Italy: Social Pact Gives Significant Boost to Tripartite Economic Policy Consultation

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SOCIAL PACT GIVES SIGNIFICANT BOOST TO TRIPARTITE ECONOMIC POLICY CONSULTATION

The signature of a new Social Pact in Italy took place on 24 July 1993 following a series of local and enterprise-level referendums. Over two-thirds of those polled voted in favour of the Pact. The agreement was concluded despite efforts by the road haulage union to torpedo the Pact with a wildcat strike. But with the support of the general labour unions the Government stood its ground and the strike action was withdrawn.

The Social Pact, concluded after months of negotiations (see ILR 1993/3, p. 281), covers incomes policy; industrial relations; job creation; the absorption into the labour market of certain target groups (youth, long-term unemployed, women); company restructuring; redundancies; unemployment benefits; and cost-of-living adjustments.

INCOMES POLICY

Tripartite incomes policy sessions will be held twice a year, in May-June and in September, so that the Government and the social partners can agree on the medium-term prospects for the main macro-economic variables (GDP growth, prices, utility rates) and on other key factors affecting economic policy.

NATIONAL COLLECTIVE AGREEMENTS

There will be two distinct elements in national, sector-level collective agreements, namely, sections dealing with labour standards, to last four years, and sections dealing with the remuneration package, which will last for two years. The terms of the remuneration package will have to respect the parameters of national incomes policy and the planned inflation rate. Upon the expiry of the two-year pay agreement, employers and unions will take account of the differences between planned and actual inflation and determine the appropriate action to be taken.

Three months after the expiry of the old agreement, during the renegotiation period, an automatic adjustment equivalent to 30 per cent of the actual rate of inflation will be applied to wages and salaries. After six months this will increase to 50 per cent of inflation. The history of past sectoral agreements shows that renegotiation tends to drag on for an unconscionable amount of time.

COMPANY-LEVEL COLLECTIVE AGREEMENTS

Company agreements will be concluded for a four-year term, but will not deal with matters already covered by sector-level agreements.

Remuneration provisions will be based on specific targets concerning such areas as productivity, quality control and competitiveness. Where possible, profit-sharing agreements will be encouraged. Small and medium enterprises are to be specifically targeted where company-level agreements are concerned. The accounts of any firm wishing to conclude such an agreement will have first to show a profit.

The taxation and administration of social contributions for retirement, health, housing and other benefits covered by company-level agreements will be the subject of legislation to be drafted by the Government for future parliamentary approval.

Representation within individual firms will operate through workers' representatives, two-thirds of whom must be elected by all of the company's workers with the remainder made up of members of trade unions having the power to sign national collective agreements.

REDUNDANCIES

To assist companies in restructuring, the procedures associated with Italy's compulsory layoff fund (the cassa integrazione guadagni) will be speeded up so that benefits will in future be available within 40 days of an application to the Ministry of Labour. Public finance permitting, unemployment benefit will gradually be increased from 20 per cent to 40 per cent of basic pay (as per national collective agreement) with special provisions for certain categories such as agricultural and part-time workers.

LABOUR MARKET AND TRAINING

Apprenticeship contracts are to be strengthened by increasing their training content. "Work and training contracts" are now to be made available to any worker under 32 years of age. …