Italy is in turmoil at the moment. At the root of much consternation are reforms to Italy’s labor legislation and in particular something known as Article 18.
Article 18 is part of Italy’s “workers’ statute”, the body of Italian law which governs employee rights. This article states that Italian employers must reinstate unfairly dismissed workers. Italy’s courts decide whether or not sackings are justified.
Even in instances in which misbehaving workers are sacked in Italy, they tend to be reinstated by sympathetic judges much more often than not. At times, this can cause problems for employers.
Italy’s business owners would like to be able to rid themselves of workers who don’t and some believe Article 18 goes too far in terms of protecting the rights of employees. Italy’s workers, on the other hand, think they need protecting from unscrupulous employers.
In its present state, Article 18 effectively dissuades companies in Italy from sacking anyone ever, although it only applies to companies with more than 15 employees.
One consequence of Article 18 protection is that Italian companies have become ever more reluctant to take on new staff. Article 18, combined with issues such as bureaucracy, corruption, and a slow court system, also put off all but the very biggest foreign companies from setting up operations in Italy.
Another problem reputedly caused by the effect of Article 18 is that companies cannot easily downside during economic downturns. As a consequence of this, companies in Italy which could have weathered economic storms by reducing numbers cannot do so. In some cases, this means business shut down forever. Without the restricting effects of Article 18, businesses could lay off some workers, weather the economic storm more easily and, once the waters calm, expand and, potentially, take back on the laid off workers. In other words, without Article 18, tough economic times would not kill off as many business in Italy permanently. Or that’s the theory.
Note: Changes to Article 18 did not occur in 2012 but the subject is once more being discussed in 2014. Italy’s economy in 2014 is in an even worse state than it was when this article was written in 2012. What is written here continues to be relevant.
Precarious Italy
Even legislation introduced in Italy to promote short term work contracts has not led to long term employment, even if this was supposed to be the objective. In fact, quite the opposite happened – and the Italian language has been graced by a specific term to refer to short term contract employees – “precario“.
Employees with short term, effectively temporary, work contracts rarely find themselves with permanent jobs upon the expiry of the “precarious” short term contracts, even if the intention of their introduction appeared to have been to enable employers to give employees a kind of ‘test drive’ to evaluate their performance before taking them on permanently. Temporary work contract pay levels are not high, either. What happened after the introduction of the short term contract system in Italy is that employers used the precarious contracts as a way to cut labour costs.
Demand has exceeded supply in Italy’s current labour market for more than a decade, so when a temporary contract comes to an end the employee concerned is almost invariably sent home. A fresh new precarious employee may well be taken on as a replacement. Rinse and repeat, every two years or so. This is good for certain companies, but not so good for workers, especially those who’d like the stability a long term work contract offers.
Pay levels for these brief contracts are often derisory, but precarious employees are expected to work as long and as hard, if not more so, than their permanent colleagues. This many do, in the vain hope of being taken on permanently when their contracts expire. Rarely does this happen, despite assurances and promises from certain employers. Such assurances can turn out to be false.
Many of the employees affected by the precarious contracts are young. Often they are graduates. Youth employment in Italy stands at over 30% – (in 2014, youth employment is now over 40%).
Socioeconomic Consequences for Italy
The resulting precariarity of the short term contract employees has had and is having socioeconomic consequences for Italy. Individuals with short term contracts simply cannot find long term employment and begin some semblance of a career.
Not having a permanent job means that mortgages and other loans are out of the question, as is starting a family. Short term poorly paid jobs have depressed consumer spending and Italy’s housing market. Around 700,000 Italians are ‘precarious‘ workers, although that figure goes well over one million, if Italy’s VAT registered employees are tacked onto the total.
Another negative effect of the short term contracts is that Italy’s bright young things are becoming deluded. Those who can are leaving Italy to work in other countries – many of which, ironically, do not possess overly protective Article 18 type laws. Oddly, the absence of an Article 18 equivalent does not appear to worry those Italians who leave Italy for the UK and elsewhere.
Time For Change
Something needed to be done to make Italy’s employment market more flexible, but at the same time encourage companies to take on more full time employees – hence the attempt by the Monti government to either alter or eliminate Article 18.
The Berlusconi government did attempt to reform Article 18, but caved in to union pressure way back in 2002. Incidentally, right up until Berlusconi was ousted in late 2011, his government was still talking about tackling Article 18. Berlusconi’s government did an awful lot of talking but very little tackling.
Mario Monti, despite facing a similar level of pressure from Italy’s unions – in particular the argumentative and influential CGIL union, does not look as if he will cave in. The stagnation in Italy’s economy, brought about in part by the effects of Article 18, has caused even Italy’s unions to appreciate that action is necessary.
Doing what needs to be done is not proving easy though, and proposed modifications to Article 18 have provoked threats of a general strike.
