1 / 79

EUROPEAN DOWNTURN: A CHALLENGE YET TO OVERCOME

EUROPEAN DOWNTURN: A CHALLENGE YET TO OVERCOME. WHAT DOES EUROPE MEAN FOR THE WORLD?. WHAT DOES EUROPE MEAN FOR THE WORLD?. WHAT DOES EUROPE MEAN FOR THE WORLD?. HARMONISED UNEMPLOYMENT RATE WORLDWIDE. 2010 Q4. HARMONISED UNEMPLOYMENT RATE IN THE “EURO AREAS”.

Lucy
Download Presentation

EUROPEAN DOWNTURN: A CHALLENGE YET TO OVERCOME

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. EUROPEAN DOWNTURN: A CHALLENGE YET TO OVERCOME

  2. WHAT DOES EUROPE MEAN FOR THE WORLD?

  3. WHAT DOES EUROPE MEAN FOR THE WORLD?

  4. WHAT DOES EUROPE MEAN FOR THE WORLD?

  5. HARMONISEDUNEMPLOYMENT RATE WORLDWIDE 2010 Q4

  6. HARMONISEDUNEMPLOYMENT RATE IN THE “EURO AREAS”

  7. EMPLOYMENT GROWTH RATES IN EURO AREA AND EU27

  8. HARMONISEDUNEMPLOYMENT RATE BY COUNTRY

  9. WHERE DO WE CURRENTLY STAND IN THE CRISIS?

  10. WHERE DO WE CURRENTLY STAND IN THE CRISIS?

  11. WHERE DO WE CURRENTLY STAND IN THE CRISIS? “Three areas at the core of efforts that will contribute to shaping the contours of the post-crisis order (…) First, institutions. The second area at the core of our efforts concerns reforms of the financial sector. The third area of work concerns fiscal consolidation”. Jean-Claude Trichet, President of the ECBat the conference “The ECB and Its Watchers” XIIFrankfurt am Main, 9 July 2010.

  12. WHERE DO WE CURRENTLY STAND IN THE CRISIS? • “By February 2010 the EU unemployment rate had risen to its highest level in a decade (9.6 %). Within the EU, Member States such as the Baltic States, Ireland, and Spain have undergone wrenching adjustments in their labor markets, in part linked to the collapse of construction booms or property bubbles”. Employment in Europe report (2010). • “The labor market is in a deplorable state. I must admit that the crisis will not pass unless the unemployment rate decreased significantly”, Dominique Strauss-Kahn (Executive Director of the International Monetary Fund)

  13. WHERE DO WE GO NOW? The picture varies across Member States: • For many it has led to a substantial increase in unemployment, and potentially in long-term unemployment, • For some others job losses have been rather restrained to date, especially compared to certain of the EU’s global competitors (Japan and United States).

  14. WHERE DO WE GO NOW? General recourses battling unemployment during the crisis • Increase internal flexibility: • Flexible working time arrangements • Shorter hours or temporary partial unemployment, • Temporary closures, • Nominal wage concessions • Employment stability in some sectors General absence of new policies to create new job opportunities.

  15. WSG 2011 European Regional Meeting Legislative measures adopted by Italian Government (and not only) to face the crisis Raffaella Betti Berutto Amsterdam, 24 March 2011

  16. “AMMORTIZZATORI SOCIALI” (I.E., SOCIAL SHOCK ABSORBER) The “ammortizzatori sociali” are a Governmental support offered to people who have been suspended or laid off because the employer is in financial crisis 17

  17. THE “SOCIAL” SHOCK ABSORBERS CIGS Solidarity Agreement Mobility Indemnity Unenployment Indemnity 18

  18. “CASSA INTEGRAZIONE GUADAGNI” Is a Government redundancy fund (partially funded by employers’ national insurance contributions and by the INPS) ensuring that some form of compensation is paid to those who have been suspended from work or who are working reduced hours. • Payments to employees may be made under one of two regimes: • the so-called ordinary regime (Cassa Integrazione Guadagni Ordinaria- Ordinary Wages Guarantee Fund (CIGO)) which applies where there is a temporary interruption or reduction in work caused by factors such as market trends or flooding; • the extraordinary regime (Cassa Integrazione Guadagni Straordinaria - Extraordinary Wages Guarantee Fund (CIGS)) which applies in the event of the employer’s insolvency, restructuring, or reorganisation, cessation. 19

