After a long period of gestation, the package of comprehensive labour reforms put forward by Matteo Renzi, leader of the centre-left Partito Democratico (PD), has finally become law. Significantly the so-called Jobs Act has been welcomed with enthusiasm both domestically, by big businesses and entrepreneurs, and internationally. It has been argued that Italy is sending a positive message to Brussels, spelling out its commitment to increase the flexibility and dynamism of its inefficient and unproductive labour market.
Needless to say, the road towards the approval of the Jobs Act has been tortuous to put it mildly. The main source of controversy lay in the scrapping of the dogmatic Article 18 of the labour code concerning the protection of employment by unfair dismissal in firms employing more than 15 workers. Since 1970, the infamous Article 18 considered null each dismissal that occurred without just cause thereby forcing workers’ reintegration onto employers even at times of economic hardship. Regardless of his left-wing leaning, Mr Renzi regarded the Article as an obsolete constraint that not only prevented firms from hiring, but also sabotaged Italy’s attractiveness in the eyes of wannabe foreign investors.
Contrariwise, Article 18 was tirelessly defended by the Italian Confederation of Labour (CGIL) and other trade unions that viewed it as an acquired privilege and an undeniable right for workers. Paradoxically this social parachute was not applicable to the workforce employed by trade unions. In fact workers employed by political parties and organised labour alike saw themselves deprived of such tutelages.
Ironically, this contradiction did not prevent the CGIL form protesting and disparaging the reforms, relentlessly making the case that the abandonment of the Article intelligibly undermines workers’ rights vis-à-vis their employers. Also, leftists and progressives vocally oppose the government’s decision to reduce employment protection to the detriment of fairness and social justice as a means of launching economic growth.
Additionally the Five Star Movement (M5S), Italy’s populist anti-euro party, whilst agreeing that Italy’s labour market is in desperate need of reforms, challenge the notion that the Italian economy will be magically reinvigorated by adding some flexibility to the labour market. They avouch that in order to increase economic output, the Italian government should be focussing on measures to cut taxes, reduce bureaucratic constraints on small businesses and halt tax evasion. Ultimately the abandonment of Article 18 has been dismissed firstly as a measure to please the Troika made up of the EU, the European Central Bank and International Monetary Fund, and secondly as a mere ‘gift’ to multinational corporations. Significantly, many business owners operating on Italian soil will tell you that Article 18 is, in fact, trivial, due to the fact that the vast bulk of businesses are small size or family-run hence beyond the Article’s reach.
Nevertheless it is important to look at the broader picture whilst assessing Renzi’s Jobs Act. New forms of permanent employment contracts have been introduced in an effort to tackle temporary employment and job insecurity, especially for young people. These contracts will guarantee greater rights for workers according to principles of seniority, and thanks to such measures over 200,000 casual workers will see their contracts switching from temporary – with no benefits at all – to permanent. Moreover, the fifth delegation of the Jobs Act focuses on fostering a better balance between the periods of life and work. In doing so the Act aims to facilitate family care and to allow working parents to benefit from flexible contracts. Tax credits will also be granted to female workers with dependent or disabled children and tax allowances will be introduced for single mothers that work from home.
Overall it appears that the controversial Jobs Act has a genuine potential to bring some tangible benefits to Italian workers and to the Italian economy as a whole. The National Institute of Statistics (ISTAT) claims that in December alone, more than 100,000 new jobs have been created and the number is expected to grow in months to come. In addition, to Renzi’s delight, overall unemployment is down from 13.3 per cent to 12.9 per cent, the best score in over a year but still higher than the eurozone average.
Moreover it is vital to keep in mind that all that glitters is not necessarily gold: evidence shows that despite more jobs being created, we still do not know what kind of positions have become available. It is also noteworthy that less and less job applications are being filled on a daily basis, partially due to the exodus of the Italian youth. This trend stems from a growing feeling of hopelessness and resignation that not only negatively affects financial and personal life, but also undermines social cohesion and hinders economic growth. Sadly, Eurostat shows that consumers’ spending keeps dropping and even the most rosy predictions do not expect economic growth to exceed 0.2 per cent in 2015 despite the Milan Expo.
Effectively, whilst the Jobs Act may bring some benefits to the Italian economy, and the removal of Article 18 will provide an incentive for large firms to hire more workers, it is debatable whether the stagnating Italian economy will improve as much as has been envisaged. Increasing the flexibility of the labour market is surely instrumental, but it appears as a half-hearted attempt which merely scratches the surface of the real challenges faced daily by ordinary citizens.
I believe that issues such as the oppressive bureaucracy, nepotism, corruption, the exorbitant financial pressure that suffocates businesses and the fact that Italian families simply run out of money, will overshadow the effectiveness of the reforms.
By Cecilia Vandini, a second-year student of European Politics at King’s College London
Sources:
http://it.tradingeconomics.com/italy/unemployment-rate [2]http://ec.europa.eu/eurostat/documents/2995521/6454659/3-07012015-AP-EN.pdf/f4d2866e-0562-49f5-8f29-67e1be16f50a
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