Enhancing flexibility to improve the Italian labour market: the Renzi`s

REMARKLAB FINAL CONFERENCE
New Foundations of Labour Law in the Globalised Market Economy?
Stockholm, Thursday 19 May – Friday 20 May 2016
Workshop theme n. 1: Precarious work: the new normative model of labour law?
Carla Spinelli
Associate Professor of Labour Law
University of Bari Aldo Moro, Italy
DRAFT PAPER
Enhancing flexibility to improve the Italian labour market: the Renzi’s Government strategy through
the so called ‘Jobs Act’
1. The Flexicurity Strategy face the Global Economic Crisis
It is well known that flexicurity is an analytical concept widely used in recent decades to reconcile
the needs of high levels of flexibility, required to compete successfully in a globalised market, with the
need for social security. It is a strategy of labour market adjustment based on a balance between flexible
contractual arrangements, ensuring numerical and functional flexibility, and social security systems,
which provide income support and employment protection for workers, by means of active
employment policies, helping workers and jobseekers to cope with rapid change and ease the transition
to new jobs.
Flexicurity has been considered a win-win situation both for employers and employees, so it has
become an influential concept promoted by the European Employment Strategy. Flexicurity principles
and policies have been identified by the European Commission, especially since the year 2000, as a
model of modernisation of labour market regulations in EU Member States, though each State has
been left free to determine its own policies for balancing flexibility and security. However, as a result of
the global economic crisis of 2008, flexicurity as a key policy concept has faced difficult challenges.
On the one hand, the economic crisis has reduced government spending for active labour market
policies and its support for education and training, as well as for the funding of social security systems.
Similar reductions have taken place in private investment in human resources, with the result that
workers on flexible contracts were the first victims of the crisis. Persistent unemployment, affecting
various categories of workers in different ways – with particular disadvantages for young people,
women, and low-skilled workers. – as well as the difficulties and delays in career development, together
with the cuts in public spending due to the austerity policies in many European countries, are all factors
that have undermined the effectiveness of flexicurity policies, even in the Member States in which they
were originally adopted such as Denmark. Clearly, northern, central and southern European countries
have all been affected by the crisis, though not to the same extent (Tros, 2013).
On the other hand, the concept of flexicurity now suffers from a lack of consensus, because of the
weakening of the underlying theories, but also due to the empirical evidence of increasing
precariousness of work, at least in terms of lower levels of protection, the impact on health and the
crisis of identity. Several studies have highlighted the inability of flexicurity policies on their own to
fight unemployment and ensure the achievement of good levels of both quantity and quality in
employment (Treu, 2013).
2. Italian Labour Market Regulation: an Evolving Scenario within the Flexicurity Strategy
The implementation of the flexicurity strategy in Italy did not produce significant results even before
the economic crisis broke out, as in the other Mediterranean countries. This can be considered a
significant indicator of the weakness of the flexicurity model, when exported outside the economic,
political and social environment in which it was first developed. The transfer of any model from one
context to another should never be understood as a mechanical operation: models are bound up with
the history and the characteristics of the contexts they apply to (whether companies, institutions or
States).
Since the two main labour market reforms introduced in 1997 (Act No. 196/1997, the ‘Treu Package’)
and in 2003 (Act No. 30/2003 and Legislative Decree No. 276/20013, the ‘Biagi Reform’), the Italian
legislation has been characterised by a high level of flexibility not matched by an equally high level of
security, although the original project of Marco Biagi, partially enacted by the Berlusconi Government,
clearly referred to the need to strike a balance between flexibility and security.
A few years later there was an attempt to reform the welfare system and reduce the segmentation in
the labour market, agreed upon with the social partners, that led to a Protocol implemented by means
of Act No. 247/2007. This regulation represented only a minor reform of the unemployment benefits
system and once implemented it was even weaker. The Prodi Government that enacted this legislation
was short-lived, and the attempt at creating a more balanced flexicurity model was abandoned.
The Berlusconi Government that took office in May 2008 was late in facing up to the global
economic crisis and responded with a high degree of flexibility and deregulation. Because of the
deepening of the economic crisis with public finances close to breaking point, in November 2011 the
President of the Republic appointed a technical government led by the former European
Commissioner, Mario Monti. This Government was intended to introduce structural reforms.
