Collective bargaining in the private sector in Italy primarily takes place at two levels – industry level and company level. However, changes to the system – agreed by some union confederations but not the largest – have altered the balance between the two. This has led to divisions between the unions, although the most recent developments suggest that these may be diminishing.
Collective bargaining in Italy primarily takes place at two levels: at industry level – the most important – and at company or, sometimes, district level. In addition, national level agreements between employers and union have been used to implement EU-level initiatives – such as the agreement on teleworking, and there are also national level discussions between unions, employers and the government, which sometimes lead to agreements. The most important of these in recent years was the agreement between employers, unions and the government at national level in July 1993, which radically reformed the system of collective bargaining. It restructured the links between industry and company level bargaining, and drew up new bargaining timetables. The 1993 agreement also laid the basis for a new system of workplace representation (see section on workplace representation) and finally ended the system of pay indexation - linking pay to prices - the “scala mobile”.
The main elements of the negotiating structure are as follows.
Industry level negotiations are intended to ensure that pay keeps pace with prices and should set increases that take account of expected inflation. In addition industry level negotiations deal with a range of non-pay issues such as hours, information rights and work organisation.
Pay negotiations at company level should provide a mechanism for the employees to take account of particular company level developments, such as improved productivity on the one hand or the risk of job losses on the other. In addition company level negotiations also deal with changes introduced by the company such as the introduction of new working methods.
As well as company-level bargaining it is also possible for this lower level of bargaining to be conducted for several employers on a district or regional basis. This has occurred to a limited extent, particularly in construction, tourism, crafts and agriculture.
There are no official statistics on the coverage of collective bargaining, but Eurofound estimated it at 80% in 2014.1 However, this figure is for overall coverage. Bargaining at company level, to improve or complement the national agreement – as foreseen by the July 1993 agreement – is much less common. Recent estimates suggest that only 30-40 percent of the workforce is covered by company level agreements.2
There is no mechanism for extending collective agreements to employees not directly covered by them. However, the courts will often refer to the minimum wage levels set in the relevant industry-level collective agreement in individual cases where they are asked to judge whether pay conforms to the constitutional requirement for pay to be “commensurate with the quality and quantity of their work.”
The bargaining framework has come under pressure in recent years. The employers’ association, Confindustria, has called for bargaining to be made more decentralised, giving greater importance to company level bargaining. CSIL also accepts that lower-level bargaining, where it emphasises district as well as company level negotiations, should gain in importance. (UIL takes a broadly similar position.) CSIL argues that it is important to make the system more flexible so that it can respond better to the very varied position that individual companies face. CGIL, however, takes a different view, arguing that the main problems in recent years have been the long delays in reaching agreements – these are often signed months after the old agreement has run out, and the fact that inflation, particularly forecast inflation, is often underestimated.
These issues were discussed at length by the three confederations in 2008 in an attempt to find a common position, but without success. The consequence has been that since the beginning of 2009 there have been a series of agreements, sometimes involving all three confederations, sometimes just CISL and UIL, aiming to provide a framework for negotiations.
The first major agreement on the structure of collective bargaining was signed in January 2009 when, following the three confederations’ failure to agree a common position, CISL and UIL decided to act without CGIL. Together with another smaller confederation, UGL, they signed an outline agreement with the employers and the government on a new system of collective bargaining.3 In April 2009, this was followed by a more detailed agreement specifying the rules for the new system in the industrial sector.4
CGIL did not sign either agreement and does not recognise the new system.
The most important changes compared with the system established by the July 1993 agreement are that:
- industry agreements now run for three years, covering both pay and conditions issues, rather than the two years for pay and four years for conditions, set out in the 1993 framework;
- pay increases in industry agreements are no longer linked to the forecast inflation rate but to the forecast European harmonised consumer price index for Italy, excluding energy consumption. Any differences between the forecast and actual inflation should be made up for within the three-year period of the agreement. Productivity improvements are now only to be taken account of in company level bargaining, which the government encouraged through tax incentives. Where there is no company-level bargaining, employees should receive extra payments through a wage guarantee element (“elemento di garanzia retributive, EGR”), to be agreed jointly by the two sides, and paid at the end of the three year period.