  19. EXTRAORDINARY WAGES GUARANTEE FUND (CIGS) Reasons for intervention: financial crisis CIGS for financial crisis is granted if the following conditions are met : negative or backwards trend of the enterprise, shown by the presence of economic-financial indicators referred to the previous two-year period The headcount has not been increased in the previous two-year period existence of a recovery plan setting forth the actions to be taken to overcome the financial crisis submission of an headcount relocation plan if the employer envisages to have redundancies Remarks: The requirements under(a) and (b) are not required if the crisis has been caused by a “sudden and unexpected” event, to be evidenced, of the enterprise, with regard to its unpredictability, the quickness with which it caused adverse effects and the thorough autonomy from the business management policies. See circular of the Ministry of Labour Prot. No. 4/0005251 of March 30, 2009 about the possibility to ascribe the events originated by the economic crisis of 2009 to the notion of sudden and unexpected event In addition, until 2001 it is not necessary to submit the recovery plan in presence of a request for CIGS due to the occurrence of a sudden and unexpected event (Ministerial Decree of June 29, 2009). Lately, CIGS has been admitted in case of business crisis with cessation of the business of the entire enterprise or of one of its sectors, with contextual submission of an headcount relocation aimed at decreasing the recourse to the collective lay-off. 20

  20. EXTRAORDINARY WAGES GUARANTEE FUND(CIGS) Reasons for intervention Restructuring: remarkable changes in the business structures (equipment or premises) with following investments Reconversion: introduction of production of different product fields by changing the production cycles of the existing facilities Reorganization: organisational and managementrationalization aimed at facing business inefficiencies Various ministerial decrees lay the basis for the admission of the enterprises to CIGS vis-à-vis the three specific cases at issues indicated above 21

  21. EXTRAORDINARY WAGES GUARANTEE FUND(CIGS) Reasons for intervention: insolvency procedures (art. 3 of Law no. 223/91) Declaration of bankruptcy Issue of the measure of compulsory winding-up Subjection to receivership Admission to composition with creditors, consisting in the assignment of assets Debt restructuring pursuant to art. 182-bis of the BankruptcyLaw (see Note of the Ministry of Labour prot. No. 14/4314 of March 17, 2009) 22

  22. EXTRAORDINARY WAGES GUARANTEE FUND(CIGS) Sectors concerned Employers of industrial staffed with more than 15 employees in the last six-month period Employers of commercial businesses staffed with more than 200 employees (monthly survey) Remarks: Specific sectors are excluded from CIGS such as hotel, and banking industry Each year, the admission to CIGS is provided for commercial businesses with more than 50 employees, supervisory firms with over 15 employees, travel and tourist agencies with over 50 employees Beneficiary workers Blue collars White collars Quadri having at least a seniority of 90 days at the company Remarks: they may be both open-ended and fixed-term workers, both full-time and part-time Executives and apprentices are left out (yet, see infra for the“in derogation” shock absorbers for apprentices) the criteria for the identification of workers to be suspended as well as the modalities for the personnel turnover shall be the subject of a unions consultation (see infra) Personnel turnover: if the enterprise envisages, for technical-organisational reasons linked to the maintenance of the ordinary efficiency levels, not to adopt any turnover among workers performing the same tasks and working in the production unit concerned by suspension, it shall indicate the reasons for it 23

  23. EXTRAORDINARY WAGES GUARANTEE FUND (CIGS) Duration of the intervention General rule: for each production unit, the CIGS cannot exceed 36 months in a five-year period (Law no. 223/91). Specific rules linked to the different reasons for intervention: the duration of the programme for business crisis shall not exceed 12 months; an extension for the same reason may be provided for only once 2/3 of the initial term has elapsed the duration of the business restructuring, reorganization or reconversion shall not exceed 2 years, with the possibility of two extensions, each of one not exceeding 12 months, for such programms showing a particular complexity In case of insolvency proceedings: 12 months with possibility to a six-month extension 24

  24. EXTRAORDINARY WAGES GUARANTEE FUND(CIGS) Procedure for the admission to CIGS Unions consultation The employers who intend to request the admission to CIGS must promptly informs the Unions Within 3 days after the above mentioned notice, the employer or the Unions submit to the competent administrative office, the application for joint examination of the business situation The consultation procedure must be completed within 25 or 10 days (depending upon whether the employer employs over or less 50 employees) Submission of the application to the Ministry Within 25 days after the end of the pay-period outstanding in the week when the business suspension or reduction began After completion of the preliminary proceedings, the Ministry issues the measure for the admission to CIGS In case such admission is refused, it is possible to request a review, without prejudice the possibility to have recourse to the Regional Administrative Court Submission of the request to INPS Within 25 after the end of the pay-period outstanding as of the date of publication of the decree granting CIGS on the Official Gazette 25