With regard to the labour market, a systematic reform was adopted with Act No. 92/2012, the
Fornero Reform. As extensively discussed in the literature (Chieco, 2013; Cinelli, Ferraro, Mazzotta,
2013; Magnani, Tiraboschi, 2012), there was a wide gap between the intentions of the legislator and the
effects of the statutory provisions, also due to the complicated political compromise leading to the
enactment of the reform.
The Fornero Reform attempted to introduce ‘good’ flexibility, as a result of a balanced mix of
restricted flexibility at the point of entry, and higher exit-flexibility, supported by the improvement of
active labour market policies and the revision of unemployment benefits. Whereas this reform
originally aimed at reducing the segmentation of the Italian labour market, providing universal welfare
cover and increasing the efficacy of labour market policy, in the end it resulted in an incomplete reform
that left many problems unresolved. In particular, as far as flexibility at the point of entry is concerned,
the reform introduced restrictions on the use of fixed-term contracts and promoted apprenticeships. As
far as exit-flexibility is concerned, the attempted reform of Article 18 of the Workers’ Statute (Act No.
300/1970) aimed at simplifying the procedure for dismissals for economic reasons, with a view to
reducing the financial burden on undertakings, though it resulted in a more complicated system of
remedies, that left much discretionary power to the courts. The third pillar, concerning unemployment
benefits, introduced a more comprehensive if not yet universal protection, but this system was
conceived as developing step-by-step and was to be phased in over a number of years.
The Monti government did not manage to survive with a strategy based exclusively on austerity
policies and early in 2013, after the election of a new Parliament, it was replaced by the Letta
government. There was a degree of continuity between the policies adopted by the two governments,
even if the stated priority of the Letta administration was to promote new investment for restarting
economic growth.
As regards the labour market, the Letta Government amended the Fornero Reform, primarily in
order to reintroduce flexibility at the point of entry, removing some restrictions on fixed-term contracts
and confirming the promotion of apprenticeships. It also introduced new incentives for enterprises
recruiting vulnerable workers, the categories most affected by the crisis, like young people, older and
low-skilled workers and women, on long-term contracts (Decree Law No. 76/2013 converted into Act
No. 99/2013).
On 12 February 2014 the Letta Government put forward additional proposals on new strategies for
regulating the labour market. However, it was not able to enact them, as it was replaced by the Renzi
Government, as a result of the delay in adopting the structural reforms considered necessary for
economic recovery.
The proposals of the Democratic Party leader Matteo Renzi for the labour market were outlined in
general terms in a policy document, the so-called Jobs Act, presented before he was appointed as Prime
Minister. The document focused on increasing measures of flexibility at the point of entry; modifying
income support for workers in the case of restructuring (the Cassa integrazione guadagni, in the case of the
ordinary scheme and Cassa integrazione guadagni in deroga for sectors excluded from the ordinary scheme);
amending unemployment benefit regulations; reforming public employment services and, above all,
cutting (non-wage) labour costs, for the benefit of both employers and workers.
The strategy of the Renzi administration for labour market reform was to adopt amendments to
allow once again extensive recourse to atypical work with a Decree Law, to be enacted immediately,
while all the other proposals were included in a Government bill to be discussed in Parliament. More
precisely, Decree Law No. 34/2014 converted into Act No. 78/2014, “Urgent provisions to enhance the
employment rate and to simplify burdens on businesses”, introduced measures of further liberalisation of fixedterm contracts, temporary agency work and apprenticeships. The proposed law A.S 1428 dealt with
income support in the case of lay-offs and working-time reductions as well as protection against
unemployment (Article 1); public employment services (Article 2); simplification of labour procedures
(Article 3) and of employment contract law (Article 4), work-life balance (Article 5). The political
debate in the Italian Parliament was very fraught, considering the high risk that the commitment to
overcome the segmentation of the labour market might simply lead to a levelling down of workers’
protection.
