Although Italy's prime minister Mario Monti believes jobs for life in Italy no longer exist, data shows this may not be the case
Italy’s technocrat Prime Minister Mario Monti stirred up a huge fuss in Italy last week when he stated on television that having a job for life was a bit boring. Italians hurled insults towards Monti via Facebook and Twitter. Italy’s political parties were unhappy with Monti’s quip too.
Italy’s politicians are horribly well paid and receive extremely generous pensions after serving their country for a very short period of time – so Monti scared them!
To all intents and purposes, the incident was Mario Monti’s first real gaffe. Really though, what Mario Monti was doing was pointing out cold hard reality to Italians. He could, perhaps, have chosen to have put what he said in another way.
For Italy’s population, job security is their Holy Grail in life - a primary objective for all of Italy’s job seekers, many of whom lust after a cushy job with local or central government and the equally cushy pension which comes after it. Italy’s employers, on the other hand, seem to do everything in their power to avoid offering employees long term work contracts.
What the Holy Grail seeking Italians have not heard is that less regulated job markets, such as that of the United Kingdom, can lead to people staying in their jobs for longer than Italy’s tightly regulated highly inflexible labor market. A report for the CEPR showed this. The CEPR report is from 1997, so it is not, admittedly, up to date, however, Italy’s labor market has, theoretically become slightly more flexible through the introduction of a series of short term employment contracts. With the pseudo-flexibility came lower salaries and unending internships.
This is a topsy turvey aspect of Italy – in other nations, the UK and the USA, short term contract work is often better paid than long term employment – in Italy, the opposite is true.
Incidentally, complex Italy boasts no less than 46 different blends of employment contract.
Jobs for Life are Not Always For Life
The 1997 report called Jobs for Life? – Is the End in Sight, carried out for the Centre for Economic Policy Research by Bristol University economics professor Simon Burgess and an Italian researcher from the University of Turin – Lia Pacelli, makes for interesting reading.
I would hasten to point out that Simon Burgess in an email to me stated that he is not in a position to say whether the data in his 1997 report is still relevant. Burgess’ report is, in my opinion, still interesting, as it takes a look at the UK which by 1997 had already undergone the kind of transition Italy is attempting to go through now.
In this academic investigation into the job for life phenomenon, Burgess found that even if job security in the UK by 1997 had been reduced by fewer legislative shields for employees, many workers effectively still had jobs for life.
Here is an except from the 1997 Burgess/Pacelli report:
According to Burgess, the data demonstrate that the average length of job tenure in the United Kingdom is about 12 years for women and 18 years for men. These figures suggest that there is still a large element of stability in the labour market. The averages naturally summarize a very disparate set of experiences: although 24% of men’s jobs had a duration of less than five years, over 40% lasted more than 20 years and 24% more 30 years. For women, the corresponding figures were 41%, 18% and 12%.
This is also relevant:
These numbers show clearly that, at any particular moment, a substantial percentage of workers are in short-term jobs. A common argument is that this fraction has increased substantially in the past 20 years or so, with a corresponding fall in the proportion in longer-term jobs. The data, however, show that this is not the case. Elapsed job tenure was the same for women in the early 1990s as it was in 1975; for men it had fallen by about one year. The proportion of workers who had been in their jobs for less than a year was the same in 1992 as in 1975. And, while the percentage in jobs for more than five years was lower in the 1990s for men (though not for women) than in the 1970s, the difference was not dramatic.
Italians might also like to read this paragraph from the Burgess/Pacelli report:
Furthermore, despite very different labour market regulations and institutions, there is little difference in job tenure between the United Kingdom and Italy; if anything, jobs appear to last slightly longer in the less regulated UK labour market. For a 35 year-old, averagely qualified worker in a medium-sized company, and controlling for other factors, the chance of having a job that has lasted at least five years is 50% for a female manual worker in manufacturing in both countries, and 40% for a female non-manual worker in a service industry in both countries. For men, the corresponding numbers for the same cases are 53% in the United Kingdom and 49% in Italy for manufacturing, and 42% in the United Kingdom and 38% in Italy for the services sector.
What will come as a surprise for Italians, and it is something Mario Monti could have pointed out possibly, is that the report notes that workers in the United Kingdom stayed in their jobs longer than Italians and this is despite Italy having a constitution and heaps of legislation designed to enhance job security.
OECD Job Tenure Data
There is more recent data on the subject of job tenure from the OECD.
From OECD data covering the period 2000 to 2010 for all ages and both sexes, there is not much difference between the United Kingdom and Italy:
Job tenure in the United Kingdom and Italy in 2010:
- UK: People who worked for the same employer stayed for 20.15 years.
- Italy: People who worked for the same employer stayed for 21.66 years.
There is not a huge difference, despite Italy’s protective legislation. There is, however, a difference when it comes to the overall time people spend in one job:
Total Job tenure in the United Kingdom and Italy in 2010:
- UK: People worked for the same employer for 9.26 years – the trend has been increasing since 2000 (8.2).
- Italy: People worked for the same employer for 12.73 years – a slight increase since 2000 (12.0).
Overall, Italians stay with companies for just under 4 years longer than their British counterparts.
For those working between 3 to 5 years for the same company, there is very little difference between Italy and the United Kingdom.
I did find data for the United States, where jobs for life ended many years before those in Italy and the United Kingdom. However, instead of averages, as used by the OECD, the US figures refer to the not directly comparable and more opaque, in my opinion, medians. For those interested, the median time US employees stayed with their employers in January 2010 was 4.4 years. In January 2008, the median was 4.1 years.
The concept of having a job for life in the United Kingdom more or less ended during Margaret Thatcher’s reign, some 30 years ago and yet the UK economy has become steadily wealthier, even if young people, as in Italy, are not finding it easy to find work in the UK at present.
The 1997 CEPR report and OECD data referred to here might give Italians some hope – and that hope is that the end of jobs for life does not necessarily mean the end of their world.