  25. EXTRAORDINARY WAGES GUARANTEE FUND (CIGS) Amount of the CIGS indemnity 80% of the overall pay that the employee would have received for hours not worked, with the following monthly ceilings (2011 ceilings): € 906.80 gross per monthly pay up to € 1,961.80 € 1,089.89 per monthly pay exceeding € 1,961.80 In principle, the CIGS indemnity is paid in advance by the employer and reimbursed to the latter by INPS. Should the enterprise be in an exceptionally critical financial situation, INPS may effect a direct payment (nevertheless, see infra, CIGS in derogation). Contribution for CIGS Current contribution: 0.90% (of which 0.30% to be borne by workers), to be calculated on the taxable salaries of the employees entitled to CIGS Additional contribution: 3% (up to 50 employees) and 4.50% (over 50 employees), to be calculated on the amount of the wage integration paid to workers; it shall be doubled starting from the first day of the 25th month after the beginning of CIGS; no additional contribution shall be due for CIGS in case of insolvency proceedings 26

  26. DEFENSIVE SOLIDARITY AGREEMENTS (CDS) “Contratto di solidarietà” - Special features The solidarity agreement is an agreement between employer and unions concerning the reduction of working hours in order to avoid headcoutn reductions The loss of salaries deriving from the reduced working hours is partially reimbursed by INPS. Term: 12/24 months which may be extended for further 24 months within the maximum limit of 36 months whithin the five years period. 27

  27. DEFENSIVE SOLIDARITY AGREEMENTS (CDS) Sectors concerned The same employeres falling within the scope of CIGS Remarks: The employers admitted to insolvency proceedings are left out Beneficiary workers Blue collars White collars Quadri Remarks: Fixed-term workers are left out Executives and apprentices are left out 28

  28. DEFENSIVE SOLIDARITY AGREEMENTS (CDS) Wage integration for workers Integration of 60% of the wage lost vis-à-vis the working time reduction The monthly ceiling provided for CIGS is not applicable • Benefits for enterprises • The additional contribution established in case of CIGS is not provided for • Social security contributions reductionfor the hours worked equal to 25% (if such reduction ranges between 20 and 30%) and to 35% (if such reduction exceeds 30%); the reduction is higher in the areas of the South of Italy 29

  29. DEFENSIVE SOLIDARITY AGREEMENTS (CDS) DSA for enterprises not subject to CIGS (2nd-type solidarity agreements) Enterprises which do not fall within the scope of CIGS may enter into solidarity agreements (a) in order to avoid or reduce the excess personnel during the mobility procedures or else (b) in order to avoid individual dismissals for objective justified reason For the reduction of working hours, a contribution equal to the half of the wage for the total working hours not worked, equally divided between the employer and the workers concerned by the reduction, is paid for a period not exceeding 24 months, that may be extended for maximum further 12 months 30

  30. MOBILITY INDEMNITY Main features The mobility indemnity (i.e., the indemnity paid by INPS to the dismissed employees) applies in the following cases: An enterprise admitted to CIGS needs to start, during the programme or upon completion of the same, the dismissal of one or more people An employer employing more than 15 employees intends to perform – after a reduction or change of business or work, or else after cessation of its business – at least 5 dismissals, in a period of 120 days, in each production unit or in more production units within the territory of the same province (collective dismissal procedure) In both cases, the dismissal is subject to the completion of the following process as per Law no. 223/91: Notice to the trade unions Unions’ consultation which may take up to 75 days dismissal Regulatory source: Law no. 223/91 31

  31. MOBILITY INDEMNITY Requirements to benefit from the Mobility Indemnity Workers dismissed and enrolled in the regional unemployment records (so-called mobility lists) who: have a seniority of 12 months, of which at least 6 worked submit the relating application enjoy the Mobility Indemnity The Mobility Indemnity is applicable for personnel of enterprises falling within the scope of CIGS The beneficiary workers are blue collars, white collars and quadri having an open-ended labour contract 32

  32. MOBILITY INDEMNITY Duration of the Mobility Indemnity INPS Circular no. 95/2008: for the purposes of the acknowledgement of the 12-month increase, reference should be made exclusively to the place where the enterprise permanently organizes the activity of the worker concerned. 33

  33. MOBILITY INDEMNITY Amount of the Mobility Indemnity The Mobility Indemnityis determined – detailed as follows -according to the wage integration that the worker has received (mobility for CIGS) or that he/she would receive (mobility for collective dismissal) in the period immediately preceding the termination of the labour relationship: 100% in the first 12 months 80% from the 13th month on with the following ceilings (2011 ceilings) € 906.80 gross, for salaries up to € 1,961.80 € 1,098 gross, for salaries exceeding € 1,961.80 34