Finally, the last wide and comprehensive reform of the labour market put forward by Renzi’s
Government, enforced by Law No. 183/2014 and Legislative Decrees No. 22, 23, 80, 81, 148, 149, 150
and 151 of 2015, confirmed both entry- and exit-flexibility and completed the legal framework of the
employment contracts introducing more ‘functional’ flexibility. This mainly means having strengthened
the employers’ unilateral powers on work performance. More precisely, the regulatory amendments
concern the power to change employees’ tasks (Art. 2103 of the civil code as amended by Art. 3,
Legislative Decree No. 81/2015) (Santoro Passarelli 2016, Gargiulo, 2015, Voza 2015) and the power
of remote control over the fulfilment of their work (art. 4 of the Workers’ Statute as amended by
Article 23 of Legislative Decree No. 151/2015).
3. Non-standard contracts of employment: flexible work or precarious work?
As has been shown, labour flexibility and especially entry-flexibility, which means to allow largescale recourse to non-standard employment contracts, is the main strategy (or should we say the only
strategy?) that every government has been able to conceive and pursue in Italy over recent years in
order to face economic difficulties and to fight unemployment (Spinelli 2015).
Since Law No. 92/2012 introduced for the first time the 12 months’ fixed-term contract with no
substantive reason for the first hiring, or the first assignment in temporary agency work, the so called
“Giovannini Decree” (Decree Law No. 76/2013) conferred to collective bargaining the power to
identify further cases to exclude reasons that would have legitimated the fixing of the term (Alessi
2013). The following amendment (Decree Law No. 34/2014) concerned the introduction of an up-tothree-year fixed-term contract with no substantive reason (Magnani 2014). It is worth underlining that a
very significant turning point in legislation and in the definition of a fixed-term contract was presented
as a measure to simplify contract types, to create employment, above all among young people.
Compared to the previous system, the repealing of a reason that would legitimate the fixing of the term
is an example of deep deregulation 1, operating also with reference to the temporary work agency
contract, at that time falling under Articles 20 ff. of Legislative Decree No. 276/2003.
In this context, it is also important to consider the contract regime for apprenticeships, which has
been reformed frequently and particularly over the past few years, by provisions aimed at conferring a
prominent role to this type of contract, as a preferential way for young people to access the labour
market. In particular, since 2011 the number of reforms has been increasing in order to face the
growing youth unemployment rate and to solve the problem of the lack of integration between
education and vocational training, which can in some instances make the transition from school to the
workplace difficult (Ciucciovino 2012, D’Onghia 2012). The Decree Law No. 34/2014 modified the
rules regarding apprentices’ stabilization, training duties and individual training plans, and wages
(D’Onghia 2014, Tiraboschi 2014). Nevertheless, the up-to-three-year fixed-term contract with no
substantive reason still appears more attractive and affordable for most employers.
Precarious work is common not only among employees, but it also affects a large number of selfemployed people. For a long time, because of the lower cost in terms of fees and social security
contributions as well as regulatory constraints, collaborazioni coordinate e continuative (coordinated and
continuous collaboration contracts) have become particularly desirable. Such working relations are
mostly personally performed and are of a non-subordinate nature pursuant to Article 409, No. 3, Civil
Procedure Code. This is a procedural rule by which the coordinated and continuous collaboration
contracts were implemented in the Italian legal system in 1973. However, behind the guise of
independent work being done in functional connection with the activity of the client that is durable
Indeed, this regulation of fixed-term contracts has been appealed to the European Commission by one of the major Italian
trade union confederations (CGIL), contesting its compatibility with Directive No. 1999/70/EC.
1
and, therefore, characterized by conditions of socio-economic dependency (hence the scholarly term
‘para-subordinate work’), there were often hidden work relations which could be placed in the area of
subordination. The proliferation of the self-employed has caused an area of friction with Labour Law
concerning independent ‘collaborators’, since their similarity with workers hired with an employment
contract is becoming so clear, that the former are considered as “functional substitutes” for the latter.
By introducing the “lavoro a progetto” (coordinated and continuous collaboration contracts based on a
project work - Articles 61-69) Legislative Decree No. 276/2003 pursued an anti-fraud goal. Such law with the exceptions set by Article 61, paragraphs 1, 2, 3 and with the exclusion of the public sector –
provided that these collaborations were referred to one or more specific projects, work programs or
phases of it, as elements that can, at least in the intention of the legislator, ensure their authentic nature
of non-subordinate relationships. Subsequently, Law. No. 92/2012, with an even more markedly antifraudulent aim, sought to strengthen the indices of the project worker’s autonomy through the
formalization of data considered relevant for this purpose, also on the basis of well-established case law
(Novella 2012).
