Individual Case (CAS) - Discussion: 2007, Publication: 96th ILC session (2007)

Employment Policy Convention, 1964 (No. 122) - Italy (Ratification: 1971)

A Government representative gave a presentation on the characteristics of the Italian labour market and examined labour market developments and government policies related to the labour market.

Firstly, a significant increase in the employment rate could be observed, particularly in the northern part of the country, but also to a lesser extent in the south; an increase in the rate of employment of women could also be noted, although it was still insufficient and below that of men. The unemployment rate had fallen to 6.8 per cent, contrary to the trend observed in other European countries. The unemployment rate of women was 8.8 per cent and measures had to be adopted to bring it into line with that of men, which stood at 5.6 per cent. In general, unemployment had been steadily decreasing in the whole of the country, despite the fact that this decrease was sharper in the north than in the south. Long-term unemployment was still unacceptably high, affecting 2.5 and 4.4 per cent of men and women, respectively, particularly in the south of the country. With regard to the employment rate, she considered that it still was not sufficiently high and noted a decrease in the employment rate of women in the south, which might be linked to the phenomenon of undeclared work, which the Government had been striving by all possible means to combat. The level of employment of young people was also insufficient and the Government believed that this problem had to be addressed by means of an active policy to combat precarity and unemployment of young people. She added that Italy had an educational system characterized by a high high-school drop out rate which, however, had been declining since 2000. The number of women and men with degrees was on the rise and two-thirds of adolescents succeeded in making the transition from school to university. The country was also facing a number of new problems related with the liberalization of the labour market, and there were no fewer than 2 million temporary jobs, essentially located in the southern part of the country, which represented 9.2 per cent of all jobs. In this respect, it was important to encourage permanent contracts. Furthermore, part-time work, which had not been highly prevalent in the past, was increasing sharply in the country as a whole, particularly for women. As for precarious or atypical contracts for which there was no guarantee that they would be made permanent, such as "project contracts", of which there were 400,000.

She recalled that the lines of action that had been decided on by the Government to address these problems consisted in combating precarity, adopting measures to encourage permanent employment and encourage undeclared workers to become legal, to improve social protection for precariously employed workers, to support the action of the labour inspectorate against undeclared work while at the same time encouraging the enterprises concerned to legalize their activities and, finally, to formulate a bill on occupational health and safety. In this respect, the Government was, in collaboration with the social partners, organizing a series of round tables to formulate a new social safety net, measures addressing occupational change, measures intended to reduce undeclared work and precarity, as well as to discuss the issue of retirement. In conclusion, she emphasized the importance of social dialogue and consultation between the social partners in the formulation and development of national policies, and stated that the action of the new Government in this area would be directed at improving social cohesion.

The Employer members recalled that this case went back some 20 years and the Government had been asked to appear before the Committee on at least half a dozen occasions. The Committee of Experts acknowledged that the Government had provided a comprehensive report and this level of cooperation should also find satisfaction in the Conference Committee. This case was atypical in that it did not concern an assessment of whether a legislative matter or factual development was compatible with the terms of a ratified Convention, but rather broader and less precise questions. The fundamental issue was whether the employment and labour market policies of the Government of Italy were compatible with the treaty obligation to take active steps to promote employment, reduce social disadvantage through employment and to do so in consultation with the social partners. While imprecise, these issues were no less important than a case involving more typical legal analysis. The Conference Committee had noted this point in previous comments about Italy and in 1998 had borne in mind "the particular difficulty of assessing the application of a Convention which requires the formulation and implementation of policy".

The most recent observations by the Committee of Experts concerned four subject matters, namely: the macroeconomic position as it affected the labour market; the measures to promote labour market flexibility; the measures relating to human resources, education and training; and the participation by the social partners in this work. These observations and requests by the Committee of Experts appeared well founded and there was no reason to demur from them.

On the issue of unemployment, the Committee of Experts drew attention, in line with its previous observations, to the unequal impacts of the scourge of unemployment in the different regions of the country and called for "territorial cohesion in order to fill the gap between the various regions of the country". As a general proposition this request was not unreasonable, but the Committee of Experts had provided little in the way of real guidance. This was not surprising as the solutions to the application of this Convention were policy, rather than legal matters, the latter being the province of the Committee of Experts, but not the former.