- the negotiating timetable has been changed: the unions must submit their claim six months before the end of the agreement and the employers must respond within 20 days; strikes are prohibited during the last six months of an agreement and in the month after it runs out.
As already noted, the CGIL did not sign either agreement, and campaigned against the change. CGIL’s major criticism related to the protection against inflation, which it saw as less than that provided by the 1993 agreement, as well as its fear that the new arrangements would undercut industry-level deals. The text of the agreement signed in April 2009 makes it clear that greater decentralisation of bargaining is seen as a mechanism to “re-launch a growth in productivity and therefore of real incomes.”
Despite CGIL’s opposition to the framework agreement, most industry agreements, including building, wood and furniture and the chemical industry, have been signed by the industry federations of all the three main union confederations, CGIL, CISL and UIL These agreements reflect some of the key elements of the 2009 framework agreements, such as the three year term and European inflation forecast.
However, Italy’s most important industry agreement, both in terms of the numbers covered and its wider impact – that for the metalworking industry – has been an ongoing source of dispute between the confederations and their affiliated federations.
This became clear in October 2009, when FIOM, the CGIL affiliate in the metalworking industry, did not sign the deal when it was renewed in October 2009, arguing that the pay increase was too low and that the deal would weaken the national agreement.
The conflict between the unions grew further in September 2010, when representatives of FIM (the CISL affiliate in the metalworking industry) and UILM (which belongs to UIL) signed an additional agreement with the metalworking employers’ association Federmeccanica, allowing the October 2009 national agreement to be modified by local deals at company level.
The September 2010 agreement stated that these local deals could be reached “to aid the economic development” of the company, or to counteract the “economic and employment effects flowing from the crisis.” However, these local deals could not alter minimum pay rates or service-related increments, which remained as set out in the national agreement. As in 2009, FIOM criticised the agreement as weakening the national agreement, while FIM and UILM in a joint statement said that it reinforced it.
The most recent metalworking agreement, reached in December 2012 for the three years 2013 to 2015, was also only signed by FIM and UILM.
The tension between FIOM and the other two metalworking federations has been increased by developments at the vehicle maker Fiat, Italy’s largest industrial grouping.
Fiat initially pushed through changes to working conditions at its Pomigliano plant near Naples in 2010. This was followed by similar changes at the Mirafiori plant in Turin in early 2011. In both cases the local agreements implementing the changes were signed by FIM and UILM but not by FIOM and were ratified in workplace votes after the company threatened to move production abroad. While CISL and UIL argued that these agreements were no different to others signed by affiliates of all three confederations to defend jobs and employment, CGIL argued that they were not the same and in particular that the Mirafiori agreement allowed the company to prevent FIOM representing its members (see section on workplace representation).
In January 2012, Fiat left the employers’ association Confindustria and so ceased to be covered by the national metalworking agreement. The company opposed Confindustria’s decision not to make full use of the flexibility provided by legislation introduced in September 2011(see below). It has subsequently signed an agreement with FIM and UILM, although not with FIOM.
In the meantime, at national level relations between the main confederations appeared to have been improved by an agreement that all three signed in June 2011.5 This set out clear rules for company-level agreements, whose “development and extension” were seen as “a common objective” of all the signatory parties.
These company-level agreements can, in the words of the June 2011 text, “set out … specific terms modifying the regulations contained in the national collective agreements, within the limits and in line with the procedure that the national company agreements themselves permit.” In other words the terms of the industry agreement reached at national level can be improved or worsened provided that this possibility has been allowed for in the industry-level agreement itself.
In addition, in the interim, before national industry agreements allowing for these company-level variations have been signed, local negotiators will be able to agree changes on “work performance, working time and work organisation.”
The framework agreement also laid down the rules on how company-level agreements are to be approved (see below).