4. Enhancing flexibility as a part of Renzi’s Government strategy to improve the Italian labour market: the so
called ‘Jobs Act’
Focusing on the high level of flexibility injected into employment contracts law by the Jobs Act, it is
worth considering the Legislative Decree No. 23/2015. It has introduced the contratto a tutele crescenti
(contract with growing protection), a ‘new’ open-ended labour contract which is applied since 7th March
2015 both in cases involving newly hired employees and those involving the transformation of former
temporary contracts (Magnani 2015, Speziale 2015).
On the background of the new statutory regulations there is the (academic and political) debate on
the possibility to introduce a contractual type with an open-ended duration from its beginning and a
growing level of protection, invoked as an instrument to restore a central role to stable employment in
the labour market. There were many proposals on the ‘single employment contract’, all providing for an
open-ended contract from the beginning, although without all the guarantees currently related to openended contracts. The differences among the proposals mainly referred to the modulation and the types
of the growing employment protection (Caruso 2014, 2015).
According to the legal framework enacted by the present Government there is no increasing
employment protection at all, indeed there is not really a new type of contract, but simply new specific
rules for individual (and collective) dismissal which significantly lowers employment protection for
workers employed under the ‘contratto a tutele crescenti’.
In firms with more than 15 employees, this contract brings about the following innovations: the
reinstatement of a dismissed worker is limited to those cases where the court declares the dismissal
unlawful, either due to discrimination or because the reasons for dismissal are not valid; in all other
cases of unfair dismissal, the workers receive financial compensation only. The amount of
compensation to be paid by employers is not defined by the courts, but pre-determined in accordance
with the duration of the terminated contractual relationship: it is equal to 2 months’ salary per year of
seniority with a minimum of 4 and a maximum of 24 monthly salaries. In firms employing up to 15
individuals, the maximum compensation amount corresponds to 6 months’ salary. In the event of
preventive conciliation between a dismissed worker and employer, the amount is also reduced to 1
month’s salary per year of seniority with a maximum of 18 months’ salary.
As it is clear, not only is compensation even more the principal remedy for unfair dismissal, but also
the amount of the compensation is very advantageous for the employers, especially in case of
preventive conciliation. Therefore, there is now a new segmentation in the Italian labour market,
affecting workers hired before 7th March 2015, who are entitled to the protections provided for by Art.
18 Law No. 300/1970 (as amended by Law No. 92/2012) 2, and workers hired after that date, who are
subject to the rules provided by Legislative Decree No. 23/2015.
Moreover, according to the perspective of restoring a central role to stable employment in the
labour market, one would expect a reduction in the wide range of non-standard employment contracts
the law provides for. On the contrary, all of them are still available and now regulated by Legislative
Decree No. 81/2015 with the only exception of job sharing that has been repealed. The aim stated by
the legislator was to rationalise the contractual models and simplify their regulations, but in the end, for
many of them the expected outcome of the amended rules is more flexibility. This is the case for
example of the fixed-term contract (Art. 19-29, Legislative Decree No. 81/2015), which remains the
main competitor of the new open-ended contract with growing protection. It has been confirmed that
the fixed-term contract does not require any objective reason to be stipulated (such as temporary work
agency contracts, now regulated by Art. 30-40, Legislative Decree No. 81/2015). The fixed-term
contract is subject to two limitations only: one is of temporary nature (36 months as a whole) and the
other is quantitative (20% of employees with indefinite contracts in force with the employer). Indeed,
they do not act as an effective barrier to the wide use of this type of contract.
The Fornero Reform (Law. No. 92/2012) has implemented also exit-flexibility, amending the regulations of remedies in
case of unfair dismissal. As far as exit-flexibility is concerned, the reform of Article 18 of the Workers’ Statute (Law No.