Although they considered that the most desirable policy settings for the cure of long-term unemployment depended on national circumstances, and hence international consideration of these issues was by definition limited, the Employer members recalled the views they had expressed on this issue in numerous policy debates occurring on labour market reform in the ILO, both at the current session of the Conference and in the Governing Body or Regional Meetings. These views included the belief that there should be a holistic (rather than piecemeal) approach to address a range of inter-related measures; that there should be structural reform rather than one-off measures; and that long-term problems needed long-term planning and perseverance. As employers, they also believed that the "legislation" of the ILO itself needed to be subject to regular review to ensure that it did not act as a disincentive to meaningful employment. The problems were not unique to Italy and many other countries were grappling with similar issues to a greater or lesser degree. No country could be satisfied that it had done enough in this area, and the reform effort around the world was a continuum. The task in this Committee was to check that the reform continued in the right direction and that there was learning from other countries' experiences. Structural reforms of one type or another were also advocated by the OECD, the World Bank and the IMF. Overall, it was clear that the Government was sensitive to the task. Whether it adopted the right mix of solutions would be seen in the outcomes, and in the further steps it was asked to take by the Committee of Experts.

The Worker members pointed out that Convention No. 122 was considered as a priority instrument as it guided and oriented the work of ILO member States in the area of socio-economic policy. The right to work was recognized in this Convention as an individual right which should be guaranteed though voluntary action on behalf of governments, in cooperation with the social partners, aimed at the promotion of full employment and the fight against unemployment and insecurity.

The proclamation by the Declaration of Philadelphia of the right of every person to work and to the free choice of work in equitable and satisfactory conditions and to protection against unemployment remained fully relevant today through the notion of decent work. In order to achieve this, it was necessary for political leaders and the social partners to recognize the priority of full employment and to refuse a policy consisting of leaving the labour market to be governed solely by free market forces.

The Convention provided to the ILO member States, through the respect of the essential principles it set out, a framework for the development of their employment policies according to their own methods and on the basis of national conditions in order to significantly reduce unemployment. As underlined by the report of the Committee of Experts, the unemployment rate remained high and there was a slowdown of employment growth and a serious deficit in human capital. Regional disparities were important, especially between the North and the South of the country. The difficult integration of certain target groups, especially young persons and the long-term unemployed was also examined. Nevertheless, the main question was which policies were developed by the Italian Government to increase employment and promote an improved distribution of work with fewer disparities and inequalities, as well as the question of the conformity of these policies with the provisions of the Convention. This demonstrated the need to involve the social partners fully in the elaboration and implementation of employment policies.

The Committee of Experts concentrated its observations mainly on the criticism made by the Italian trade unions with regard to the inequitable tax cuts made by the previous Government, the flexibilization of the labour market, the legislative texts of 2003 on labour market reform and the low participation or perfunctory consultation of the social partners in the elaboration and evaluation of policies. Its report was limited to requesting the Italian authorities to provide additional information in the next report. In fact, the previous Government's priority was to render the labour market more flexible and to promote the individualization of labour contracts. The legislation adopted in 2003 had resulted in a serious problem of precarity in the labour market, especially through the introduction of new forms of employment, new types of flexible contracts and the reduction of security of employment and of the protection of workers against abuse. The new spectre of flexicurity haunted Europe and the international institutions. Instead of serving to guarantee more security to workers with precarious contracts, this concept had been emptied of its positive content and served as an argument for destroying protection against dismissal, making regular contracts more flexible and putting an end to the primacy of permanent contracts. Moreover, the European Commission was announcing that a communication would be issued on this subject at the end of June 2007 pursuant to the Green Paper on modernising labour law published at the end of 2006. The Government seemed today to wish to change course and adopt a different employment policy, another approach to the question of flexicurity and different relations with the social partners. The Committee should encourage this new policy direction.

The Worker member of Italy noted the Government representative's statement and recognized that the issues being discussed were to a large extent the legacy of the previous Government. The latter had done all it could to liberalize the labour market, raise the retirement age and undermine the very basis of tripartism and social dialogue.

The attitude of the new Government had therefore to be welcomed, as well as the reactivation of tripartite negotiation, particularly with regard to the new labour legislation. The basis for genuine dialogue, however, consisted in clear positions followed by appropriate action. A clear position by the Government on matters of social and labour legislation was therefore desirable because, despite certain actions carried out in the 2007 Budgetary Act, it still did not have a coherent policy to address the problems in the field as a whole.

