of the measure due to the presence of other incenSves on the labour market. Other explanaSons can be searched in the sectorial structure.
Details on the distribution by sector of Firm level contracts
17
The sector structure of the requests, net of a missing data that weighs around 14.8%, sees the prevalence of the services sector, which measured in terms of beneficiaries involved represents 44.9%, followed by the sector industry in the strict sense (38.2%) and the construcSon sectors (1.89%) and agriculture (0.1%).
So we are witnessing a very differenSated sectorial dynamics. If we consider the regional specializaSon models these could have influenced the same territorial dynamics.
MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING
Sectoral distribu?on of the recipients
(macro-divisions and details Ateco 2007)
Composi?on of applica?ons per main sectors on the basis of the geographical area
Details on the distribution by sector of Firm level contracts
First effects of politics: the risk of a territorial dualism
18
In conclusion, the impact of this policy sSll remains to be assessed but it is clear from the first deposits that there is a greater acSvaSon by the regions of the Center-North compared to those of the South.
This condiSon could accentuaSng the territorial dualism, which characterizes the growth of producSvity in the Italian regions, if the system is not integrated by other policies that take into account the regional differences.
Labour p ro du c?vi ty in th e man ufactu rin g secto r
Co rp or at e b ar ga in in g in ci de nc e by Re gi on
MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING
Council recommendation on the decentralized bargaining
19
COUNCIL RECOMMENDATION on the 2018 Na?onal Reform Programme of Italy and delivering a Council opinion on the 2018 Stability Programme of Italy
COM(2017) 411 final
«Whereas: […] (22) Bargaining at firm or territorial level remains
limited, also due to the prevalence of smallfirms in Italy. This may prevent wages from adapSng swijly to local economic condiSons. At the end of February 2018, Confindustria and the three major Italian trade unions (Cgil, Cisl and Uil) signed a framework agreement, stressing the role of second-level bargaining, by increasing legal certainty through sehng clearer rules for the representaSon of social partners at negoSaSons.
The tax rebates on producSvity-related wage increases set by second-level agreements were strengthened in 2017, but their effecSveness is difficult to evaluate.
While the total number of collecSve agreements is on the rise, only a small share of them is signed by the main trade unions and employers’ associaSons.[…] ».
COUNCIL RECOMMENDATION on the 2017 Na?onal
Reform Programme of Italy and delivering a Council opinion on the 2017 Stability Programme of Italy
COM(2017) 511 final
«Whereas: […] (22) Second-level bargaining is not broadly used. This hampers the efficient allocaSon of resources and the responsiveness of wages to local economic condiSons. This is also due to the exisSng framework rules and pracSces for collecSve bargaining, which entail uncertainty in industrial relaSons and leave limited scope for local-level bargaining. Tax rebates on produc?vity- related pay increases have not proved effec?ve in extending the use of second-level bargaining significantly.
[…] ».
[…] «RECOMMENDS […] (4) With the involvement of social partners, strengthen the collecSve bargaining framework to allow collecSve agreements to becer take into account local condi?ons. […]».
CONCLUSIONS: SOME POLICY RECOMMENDATIONS
Key Findings
20
Pros (+) Cons (-)
AdenSon of the policy maker on the importance of decentralized bargaining.
Second-level bargaining is not broadly used.
Bargaining at firm or territorial level remains limited.
IncenSve policy for the diffusion of decentralized
bargaining. The use of corporate welfare programs is limited
even if the growth trend is posiSve. On the other hand, workers' parScipaSon pracSces are sSll very marginal.
Tax wedge reducSon.
In theory, two-Ser wage bargaining structures
could reconcile macroeconomic stability with a closer link between producSvity and pay. This did not happen in fact.
It is sSll early to evaluate this policy but if it should work, it could generate polarizaSons of
producSvity gains between territories and
between types of companies (by size and sector).
CONCLUSIONS: SOME POLICY RECOMMENDATIONS
Some policy recommendations
CONCLUSIONS: SOME POLICY RECOMMENDATIONS
21The industrial relaSons system should guarantee programmed levels of producSvity gains.
The industrial relaSons system should ensure closer coordinaSon between the two levels of
bargaining to ensure the
responsiveness of wages to local economic condiSons.
Policies for the disseminaSon of corporate welfare programs and workers' parScipaSon pracSces should improve their appeal.
Policies for the diffusion of decentralized bargaining and producSvity growth should be integrated with broader industrial and local development policies.
Policies Industrial rela?ons
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