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

DECENTRALIZED BARGAINING AND MEASURES FOR PRODUCTIVITY

AND CORPORATE WELFARE GROWTH IN ITALY
- 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”
 INDEX
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
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.
Features of collective bargaining in Italy

The Italian model of collecSve bargaining involves two levels

First level Second level

NaSonal CollecSve Labor Bargaining Decentralized bargaining

(CCNL) (Company or territorial level agreements)

minimum wage performance related pay (PRP)

link between pay and prices other issues:
-  corporate welfare;
others issues: -  company parScipaSon;
-  working Sme; -  rent-sharing formulas;
-  work organizaSon; -  benefits;
-  disciplinary disposiSons; -  work life balance;
-  etc. -  etc.

COLLECTIVE BARGAINING IN ITALY 4

The Protocol of 23 July 1993 and the two-tier bargaining

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).

COLLECTIVE BARGAINING IN ITALY 5

The Italian labour productivity slowdown
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.

CONUNDRUM OF LABOUR PRODUCTIVITY IN ITALY 6

The Italian labour productivity slowdown
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:
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.

Euro + deficit spending

Protollo ‘93 (Ciampi)

China into the WTO

Riforma Fornero
Paccheco Treu

Legge Biagi

Jobs Act
CONUNDRUM OF LABOUR PRODUCTIVITY IN ITALY 7
The opportunities offered by two-tier bargaining

Decentralized bargaining remains the level where condiSons for a beder company-workers
relaSonship can be made, which indirectly could result in increased labor producSvity.

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. Par?cipa?on

I n r e c e n t y e a r s , t h e Benefits
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 Work-life balance
tax benefits regime for an
e v e r - w i d e r b a s k e t o f
services (scholarships for
the children of employees,
a s s i s t a n c e t o e l d e r l y
Corporate Welfare
relaSves, baby-sihng or
gym voucher, etc.).
Produc?vity

MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING 8

The new incentive measures for decentralized bargaining

Since 2008 the Italian law has expected forms of variable wage tax reducSon.
2016/2017 StarSng from 2016, ajer an experimental phase, the measure was reacSvated
making important changes compared to the past.

PRP 5 goals
produc?vity profitability quality efficiency innova?on

Other goals
workers par?cipa?on corporate welfare

Taxa?on Amount limit for tax benefits Income limits

period
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

MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING 9

A new 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 incenSve system has sSmulated, from May 2016 to

August 2017, the deposit of more than 25 thousand
second-level contracts.
REPOSITORY
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.

Therefore the applicaSon forms considered

valid for processing are 23,063.

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 10

Applications distribution

Applica?ons Firm level 18,897

23,063 Territorial level 4,166
Recipients/Beneficiaries
Average Total Firm level Territorial level
215 4,948,813
18%
Value of the bonus
Total Average 82%
6,354,528,956 € 1,284 €

MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING 11

 North-West

989
North-West

North-East North-East 8,146

2,331
6,157

Centre Centre

639
3,103

Geographical district
Geographical district
South and South and
Applications distribution

207
Islands Islands
1,491

No answer No answer

562
3,045

Up to 15 Up to 15
employees employees
1,757
2,031

From 16 to 49 From 16 to 49
823
3,345

From 50 to 99 From 50 to 99

Firms’ size
Firms’ size

371
2,648
Firm level

From 100 to From 100 to

Territorial level

294

249 249
3,498

250 and over 250 and over

359
4,330

No answer No answer
406
2,341

Agriculture
91

Agriculture
55

MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING

Industry strictly Industry strictly

speaking
895
9,893

speaking

Construc?on
288

Construc?on
445
Sector of economic ac?vity

Sector of economic ac?vity

Services Services
6,284

2,365

12
Welfare measures and Workers’ proFit sharing

Only 13% acSvated corporate welfare measures. Even less are the pracSces of Workers’ profit-sharing:
Access to welfare services sSll seems to represent a almost 4%
problem. Unlike corporate welfare, the theme of profit-sharing
When considering corporate welfare programs, firms' size does not occupy a relevant posiSon in the public opinion
sSll makes the difference. and in that of the experts of the sector.
Access modaliSes could be solved by creaSng a network This is very well reflected in the data, where it does not
among the interested firms. even reach 1% among firms that registered local-level
This could be easier between firms of the same industrial agreements.
district or by joining private groups specialized in a sector, The lack of interest toward this aspect certainly
which have already set up and offer on the market a consStutes a missed opportunity.
plaqorm of services at an acceptable price. It sSll an important theme that could really develop in the
In all these cases, however, such services plaqorms would upcoming future.
be sustainable only with high scale volumes.