300/1970) aimed at simplifying the procedure for dismissals for economic reasons, with a view to reducing the financial
burden on undertakings, although it resulted in a more complicated system of remedies, that left much discretionary power
to the judges. Instead of the unique regime of sanctions based on the reinstatement of workers unlawfully dismissed in the
workplace and on the full compensation for damages suffered by them, a new four-tier remedial system was introduced
(Cester 2013, Marazza 2012, Maresca 2012, Speziale 2012). As a result of the Fornero reform, the consequences of dismissal
unfairness depend on the gravity of the violation of dismissal rules by the employer. These amendments reflect a shift in
employment protection law from job protection to compensation, while compensation is being reviewed at lower levels than
in the past.
2
As a result of the new regulations, the employer’s choice between open-ended contract and fixed
term contract is based mainly on the assessment of costs, both contracts being highly flexible either
throughout the performance of the employment contract or in the phase of terminating the
employment contract. This is the reason why significant benefits are provided for by law (2015 and
2016 “Stability Law”, respectively Law No. 190/2014 and 208/2015) to employers who hire employees
with the ‘contratto a tutele crescenti’ (M.T. Carinci 2015).
Finally, as far as self-employed contracts characterized by conditions of socio-economic dependency
are concerned, the lavoro a progetto (coordinated and continuous collaboration contract based on a work
project) has been repealed as well as the protection it provided for the workers. In the system outlined
by the Jobs Act, the old collaborazioni coordinate e continuative (coordinated and continuous collaboration
contracts, ruled by Art. 409, No. 3, Civil Procedure Code) are restored as the main contractual model
and can be confirmed as a functional substitute of the employment contracts. In this respect, with the
aim to extend employment protection, article 2 of Legislative Decree No. 81/2015 introduces the so
called collaborazioni organizzate dal committente (‘work organised by the principal’), defined as “exclusively
personal and ongoing work, whereby the principal organises all performance related aspects, also
including working hours and workplace'. A wide ongoing debate is developing among scholars on how
to interpret this ambiguous formula, so to effectively distinguish this new type of contract from both
the existing collaborazioni and the concept of employment under section 2094 of the Civil Code (Nogler
2015, Perulli 2015, Santoro Passarelli 2015). In order to integrate the discipline of self-employed work a
draft bill issued by the Government has been submitted to Parliament, where is now under discussion.
5. Is There Any Alternative Model?
Italy is trying to emerge from a downward spiral in which it is entrapped as a result of a number of
factors: first, a model of development suffering from a prolonged stagnation of productivity reflecting a
limited capacity for innovation and lack of investment in human capital, which has attempted to restore
competitiveness mainly through the reduction of labour costs resulting in a less skilled workforce;
second, a legal framework in which extensive flexibility at the point of entry has not been matched by
an adequate social security system; third, the weakened role of collective bargaining, with the
decentralised level increasingly characterised by deregulation and lower levels of protection, without
being offset by rules on participation at workplace level to counter-balance the unilateral powers of
companies during restructuring.
Starting from the idea that the focus should be on how to establish sustainable employment both for
employers (in terms of productivity and efficiency) and for workers (in terms of developing skills,
ensuring career and employment security, reconciling work and family life) (Eurofound, 2013), all these
measures, adopted by three successive governments over a period of two and a half years according to
the flexicurity model, need further reconsideration.
At the beginning of this year, a radically alternative model has been proposed by one of the major
Italian trade unions, CGIL, through the Carta dei Diritti Universali del Lavoro (“Charter of work universal
rights”). The ambitious project is to submit the Charter to the Parliament as a draft bill presented by
the workers.
The Charter has been conceived as a new Workers’ Statute whose scope include all workers: not only
those under contract of employment as in 1970, but also non-standard and self-employed workers, in
private as well as in public sector. The underlying idea is that job satisfaction and affective commitment
of the workers, granted by stability and protections, represent an advantage for the employers also
according to the new patterns of production and work organization of the XXI century. The aim is to
preserve fundamental rights and counter the use of flexibility adopted during the last years, so to
rebuild employment protections in favour of the weaker party of the contract. According to this
perspective, the wide range of non-standard employment contracts should be reduced, the substantive
reason should be confirmed as a fundamental requirement to stipulate short-term contracts and the
remedy of reinstatement should be restored for any case of unfair dismissal (Angiolini, Carabelli, 2016).
The Charter has found supporters and opponents, anyway it offers a starting point to rethink the
current model of development that is far from being sustainable, because increases social gaps and is
not inclusive.
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