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Italian labor relations: a system in transition.

Italian labor relations: a system in transition The mid-1970's marked a turning point in Italy's industrial relations system. At that time, the system appeared to be a case of pluralism, recognized and supported by the statute of workers' rights (Act 300/1970). The main aspects and institutions of industrial relations remained outside the legal regulation. In fact, trade unions and employers' associations exercised joint power. Trade unions reasoned that the registration procedure prescribed by article 39 of the Constitution could lead to more state interference in internal union affairs than the Constitution intended. There were no specific legal provisions concerning the procedure, scope, unit, or content of bargaining or the conduct expected of the parties to negotiations. Collective agreements were treated as contracts, binding only on the parties, although the courts indirectly extended collective wage rates to employees and employers who were not parties to the negotiations. In addition, no statutory regulation on work stoppages based on provisions of article 40 was passed, and the task of imposing limits on industrial conflict was again left to the courts.

The statute of workers' rights (Act 300/1970), which is still the fundamental source of law governing collective labor relations, marked a change of attitude towards organized labor, both regarding the constitutional approach of article 39 of the Constitution and the actual "abstentionism" of the 1950's and 1960's. The act intervenes not to regulate unions at the national level but to promote their presence and action at the plant level. The focus of the act is no longer on the recognition of unions and the extension of collective agreements, but on the basic rights granted to the most representative unions and workers for the promotion of union activity and collective bargaining in the workplace (usually enterprises with 15 employees or more). The most representative unions and union representatives were granted the time and the right to hold meetings on company premises, employee time off for union activities, checkoffs, and special protection against discrimination.

Legislative support, a favorable labor market, and political conditions of the late 1960's contributed to the development of unionization (from its lowest level of 22 percent in the mid-1960's to more than 50 percent in the mid-1970's) and collective bargaining. Individual labor law favored this approach, with minimum legal conditions providing a safety net for marginal employees, and nationwide and enterprisewide collective bargaining regulating wages and working conditions for the majority of employees. It is estimated that in the mid-1970's, more than 75 percent of factory employees were covered by collective agreements. Some features of individual labor law are more effective in supporting collective action. These include the protection of employees against discrimination and unfair dismissal contained in the statute of workers' rights; restrictions imposed by the act on employers' directive and disciplinary powers; and Social Security legislation which provides more than 80 percent of the wages lost by employees who are laid off or employed on a short-term basis because of production difficulties or restructuring in the enterprise. Social Security legislation departs from that of the 1950's and 1960's and responds to the new problems of an industrial system which faces difficulties and changes.

The pressure for change came in the mid-1970's during the serious economic crisis and consequent technological transformation which affected the socioeconomic system of most developed countries.

Italian industrial relations were built on the assumption that the economic system was capable of continuous and predictable growth within a relatively stable organization and technology. Collective bargaining, like unionization, was expected to expand much in the same way. Some scholars assumed that a stable environment would bring about stability and convergence in labor-management relations practices.

In the late 1970's, a series of events called these assumptions into question: (1) the general slowdown of economic growth; (2) the growing uncertainty of domestic and international markets' (3) the rapid technological innovations requiring or allowing changes in production or organization which might undermine collective bargaining; (4) the changing nature of labor (white-collar and service employees) which is less inclined to accept traditional forms of unionization and easier to organize; and (5) the growing initiative of management in industrial relations and personnel practices.

Difficulties in the Italian system were heightened by the structural weakness of industry and fragmentation of the economy and the inefficiency of public administration. Political tensions and polarization among the two major political parties (Christian Democrats and Communists) diminished the effectiveness and stabilizing capacity of state intervention in industrial relations and also undermined the internal cohesiveness of trade unions, thereby contributing to further reducing their bargaining power.

Signs of changed attitudes and strategies first emerged at the macro level of industrial relations. Participants acknowledged that the crucial problems of the period--recovery of the economy and international competitiveness, control of inflation (more than 20 percent in 1977 and again in 1982) and a reduction in unemployment--could not be solved without a more consensual, less conflictual attitude.

The adjustment process was long and difficult and culminated in three major trilateral agreements in 1977, 1983, and 1984 between the top organizations of the social partners and the government.

The underlying pattern was similar to that of other countries, even as early as the 1960's and 1970's, commonly referred to as "concertation" or neocorporatism in industrial relations. The terms of the economic and political tradeoff between the parties varied in the three agreements, but all implied a clear shift away from traditional economic and acquisitive collective bargaining. The trade unions accepted a slowdown of economic gains--mainly wage indexation (-18 percent in 1983 and -30 percent in 1984), which stopped or slightly reversed real wage growth--and committed themselves to greater labor flexibility and control over decentralized bargaining and conflict. In exchange, the government granted tax benefits, particularly for low-paid workers, and made the following commitments: to control public expenditures and administer prices consistent with curbing inflation; to enact a series of measures to promote employment and to favor union participation in labor market policies and, with the employers' consent, the union's role in controlling industrial restructuring and innovation processes; to promote workers' participation in capital formation through a solidarity fund (financed by 0.5 percent of wages controlled by the unions). A reduction of working time was agreed upon with the employers as a means of combatting growing unemployment. This latter directive has been implemented unevenly, depending on the sector (usually 40 hours yearly on an average 40-hour workweek).

These experiences of broad trilateral agreement and social neocorporatism have proved only partly successful. Scholars have indicated that the Italian system lacks elements which account for the success and stability of neocorporatism: a united labor movement linked to a political labor government, a strong tradition of centralization in industrial relations, and an efficient government capable of implementing the difficult long-term promises of the political tradeoff. Some functional equivalents of these elements have been operating in Italy: unity of action among the three major confederations, growing political and ideological control by the central confederation over the rank and file and middle-level union officers in order to respect social commitments, and a coalition government inclined to decide labor matters jointly with the Communists or with Communist consent only.

The effectiveness of these factors has proved precarious, and political tensions exist between the Communists and the coalition government. In fact, the agreements of 1977 and 1983 were unanimously supported by the trade unions, whereas the 1984 round ended in disagreement and the most serious split within the labor movement since the 1950's. The Communist-dominated confederation (CGIL) withdrew from the negotiations and opposed the decree which the government issued to implement some points of the agreement (mainly the slowing down of indexation) reached with the other two unions (CISL and UIL) and the employers' association.

The government-issued decree represents a step towards direct legal intervention in crucial bargaining matters, and an exceptional alteration of the unwritten rule that any major legislation in labor matters needs the largely unanimous consent of the trade union movement (including the Communist sector). This rule has been in effect since the 1950's (no major labor law has been passed in the face of Communist opposition) and had made up for the exclusion of the Communist Party from national government. The arrangement was an imperfect functional equivalent of the prolabor government usually held to be necessary for corporatism to work, and it presupposed a tacit division of roles with the Christian Democrats running the state (together with minor allied parties) and the Communists having a veto or power of codecision on labor matters (and sharing in local government).

As with many other major directives of Italian industrial relations, it remains to be seen just how exceptional this decision by decree will be. In mid-1985, top negotiations resumed between the three major confederations (United) and the central employer associations; this led to another agreement further sectoring and stabilizing the escalator clause first for the public sector, then extended to the private sector. The agreement represents a continuation, although partial, of the policy of "concertation" adopted in the past years.
COPYRIGHT 1987 U.S. Bureau of Labor Statistics
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Author:Treu, Tiziano
Publication:Monthly Labor Review
Date:Mar 1, 1987
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