Welfare measures Workers’ profit-sharing

13,13 3,6 0,8
6,00

80,87 95,7

no answer
Yes
No

MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING 13

Details on the geographical distribution of Firm level contracts
Regional incidence of firm-level bargaining
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 14

Details on the distribution by company size of Firm level contracts
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.
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.

MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING 15

Details on the distribution by sector of Firm level contracts
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.
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.

Distribu?on of shares rela?ng to employment and Incidence of recipients over employees per
recipients per firms’ size and geographical area firms’ size and geographical area

MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING 16

Details on the distribution by sector of Firm level contracts
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.

Sectoral distribu?on of the recipients Composi?on of applica?ons per main sectors
(macro-divisions and details Ateco 2007) on the basis of the geographical area

MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING 17

First effects of politics: the risk of a territorial dualism

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.
Corporate bargaining incidence by Region

Labour produc?vity in the manufacturing sector

MEASURES FOR DISSEMINATION OF TWO-TIER BARGAINING 18

Council recommendation on the decentralized bargaining

COUNCIL RECOMMENDATION on the 2017 Na?onal COUNCIL RECOMMENDATION on the 2018 Na?onal
Reform Programme of Italy and delivering a Council Reform Programme of Italy and delivering a Council
opinion on the 2017 Stability Programme of Italy opinion on the 2018 Stability Programme of Italy
COM(2017) 511 final COM(2017) 411 final

«Whereas: […] (22) Second-level bargaining is not broadly «Whereas: […] (22) Bargaining at firm or territorial level
used. This hampers the efficient allocaSon of resources remains limited, also due to the prevalence of small
and the responsiveness of wages to local economic firms in Italy. This may prevent wages from adapSng
condiSons. This is also due to the exisSng framework swijly to local economic condiSons. At the end of
rules and pracSces for collecSve bargaining, which entail February 2018, Confindustria and the three major Italian
uncertainty in industrial relaSons and leave limited scope trade unions (Cgil, Cisl and Uil) signed a framework
for local-level bargaining. Tax rebates on produc?vity- agreement, stressing the role of second-level bargaining,
related pay increases have not proved effec?ve in by increasing legal certainty through sehng clearer rules
extending the use of second-level bargaining for the representaSon of social partners at negoSaSons.
significantly. The tax rebates on producSvity-related wage increases
[…] ». set by second-level agreements were strengthened in
2017, but their effecSveness is difficult to evaluate.
[…] «RECOMMENDS […] (4) With the involvement of While the total number of collecSve agreements is on
social partners, strengthen the collecSve bargaining the rise, only a small share of them is signed by the main
framework to allow collecSve agreements to becer take trade unions and employers’ associaSons.[…] ».
into account local condi?ons. […]».

CONCLUSIONS: SOME POLICY RECOMMENDATIONS 19

Key Findings

Pros (+) Cons (-)

AdenSon of the policy maker on the importance Second-level bargaining is not broadly used.
of decentralized bargaining. Bargaining at firm or territorial level remains
limited.
IncenSve policy for the diffusion of decentralized The use of corporate welfare programs is limited
bargaining. 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 20

Some policy recommendations

Policies Industrial rela?ons

Policies for the disseminaSon of The industrial relaSons system
corporate welfare programs and should guarantee programmed
workers' parScipaSon pracSces levels of producSvity gains.
should improve their appeal.

Policies for the diffusion of The industrial relaSons system

decentralized bargaining and should ensure closer coordinaSon
producSvity growth should be between the two levels of
integrated with broader industrial bargaining to ensure the
and local development policies. responsiveness of wages to local
economic condiSons.

CONCLUSIONS: SOME POLICY RECOMMENDATIONS 21

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Achille Paliotta – a.paliotta@inapp.org | Massimo Resce – m.resce@inapp.org