Not even all of Italy’s employers are content as they fear reforms to Italy’s labor laws may not go far enough. If this turns out to be the case, Italian companies will not invest in staff and foreign companies will not invest in Italy. Not that they do anyway.
What is everyone worried about?
The Workers’ Fears
If Article 18 disappears, Italy’s workers, those who do have jobs, fear that their employers will sack them on a whim. Alternatively, employers will expect employees to work all hours the Almighty sends and if they refuse, they will be fired.
Mobbing
Another phenomenon in Italy which may lead to impromptu sackings, if Article 18 ceases to exist or is watered down, concerns something known using the English term “mobbing“. This has nothing to do with angry birds protecting their progeny. Instead it is the Italian term for instances of sexual harassment and constructive dismissal.
Stories of mobbing are legion in Italy. A simple search on Google.it for “mobbing sul lavoro” – mobbing at work – revealed 90,000 results for 2011 alone.
Mobbing may also be sparked when an employee does not see eye to eye with his or her superior, if, for example, the boss orders an employee to do something illegal.
When “illegal” sexual advances are rejected, the unfortunate, often female, employee is sacked or faces working conditions which cause them to leave. In non-sexual harassment cases of mobbing, employees are hounded until they go.
Italy’s employees worry that if Article 18 goes, they will have no protection from bosses who are unscrupulous scum bags. The general perception of bosses in Italy is that they are money grabbing devils.
Not All Italy’s Bosses are Devils
The economic downturn has lead to a string of suicides by entrepreneurs in Italy, often small business owners saddled with ever increasing debts.
In one case I’ve heard, a business in northern Italy is going bust because its owner did not make enough of employees redundant in time to save the business. The business owner refused to lay off staff – not exactly the act of a heartless scumbag and not an isolated case either.
After living in Italy for well over a decade, I have also heard of a number of cases where grateful employers reward hard working employees.While some of Italy’s bosses and business owners may be dastardly devils, by no means all are heartless princes and princesses of darkness.
Employee fears remain though.
The Employers’ Worries
Not all of Italy’s employers are too happy with the elimination of Article 18 because the replacement or re-formulated version, if it ever becomes law, will still not permit them to dismiss worthless under-performing employees easily. Under current proposals, even if employees can be given their marching orders, employers will still have to compensate them with between 15 & 27 months salary – and it will be a judge who decides how much.
As mentioned before, Italy’s judges tend to find in favour of employees, so dismissing employees could become very expensive. This will deter bosses from sacking poorly performing workers – as is already the case. And, of course, employers will be reluctant to employ anyone in the first place.
Another concern of Italy’s employers is the sheer cost of staff in Italy – employer contributions, plus generous and obligatory severance pay make employees an expensive commodity in Italy.
If the costs of employment do not come down, no amount of reforms are likely to encourage businesses in Italy to employ more people. Similarly, foreign companies will also feel that Italian employees are too expensive and they will look to other countries where costs are lower.
Really, Italy could do with offering foreign businesses incentives to set up shop in Italy, but this is not something which is being talked about.
An Uncertain Reform
Whether the reform will make a real difference is very hard to tell, even if it does make it through Italy’s parliament, and there are signs it may not. Pushing through the reform to Article 18 may even bring down the Monti government.
Regardless of the current reforms, if the cost of employing people in Italy does not fall, the number of employees will not necessarily increase.
A Dangerous Reform
Past attempts at employment law reform in Italy resulted in deaths, such as that of government adviser Marco Biagi. While Negotiating Italy’s job law reforms in 2012, Labor Minister Elsa Fornero apparently feared for her life and was escorted wherever she went by a small army of bodyguards and police.
A Question of Mutual Distrust
In a nutshell, in Italy employees do not trust employers who in turn do not trust employees. Despite the reform, it will still be devilishly difficult to remove Italy’s dodgy employees. Moreover, it will remain virtually impossible for companies to downsize during periods of economic gloom. Fast forward to 2014 and businesses are closing down right, left and centre. Had Article 18 been amended at the time this article was written, things may have been a little different.
The whole Article 18 thing is a classic example of the sense of mutual distrust which pervades the Italian character, and which has led to an “it’s better for me to rip someone else off, than be ripped off first” mentality.
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Image by Alfred T. Palmer
Alberto says
Alex,
you still miss some important points about Italy. You have a legal right to know who the whistlebower is and you can make a criminal charge on them if their “allegations” are not subsequently confirmed by a public authority inspection. Believe it or not this is the way it works from a legal point of view.
Alex Roe says
Thanks, Alberto – which law gives one the legal right to know who the whistle blower is. This is not necessarily wrong, after all, unfounded allegations should be punished as they could be very damaging for an organisation.
The public authority inspection is the problem here – as many seem to have “friends” who will ensure inspections do not reveal problems – this will definitely put people off being whistle blowers.
Best,
Alex
Andy says
Hi Alex,
Well, I wrote a bit about it too – not in as much depth.