Under the pretext of modernizing the labour market, Act No. 30/2003 had caused a serious situation of precarity in employment relations. The Government today wished to eliminate the worst forms of labour contracts established by the above Act; however, the objective should rather be to return to the situation in which permanent contracts were the rule. The statistics indicated a serious deterioration in the employment situation of the country. In 2005, while the working population had shown a slight increase in terms of full-time equivalent jobs, employment had decreased by 0.4 per cent compared to the previous year, for the first time since 1995. Fixed-term contracts were the main means for young people to enter the labour market, but it was increasingly rare for these to turn into permanent contracts; the situation was even worse for young workers. Furthermore, the introduction of "project contracts" in 2003 had only changed the name of an atypical form of work, thereby concealing a real employment relationship. According to official statistics, only one out of 25 employment relationships of this type eventually evolved into a permanent contract, whereas in 30 per cent of cases the workers concerned ended up being unemployed.

Labour market distortions were becoming increasingly pronounced. The south of the country was experiencing an alarming phenomenon of the reduction in the employment rate. This was because an increasingly large number of people were no longer actively seeking regular work and were swelling the ranks of irregular and undeclared workers. Despite a number of government actions, the illegal economy represented at least 18 per cent of the gross domestic product. The problem of long-term unemployment was especially prevalent among young workers, as well as older workers.

The situation in general was a far cry from the Convention's objective of promoting growth and development through a higher standard of living and overcoming unemployment and underemployment, and the objective of an effective policy intended to promote full, productive and freely chosen employment. The liberalization of the labour market had been the only objective of the previous Government to the detriment of and neglecting industrial, research and regional development policies, which were necessary to ensure competitivity in the modern sectors, rather than seeking to compete with emerging economies. In this respect, political measures were required, as well as the allocation of public resources to education and industrial research.

The Italian trade union confederations therefore suggested the following priorities for national tripartite negotiation: measures to fight precarity at work beyond those adopted under the Budgetary Act of 2007; the formulation of an action plan to limit, by legislative means, the use of fixed-term contracts, and to envisage the abolition of the many forms of atypical working relations established by the Act of 2003 so as to return to a situation in which permanent employment prevailed. It would also be advisable to guarantee unemployment benefits for all types of working relationships, regardless of the economic sector or the size of the enterprise, to repeal the extension of the retirement age and to put in place a system to encourage enterprises to hold on to older workers with options of flexibility when approaching retirement. Adequate resource allocation to training and a new education policy were also necessary. The implementation of the policy to combat undeclared work and encourage equality of treatment for migrant workers also constituted an employment policy element that complied fully with the Convention.

In conclusion, he hoped that, taking into account the fact that the Committee could not discuss the case of Colombia, the Italian Government would put pressure on the Government of that country to implement the tripartite agreement signed in 2006. He hoped that the Government would rapidly take steps to reform the legislation in accordance with the recommendations of the Committee of Experts and the Conference Committee.

The Worker member of India recalled that two major Italian trade unions had sent comments to the Committee of Experts on the uneven and decreasing trend in employment and productivity, the persistent high long-term unemployment rate and the unfair and inefficient tax cuts which would indirectly affect the workers. Moreover, territorial balance had to be kept in national growth and labour flexibility had to be an outcome of collective bargaining and not of the arbitrary dictates of the Government and the employers. There should be a tripartite mechanism to see that reforms were not adverse to the interests of the workers. Job security was an important right of workers without which all other forms of security were meaningless. Hence, the Government had to make much more extensive efforts.

He declared his solidarity with the workers of Italy and requested that the Government provide information on the effective implementation of an appropriate employment policy and to ensure the full employment of women, the promotion of employment for older people, measures to educate workers and the genuine participation of trade unions in employment reforms instead of perfunctory consultations, such as those criticized by the Italian trade unions.