However, this move towards greater consensus was disrupted by legislation introduced by the Berlusconi government in September 2011 containing further changes to collective bargaining arrangements.6 The legislation, included as part of a budget revision, permitted company agreements not just to agree worse terms than those set in industry agreements, irrespective of what the industry agreements themselves said, but also to undercut the minimum terms set in national legislation on a range of issues. These included working time, flexible employment contracts, recruitment procedures, work organisation and job classification and the introduction of new technology.
All three union confederations and Confindustria saw this as an attack on autonomous collective bargaining. As a result, in September they added an additional paragraph to the original June agreement, stating that they would stick with the deal they had signed on 28 June. It was this that led to Fiat leaving Confindustria (see above).
Following the fall of the Berlusconi government in November 2011, the technocratic government led by Mario Monti continued to promote decentralised bargaining, providing significant tax incentives to productivity-linked pay. In November 2012 under the auspices of the government, the employers and CISL, UIL and the UGL, although not CGIL, signed a productivity and competiveness document.7 This proposed changes to the two-tier system of bargaining, giving a greater role to company-level negotiations.
The 2012 productivity and competiveness document suggested that, in future industry level agreements should provide more possibilities for negotiation at company level on issues such as flexible working time in order to improve productivity within companies, and that part of the inflation-linked pay increase at industry level “could be allocated to … the second [company] level of negotiation”.
However, after taking different positions on the productivity document, a draft agreement on representativeness, was signed with Confindustria by all three main confederations on 31 May 2013.8 The detailed agreement implementing this draft, which was signed on 10 January 2014 – also by all three main confederations – contained (unlike the draft) a specific section on the respective roles of industry and company bargaining.9 This repeated the position set out in the 2011 agreement (also signed by all three confederations) that company bargaining covers “matters delegated to it and in the way foreseen by” the industry agreement that relates to the company. In other words, company agreements can modify industry agreements, but only if the industry-level agreement itself permits this. As in the 2011 agreement, the January 2014 agreement also states that where the industry-level agreement does not contain provisions allowing such modifications, they can still be agreed at company level in the areas of work performance, working hours and work organisation, in order to deal with “crisis situations or where there is significant investment benefitting the company’s economic or employment development.”
This agreement, which was followed in February 2014 by a parallel agreement with the service sector’s employers association Confservizi, appears to provide framework for company and industry level bargaining, which is shared by all three main confederations. (Identical but separate texts have also been signed by the union confederations UGL, CISAL and CONFSAL) As such, it seems to reduce the divisions between the confederations and provide a common approach to bargaining. However, there is no certainty that this will be the last word. CGIL’s metalworking federation, FIOM, has opposed the January 2014 agreement, in particular because of the sanctions it proposes for unions which fail to observe terms of agreements – such as strike-free clauses – which unions may not accept.
For a long period there seemed little prospect of a common approach but the agreements signed by all three confederations in 2013 and 2014, suggest that some of the divisions may be ending. However, the agreements signed by only some of the unions since 2009 have also left a clear mark on the present structure of collective bargaining.
Who negotiates and when?
Negotiations at industry level involve the employers’ federations and the industrial unions (the industrial federations within the major confederations). In most cases, the industrial federations from all three main confederations agree a common platform of demands and sign the final agreement jointly. However, for some years this has not been the case in the metalworking industry, where the 2009 and 2012 agreements were not signed by the CGIL federation FIOM, the biggest federation involved.
Until recently there were no rules on representativeness, governing who was entitled to sign industry-level agreements. However, three agreements signed in June 2011, May 2013 and January 2014 (see above), have provided a framework for assessing representativeness and their rights to be involved in negotiations at industry level and to sign agreements. The latest and most detailed agreement, which was signed with Confindustria in January 2014, sets out how the earlier agreements are to be implemented.10 (These agreements also cover representativeness at company level – see below.)
Taken together, the agreements set out a new “representativeness” threshold, based on a combination of membership (the percentage of union members in the industry who belong to that particular union) and broader support (the percentage of votes given to that union in elections for workplace union committees which are known as the RSU). Union membership data is to be provided by companies as part of their existing declarations to the social security body INPS, and the election results are to be collected by the Italian economic and social council CNEL. The level of representativeness – the representativeness score – is worked out by CNEL taking an average of these two percentages.
