Labour Market Measures in Italy 2008–13: The Crisis and Beyond

This report deals with the Italian reforms undertaken by various Italian governments during the last decade, in order to alleviate the employment cost created by the financial crisis, which hit the country during 2009. According to the review of the macroeco- nomic performance illustrated in the first chapter, Italy had already adopted several measures of flexibilization of labour contracts, starting in 1997 and continuing in 2003. As a result of these moves, Italy witnessed a significant increase in employment (in the order of 2.5–3 million new jobs), in the face of stable (or even declining in real terms) wages. As such, this growth was not sustained by internal consumption growth or by a flourishing export sector. This equilibrium path was rather unstable in terms of growth performance, and its fragility became apparent after the outbreak of the financial crisis. The employment rate declined by five percentage points, mostly among adult males; youth un- employment increased at a much greater rate than total unemployment. Italy’s reaction at the onset of the crisis was mainly based on the extension of the short-time work scheme known as cassa integrazione, which saves jobs temporarily. Nevertheless, this defensive stance did not prevent a double-dip recession in 2011.