The Worker member of France remarked that a break with Act 30/2003 would also be a rupture with the notion that the right to work was an obstacle to competition and growth. The Act had been promulgated by the executive and gave a leading role to the principle of labour market flexibility, while playing down the leading role of legal rules to the benefit of contractual freedom, which in practice was to the employer's advantage. Among the different types of contract instituted, the continuous and coordinated collaboration contract considered an employment relationship as a service. On-call work was another means of underpaying workers who nevertheless had to remain available. As to shared work or project contracts, both constituted forms of precarious work instituted by the system set up in 2003 in the same way as flexible part-time work or the extension of the possibility of using overtime, or even of modifying working hours, which were a key element of the employment contract. This resulted in widespread underemployment, even though its elimination was one of the main aims of the Convention. The weakening of workers' rights in favour of employers' rights and the decline in income caused by the multiplication of precarious employment contracts were also contrary to the objective of improving the standard of living through an active labour market policy. The Convention was absolutely critical in an international framework which promoted flexibility. This instrument made it possible to combat the phenomenon of poor workers currently developing in Europe. Involuntary part-time contracts and low hourly wages were the result of this situation which, moreover, mostly affected women. In addition, it was not only a question of just creating jobs, but of ensuring their type and quality. Finally, she supported the call made by the Worker member of Italy for the implementation of the Convention and for the Government to repeal Act 30/2003.

The Government representative recalled that her Government had only been in power for one year and that several issues and demands presented by the Worker members had already been taken into account. Indeed, flexibility was not a key element of the policy followed by the Government; permanent contracts should be considered as the norm and priority should be given to combating precarious and clandestine work. Another political objective was employment creation for young workers and women, and narrowing the gap between the north and south. The Government had already created four negotiation groups in which the social partners were involved in establishing policies in these areas.

She said that the discussion seemed to belong to the past, to another government. Indeed, the current Government had already introduced changes, and the results were starting to be seen, particularly with respect to the employment of women, the reduction of poverty and the fight against clandestine work.

The Employer members observed that finding consensus on labour market policy questions was not easy. It was not possible to legislate against unemployment and policies could only be adopted to make a difference in this respect. One area where consensus appeared to exist was that meaningful and productive employment was a pathway to human and economic dignity and well-being. It was a way out of poverty and social disadvantage. Another area of consensus could be that measures to reduce unemployment and help vulnerable groups required commitment and support beyond governments, especially if structural changes were required. Reform efforts rarely worked if they were imposed on unwilling communities. Thus, the view of the Committee of Experts that the social partners needed to participate in the development of these measures reflected the right approach.

Since this case involved a change in Government, it involved the opportunity for new methods and fresh thinking, and a new resolve to tackle issues, which seemed to be the approach that was being adopted by the Government. The information sought by the Committee of Experts was therefore particularly timely as it provided the new Government with an opportunity to inform the international community of its intentions, and of the process by which it would seek to achieve the objectives of the Convention.

The Worker members invited the Government to continue to provide all the information requested to ensure that the Committee could examine the issue in greater depth. The Government should do everything to combat the high unemployment rate and the differences and inequalities that existed in the labour market and to combat the rise in precarious work. Another priority would be the revision of Act No. 30/2003. It was satisfying to hear the Government's statement that permanent employment contracts should be considered as the norm and that flexibility was no longer the focal point of the employment policy. Italy should defend this position before the European authorities. Finally, and as indicated by the Committee of Experts, employment policy should be developed together with the social partners to obtain their support for the implementation of the necessary reforms. Indeed, this now seemed to be the case once again in Italy.

The Committee took note of the interactive presentation and the detailed and informative data supplied by the Government representative, as well as the discussion that followed regarding the measures to support the labour market adopted by the Government in applying this priority Convention.

The Committee welcomed the slight increase in the employment rate and the drop in the unemployment rate, in addition to other labour market indicators reported by the Government, which had announced its intention to reduce temporary and part-time employment, to combat clandestine employment and to promote productive employment for the most vulnerable categories, particularly young people seeking their first job, women and workers in less developed regions. The Government also proposed to foster social dialogue in order to forge an active employment policy and to amend the provisions of Act No. 30 of 2003 on labour market regulations.

The Committee further noted that measures to increase labour market flexibility needed to ensure appropriate protection for workers against dismissal and in obtaining a permanent employment contract which was productive and freely chosen. The Committee invited the Government to continue to mainstream its national programmes for full and productive employment, the promotion of decent work and high-quality work for all, as required by the Convention. It requested the Government to include in its next report detailed information on how the experience and views of the social partners had been taken into account when formulating and implementing employment policy measures. The report should also include information on the impact of the measures taken with a view to increasing the participation of women in productive employment, combating youth unemployment and closing the gap between the various regions of the country in terms of employment.