But I do feel that the hype that is being placed on changes to Article 18 isn’t really correct. There are a lot of things ‘wrong’ with employment in Italy – reform of Article 18, imho, won’t make a blind bit of difference to employment but might aid unemployment and drive wages even lower than they are.
As you know, employment here is often about ‘who you know’ and not ‘what you know’. That’s the thing that needs to be addressed. Unfortunately, no law can change this part of Italian culture. This is something that will change over time, if at all. Therefore, if you don’t know someone to introduce you, your chances of gaining full-time, permanent employment will remain the same as it is now. But the chances of you becoming unemployed if there’s someone cheaper out there AND you’re not flavour of the month or don’t have the right connections will increase.
Guido Tresoldi (@GuidoTresoldi) says
Dear Alex, I’ve become a fan of your site. Mainly because as an Italian born person who migrated just after my childhood in Australia, my interest in Italy has remained. And also my interest in how what I call the Anglosphere views Italy, and your opinions are really interesting. Can I say that many English speaking people have the right to be critical at Italy, however looking through (with an ‘anglo-saxon-celtic’ eye if I can say that) may sometime miss (in my humble opinion) some aspects.
I’ve worked in Australia all my life where labour may be more flexible (not as much as the USA, as we have arbitration here) but I have been made redundant twice so I know how it is to be sacked on ‘economic’ grounds. The fact is that in Australia (not too sure in other English speaking countries) there are checks and balances when someone is sacked. And these may not be the same in Italy.
You say that under performing employees cannot be sacked in Italy with Articolo18. But on the other hand being dismissed due to economic or organisational grounds means, in Italy, being dismissed at whim, because for an employer can put up a good case somehow about organisational reasons.
So a young woman may think twice to have a child, or have another one too close to the other. Some employee may not alert the authorities to breaches of health and safety provisions so not to be a ‘troublemaker’. The same if someone sees a colleague being treated unjustly, not to refuse extra sessions or times that are not that convenient. Yes it may be said that this is a very negative view of employers. But remember that unlike other industrialised countries, Italy has lots of businesses which are small, where the law safeguarding employees is harder to apply. The fact that I don’t know (but you probably do) is that in Australia is illegal to sack someone because she falls pregnant, and that if that was the case the sacked employee doesn’t have to go through the courts but through a special Labour tribunal which is quick and efficient. From what I know about the Italian legal system it would take an age before any justice is done on a case such as that. In Australia there is a Work Safety department where people can report any Health and Safety breach with strict confidentiality. Is there something like that in Italy? That is why workers cling to Articolo18, because it seems to me that all the other checks and balances are not there.
So I do agree with you and also I don’t. I agree that labour in Italy needs to be more flexible to provide growth. I agree with workers that see Articlo 18 as one of the few safeguards they have. The answer is to have a system which is flexible both for employers that can be confident to keep their best staff, but also flexible to provide adequate safeguards for employees without a rigid law like Articlo 18.
Alex Roe says
Hi Guido,
Thanks for becoming a fan!
It is very interesting to hear from an ex-Italian, so to speak, who is able to compare Italy to Australia. From what you say, Australia has a similar system to the UK – informal court or tribunal as they are often called in the UK (very confusing for Italians because ‘tribunale’ in Italian is a normal court, not a less formal affair).
You make a very good point regarding the small business aspect and this does make like tough on the enforcement front.
What Italy really lacks is more checks and balances – they just do not seem to exist here, or rather, they probably exist, but are not employed.
Regarding women in Italy – employers often steer clear of women of child bearing age because they may become pregnant. I believe it is illegal to sack pregnant women in Italy, but often other excuses are found to ‘get rid’ of pregnant women – this is something the Monti government is taking a look at. And the current situation does make women think twice about having a family – which, at the end of the day, is one big reason to have a job. Italy needs more children to fund its generous pensions.
As for an Italian Work Safety department – I fear that even if it were confidential, the name of the whistle-blower would be discovered – such is Italy, I am afraid.
Italy’s employers need safeguards as do Italy’s employees – it’s a shame the unions do not do something constructive on this front, after all, it is in everyone’s interests that people work, is it not?
Thank you for commenting.
Best,
Alex
Angela says
Hi Alex
Thanks for another excellent article. I’m new to Italy Chronicles but now read it every day … keep up the great work!
Best regards
Angela
Alex Roe says
Prego, Angela – there’s very little detailed news on Italy in English – I try to fill that gap for people who want to know more, but are not up to speed with Italian, or will not be here long enough to want to learn the language, maybe.
What brings you to Italy?
Best,
Alex
Angela says
Hi Alex
Exactly! I wish I’d found your website earlier, I still struggle to get past the headlines with Italian media. My job brought us to Arezzo and although we’ve only been here 14 months, we consider this small town to be very much our home.
Grazie mille
Angela