  34. MOBILITY INDEMNITY Financing of the Mobility Indemnity – Contribution to be borne by employers Monthly ordinary contribution (0.30%) borne by the employer during the employment Payment, for each worker to be dismissed, of: 9 times the monthly mobility indemnity, in case of collective dismissal process without an agreement with the unions; 6 times the monthly mobility indemnity, in case of CIGS 3 times, if the monthly mobility indemnity in case of collective dismissal which ends up with an agreement with the Unions Cases of exemption from the above payment: total exemption in case the insolvency proceedings triggering heacount reductions the employer who dismiss the worker and offers an open-term job having certain characteristics, benefits from a reduction of the mobility cost 35

  35. THE SO-CALLED “MOBILITY FOR SMALL EMPLOYERS” The workers dismissed for objective justified reason by enterprises employing up to 15 employees, for whom the mobility procedure cannot be started, may, upon request, register in the regional unemployment records (mobility lists). Such registration does not entitle workers to the mobility indemnity. However, employers who hire workers enrolled with enjoy social security benefits. 36

  36. SOCIAL SHOCK ABSORBERS “IN DEROGATION” 37

  37. SOME GENERAL PRINCIPLES In compliance with art. 36, paragraph 2, of Law no. 203/2008 (the Budget Law 2009), as amended by art. 7-ter, paragraph 4, of Legislative Decree no. 5/2009, the CIG, mobility and unemployment indemnity may be granted uninterruptedly, for periods notexceeding12 months, in derogation of the regulations in force. The financial resources allocated for shock absorbers “in derogation” of the regulations in force may be used for all kinds of subordinate employment, including the apprenticeshipand temporary workers supplied by external employment agencies (art. 19, paragraph 8, of Legislative Decree no.185/2008). The shock absorbers “in derogation” therefore potentially guarantee a thorough coverage for all kinds of subordinate workers of the private sector. On February 12, 2009 the Government, the Regions and the Autonomous Provinces executed an Agreement for the management of the shock absorbers in derogation in the two-year period 2009-2010 which has been extended to 2011 and specific agreements have been entered into between the Ministry of Labour and any single Regions. The Regions have a basic role in the complex system of the shock absorbers in derogation. Reference must be made to the specific regional agreements in order to identify the type and regulation of the shock absorbers in derogation to which an enterprise may be entitled. 38

  38. THE MAIN ANTI-CRISIS MEASURES Unemployment indemnity for suspension of work (art. 19, paragraph 1, letters a) and b), of Legislative Decree no. 185/2008) Unemployment indemnity for apprentices suspended or dismissed (art. 19, paragraph 1, letter c), of Legislative Decree no. 185/2008) CIG (ordinary and extraordinary) in derogation Mobility in derogation Una tantum for consultants engaged under a project collaboration agreement (art. 19, paragraph 2, of Legislative Decree no. 185/2008) 39

  39. CIG AND MOBILITY IN DEROGATION Workers may benefit from CIG and mobility in derogation on condition that they are provided with the personal requirements usually requestedin order to enjoy the CIG indemnity or the mobility indemnity, i.e. respectively (i) 90 working days of length of service as far as CIG is concerned and (ii) 12 months of length of service as far as the mobility indemnity is concerned INPS is authorized to pay in advance CIG and mobility in derogation. Contribution due in case of CIGS in derogation: the employers are not bound to pay any ordinary contribution (0.90% of which 0.30% to be borne by workers) but only the additional contribution (3% or 4.50% depending on whether the employer has up to or more than 50 employees), only for the period in which they benefit from the CIGS in derogation. No additional contribution shall be due if the employer is undergoing an insolvency proceedings. INPS explained that the periods of CIG in derogation do not fall within the calculation of the maximum ceiling of 36 months in a five-year period. 40

  40. UNA TANTUM PAYMENT FOR PROJECT COLLABORATORS (ART. 19, COMMA 2, D.L. 185/2008) Experimental measure effective for 2009 / 2011 period Objective requirements: Termination of the consultancy agreement Subjective requirements Enrolment with INPS Working for only one principal Preceding year: income exceeding € 5,000 (but less than € 14,240) and a social security seniority of at least 3 months In the relevant year: social security seniority of at least 3 months Declaration of availability of undergoing a training and professional requalification course Una tantum payment equal to 10% of the income earned in the preceding year 41