Under these rules, a union can participate in negotiations if, in the industry concerned, it has a representativeness score of at least 5% and an agreement is valid if it is signed by unions with a representativeness score of at least 50% plus one in the industry. In addition, the agreement must be ratified by a simple majority of the workers involved, using rules set out in the agreement concerned. Once ratified in this way, the agreement becomes binding on both unions and employers.
Although agreed, this system has not yet been used in industry level negotiations as the information on union membership and election results is still being complied. The system also only binds organisations, both employers and unions, who are affiliated to the signatory bodies. Initially this was Confindustria, CGIL, CISL and UIL, although, as already noted, other union confederations have also signed and similar arrangements have been agreed by other employers’ associations. The fact that the arrangements only bind the signatories’ affiliates means for example, that Fiat, which is outside Confindustria, is not covered by these rules.
At company level it is the elected union committee, the RSU, which normally negotiates, although very often full-time officials from the unions are also involved.
As in the case of industry-level bargaining, the agreements on representativeness, signed in June 2011, May 2013 and January 2014, have set out new rules on who can sign the agreements – as well as the composition of the RSU (see section on workplace representation).
These agreements state that where there is an RSU, a company agreement is valid if approved by a majority of RSU members. In companies, where the union representatives have been appointed directly by the unions – the union body in this structure is known as an RSA – slightly different rules apply. Here, the agreement must be approved by representatives, who together or separately have the support of a majority of union members in the company. In addition, all employees can be required to vote on the agreement if this is called for by either one of the unions involved or 30% of the workforce. For this vote to be valid more than 50% of those eligible to vote must take part and the agreement can be rejected by a simple majority of those voting.
The timetable for negotiations, as set out in the 1993 agreement, was that industry level negotiations on pay should take place every two years, and that on non-pay issues they should take place every four years. However, this was changed in the arrangements, agreed by CISL and UIL but not CGIL in 2009. These provide for industry agreements to run for three years, covering both pay and conditions issues, and this has now become the norm. The national statistics office, ISTAT, noted in 2013 that “all the renewals [of agreements] in the private sector” were for three years.11
There are often lengthy delays – sometimes of months or years – between the date an agreement runs out and the date the next agreement is signed and there is compensation for this in the final agreement in the form of lump-sum payments. The figures from the national statistics office ISTAT, for December 2014 show that at that point 55.6% of employees were waiting for their contracts to be renewed and that the average length of time these employees were waiting was 37.3 months.12
Company level negotiations under the 2009 arrangements should also take place every three years.
The subject of the negotiations
As noted above, collective agreements in Italy cover not just pay but a wide range of working conditions. At industry level, on pay they deal primarily with the protection of real living standards against inflation, as well as issues such as hours and holidays, training, health and safety, the use of temporary workers and some aspects of pensions.
At company level the negotiations, among other things, are intended to deal with mechanisms to increase productivity and foster innovation, as well as how the benefits of increased productivity should be distributed. A survey of agreements in almost 1,500 companies between 2009 and 2012, published by CISL in 2013, found that the main issues tackled were: pay (40%), restructuring and the crisis (38%), union rights (20%), working hours (19%), social benefits (14%) and training (13%).13
In addition the unions at national level have been closely involved in broader political issues such as major changes to welfare provision, taxes, and industrial development, particularly in the South of Italy. The government’s budgetary plans are discussed with the unions every year.
Italy does not have a system for setting a legal national minimum wage, although, as already noted, the courts will often refer to the minimum wage levels set in the appropriate industry agreement in individual cases on pay levels. However, the labour minister stated in August 2014 that it was possible that Italy would introduce a minimum wage in 2015, although only after hearing the views of employers and unions.14 (The possibility of an hourly minimum wage is to be included in an enabling law on employment, part of a package of reforms introduced by the Italian government in 2014.)
L. Fulton (2015) Worker representation in Europe. Labour Research Department and ETUI. Produced with the assistance of the SEEurope Network, online publication available at http://www.worker-participation.eu/National-Industrial-Relations.