Social Pacts in Italy
Since 1987
Background
The Italian system of concertation which resulted in the above mentioned agreements can be described a method of shaping public policy in which the government together with the social partners determines the fundamental economic and social goals and delegates a portion of its authority and accountability to the social partners for their implementation.
Concertation therefore is based on the concept of policy coordination and control. Social partners negotiate with the government and arrive at compromises and coordinated policy actions to deal with socio-economic challenges.
Despite the large number of tripartite social pacts signed in Italy over the last two decades, there is no institutional machinery in place to support the negotiation of social pacts. Social pacts were always signed in the government headquarters by the Prime Minister, the Treasury Minister and the Labour Minister on the part of the government and by the social partners. The only existing tripartite body, the Economic and Social Council (CNEL), is an advisory/monitoring body, in which the government is only
represented by appointed experts with no real government authority. The CNEL, however, monitors governmental economic activity by discussing the May d.p.e.f. (the document of economic/financial programming in preparation of the budget law) and collective bargaining outcomes.
Social Pacts in Italy were signed mostly under the pressure of two main factors: 1) a critical economic situation (such as high inflation, high deficits and public debt, high unemployment and
labour market rigidities), and 2) the pressures arising from EU membership, urging Italy to reduce the budget deficit or to implement properly European employment guidelines, etc.
The social partners in Italy have always been strong and able to engage in bipartite industrial relations, while the government's role has always been rather weak. Resort to tripartite social pacts was deemed necessary by the government – which always took the initiative – when the political and economic situation was too critical to be dealt with by the government alone.
The 1992 tripartite agreement introduced a new system replacing the cost of living index mechanism. Over the 1992-93 transitional period, workers would receive a small fixed amount of additional money every month instead of indexing. As a result, the pact created more space for collective bargaining and for wage bargaining in particular.
The 1993 social pact focussed on incomes policy, but also included a new structure of collective bargaining on two levels, the national and company or territorial level. The 1993 Pact (which was signed by the three major union confederations and the major employers associations) laid down the foundations of the system of industrial relations and collective bargaining currently in practice.
The 1995 law on pension reform is an example of so-called negotiated legislation. The workers’ organisations did participate in the drafting of the law through extensive consultation with the government. While formally no tripartite pact was signed by the social partners and the government, the 1995 Dini pension reform is a remarkable example of how concertation works in Italy.
The 1996 pact was signed against the background of two-digit unemployment rates (12%), with unemployment particularly dramatic in the South (over 20 %, with youth unemployment as high as 32%). Rigid labour market legislation was identified to be the main
cause of unemployment. Consensus for the need to enhance labour market flexibility grew among the social partners and the government, resulting in the Pact for Labour, agreeing on the introduction of a new set of labour market legislation.
The scenario for the 1998 pact was different; indeed, it was considered to be more a political than economic document. With the admission of Italy to the first wave of EURO countries, the then Treasury Minister Ciampi launched the proposal of a new social pact, which focused on a comprehensive reform of the Italian political and economic system. The pact proposed reforms in the legal and public administration systems as well as the system of collective bargaining. However, to quite an extent the pact remained a mere wish list, as it was too ambitious. Too many signatory parties were involved, coordination was a major problem in the following years, as was the implementation and monitoring. The pact, however, is the highest attempt to institutionalise and formalise the method of concertation in Italy.
The new centre-right government which came into power in May 2001 was less inclined to acknowledge the role of the social partners in policy concertation. Yet, it managed to sign the 2002 Pact, but without the participation of the largest workers’ organisation (CGIL). The pact consists of labour regulation reform, which was highly contested, resulting in the CGIL opting out, as well as the reform of unemployment benefits, wage guarantee funds and fiscal policy.
The success and effectiveness of social pacts heavily depend on the willingness of government to involve the social partners in policy concertation processes. This is the case for all the countries concerned, but particularly relevant for Italy.
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