Comments on the Italian labour market reform

1. Comments on the Italianlabour market reform Marco Leonardi Milano, 23 November 2012

2. Evaluation of Fornero reform • 1. Good on reform of CIG and MINI-ASPI • 2. Potentially good on reform of art.18. • 3. Less good on apprenticeships as entry contracts • 4. Good on stopping abuse of atypical contracts • 5. Political economy of reform • Withdrawal of “CIG in deroga” huge problem tackled by reform • Reform all contracts as Germany or only new contracts as France? First time that with pension and labor market reform we touch the rights and contracts of current generation and not only of future generations

3. Dinamica degli occupati in Italia

4. Dinamica dei disoccupati in Italia

5. Decline of manufacturing employment

6. Good reform on CIG and MINI-ASPI • Crisis hit on temporary contracts first and yet unemployment benefits «reduced» did not work. Reform of MINI-ASPI much needed. • CIG was extended to all firms and now we have problem to withdraw it. • Fornero reform solved political problem of withdrawing the CIG in deroga through 1) end of mobilità 2) contributions for all firms above 15 in enti bilaterali

7. Occupati per tipologia lavorativa – Anni 2009-2012 (contributi % alla variazione tendenziale dell’occupazione) • Inizialmente calo autonomi a tempo pieno e soprattutto atipici • Successivamente dipendenti permanenti a tempo pieno • Ultimi trimestri tornano a diminuire anche autonomi a tempo pieno

8. Unemployment benefits do not workI beneficiari in Italia e in Veneto

9. Mini-Aspi is more inclusive. S. Sacchi in nelmerito.com PRE-REFORM: 2.5 millions of workers excluded from unemployment benefits. 40% of temporary contracts and 50% of agency workers excluded. POST-REFORM: «only» 850.000 workers excluded. 15% of temporary workers and 20% agency workers excluded. All apprentices included.

10. Explosion of CIG in deroga • Le imprese tra crisi e selezione • Diffusione delle crisi d’impresa: si può stimare che nel triennio 2009-2011 circa 4.000-4.500 imprese abbiano formalizzato situazioni di crisi con conseguenti sbocchi in cig straordinaria o in licenziamenti collettivi (pro memoria: sono meno di 10.000 le imprese venete con più di 20 dipendenti, circa 3.000quelle con più di 50 dipendenti). • Le sospensioni: ore autorizzate di cassa integrazione (in ml.) • Ordinaria Straordinaria Deroga TotalePosti lavoro eq. • 2007 4 5 2 11 7.000 • 2008 7 8 1 1610.000 • 2009 46 17 18 8149.000 • 2010 28 55 42 124 75.000 • 2011 20 37 30 87 53.000 • 2012 90

11. 2. Potentially good on art.18 • PRE-REFORM: two problems 1) no individual dismissals in big firms and 2) fired workers not compensated if they lose court case. • POST-REFORM: 1) more individual dismissals in big firms and 2) workers compensated. • Reform is successful if transaction occurs and courts are avoided+workers get decent compensation upon firing. • If transactions too low and no aspi after voluntary transaction then too many courts rulings. • System of German automatic and predetermined severance pay needed, generous enough (more than in Germany) to convince workers to accept and avoid courts.

12. Firms fire few workers eachVeneto Lavoro

13. Individual dismissals are important * Al netto del lavoro domestico e del lavoro intermittente.Fonte: elab. Veneto Lavoro su dati Silv (estrazione 24 aprile 2012)

14. Art 18 is important for wages and workforce compositionLeonardi and Pica 2012

15. 50% of transactions in Germany

16. “Take it or go to court”- the German way • Reform is successful if we reach 50% of transactions. Post reform apparently more transactions with lower amounts • Proposal: Monitor in the next months the average amount of transactions and then set it as a benchmark by law. In Germany is 0.5 monthly wage per year of tenure, probably too low. In Italy it could be 1 month of wage per year of tenure which corresponds to most transactions occurring at around 12 months for long-tenured workers.

17. 3. Not good on apprenticeships as entry contracts • No results on apprenticeship contracts but the problem is in the uncertainty of new laws. • Trend decline in apprenticeship (manufacturing+demography) • There is potential demand for unqualified jobs • Paper shows that regions and sectors that applied new rules had success.

18. Graf. 14 - Veneto. Posizioni di lavoro dipendente*. Variazioni rispetto al 30 giugno 2008. Saldi mensili cumulati per contratto

19. Occupati per professione – Variazione assoluta 2008-2010 (dati in migliaia) • La crisi ha diminuito l’occupazione qualificata, le professioni operaie e aumentato gli impieghi a bassa qualificata

20. It all depends on regions: Cappellari, Dell’Aringa and Leonardi 2012

21. 4. Good at stopping abuse of atypical contracts. Veneto Lavoro Veneto. Posizioni di lavoro intermittente. Variazioni rispetto al 30 giugno 2008.

22. 5. Political economy • Young and old. Pension reform has bad effects on the youngs in short term but good effects in the long term! • First time that with pension and labor market reform we touch the rights and contracts of current generation and not only of future generations

23. Substitution young-old in the short term

24. 6. Conclusions • First time that with pension and labor market reform we touch the rights and contracts of current generation and not only of future generations • Success of the reform depends on resolution of uncertainty • in art.18 (judges+preliminary transactions) • in apprenticeship contracts