  41. UNEMPLOYMENT, “JOB GAP” AND EMPLOYMENT EXPECTATION Unemployment rate According to Confindustria economists, unemployment in Italy in 2011 will touch its peak and begin to decline until 2012 It is estimated that the unemployment rate will reach 9% in 2011 “Job gap” To return the pre-crisis employment rate, according to Confindustria, should be designated in more than 440,000 employees in 2011In Europe so far, the "job gap" was filled in Germany due to increased employment in the last three years Employment level rate After a decrease in 2010 (-1.7%, -2.6% in 2009), the employment level rate should remain mainly stable in 2010 (+0.1%)The rise in the employment level rate should occur according to economics forecast in 2012 only (+0.9%) 42

  42. SOCIAL SHOCK ABSORBERS IN DEROGATION • Year 2011 • In 2011 the recourse to anti-crisis measure is expected to be still very high due to the slow due to the slow economic recovery and the refinancing of social shock absorbers by the Italian Government • 315.000 employees will be involved • Year 2012 • 166.000 employees are expected to be interested in the use of social shock absorbers in derogation 43

  43. OTHER INSTRUMENTS TO FACE THE CRISIS AT COMPANY LEVEL • early retirement • flexible working time • assignment of workers to different working duties (even lower) • “concession barganing” • Collective barganing agreement at company level departing from the national collective barganing agreements • Derogation in peius: are in compliance with Italian law 44

  44. FANCIFUL INSTRUMENT TO FACE THE CRISIS:THE MIRAFIORI PLANT’S AGREEMENT(FIAT CASE) • Background • In Italy a large number of principal terms and conditions of employment are governed by collective agreements applying to almost every employee. • Collective agreements are made between • trade unions (organizzazioni sindacali) and • employers’ organizations (associazioni di categoria) • (usually grouped on an industry-wide basis) • Collective agreements are generally applicable only if the employee and employer are members of the contracting trade union and employers’ organization or the parties have otherwise agreed to be bound by its terms. 45

  45. FANCIFUL INSTRUMENT TO FACE THE CRISIS:THE MIRAFIORI PLANT’S AGREEMENT(FIAT CASE) • Background • FIAT as member of the employers’ organization (associazione di categoria) so-called CONFINDUSTRIA applies the • Collective bargaining agreement for employees of metal-mechanic sector (“Metal-mechanic CBA”) 46

  46. FANCIFUL INSTRUMENT TO FACE THE CRISIS:THE MIRAFIORI PLANT’S AGREEMENT(FIAT CASE) • FIAT’S WILL • Derogation in peius of the Metal-Mechanic CBA with regard to • Work shifts • Overtime • Absences due to sickness • Daily breaks 47

  47. THE MIRAFIORI PLANT’S AGREEMENT(FIAT CASE) • Background • In particular, • SICKNESS • Under Italian law, during the sickness employees are entitled • to retain their jobs for a certain period of time (periodo di comporto) (generally 180 days – 12 months executives pursuant to the national collective bargaining agreements); • to receive statutory sick pay (indennità di malattia) which is paid by INPS after 3-day of sickness, INPS pays 50% of the normal salary from 4th to 20th day, 66% over 20th day). • Generally, the national collective bargaining agreements provide for that the employer • pays the statutory sick pay during the first 3 days of absence (100%) (periodo di carenza) • contributes up to 100% to the payment of the statutory sick pay made by INPS. 48

  48. THE MIRAFIORI PLANT’S AGREEMENT(FIAT CASE) • AVERAGE SICKNESS ABSENCES • FIAT: 8% • In order to reduce such average FIAT introduced a system whereby, if the average sickness absences does not decrease to a certain treshold, those who have been absent (more than twice within 12 months) for less than 5 days immediately preceding or after holidays, will not be entitled to payment of day first and day second over the 3-day period (so-called periodo di carenza) to be borne by the employer pursuant to the applicable national collective barganing agreement. 49

  49. FANCIFUL INSTRUMENT TO FACE THE CRISIS:THE MIRAFIORI PLANT’S AGREEMENT(FIAT CASE) • CGIL – one of the main Trade Unions, together with CISL and UIL – disagreed with FIAT’s proposal to derogate in peius the Metal- Mechanic CBA • FIAT: • established a NEWCO • made a transfer of undertaking from FIAT to NEWCO • NEWCO: • is not a member of CONFINDUSTRIA therefore the Metal-Mechanic CBA is not applicable • entered into with CISL and UIL only a collective bargaining agreement at company’s level replacing the Metal-Mechanic CBA and implementing new rules aimed at granting competitiveness (work shifts, Overtime, absences due to sickness, daily breaks) 50

More Related