Brussels – 21 February 2013

1. Brussels – 21 February 2013 Lorenzo Bordogna – Stefano Neri University of Milan Social dialogue and the public services in the aftermath of economic crisis: strengthening partnership in an era of austerity. The Italian case

2. Outline 1. Public sector “social dialogue” 2. Trade Unions 3. Austerity measures in 2008-2012: general overview 4. Austerity measures in Local government 5. Case studies

3. Social Dialogue and Collective Bargaining Social dialogue and collective bargaining are widely practiced in the Italian public sector, partly since 1983 and definitely since 1993. Until 1983: Sovereign employermodel, unilateralism Since 1993: Model employer approach, the employment relationship of more than 80% of the about 3,4 million public employees has been privatised and contractualised 1998-2007: collective bargaining even more enhanced (autonomy, scope), especially at single employer decentralized level (with unexpected wage drift) 2009: partial retrenchment of collective bargaining and union prerogatives (Brunetta reform), but privatisation and contractualisation not cancelled

4. Social Dialogue and Collective Bargaining Two-tier bargaining system 1) Nation-wide sectoral level (public schools; central government; regions and local government; health; etc.), every 3 years, setting general wage increases, linked to inflation rates 2) Single employer level (each municipality, region, university, hospital, etc.), where some wage increases are allowed, within limits and rules defined at the higher level (often transcended in the 2000-07 period)

5. Bargaining agents National sectoral level ARAN: Public Agency compulsorily representing all Italian public administrations in national level negotiations (assisted by the representatives of public administrations, like the National Association of Italian Municipalities in the case of the national collective agreement for Regions and local government) Representative Trade Unions

6. Bargaining agents Single employer, decentralised level Employer Workplace employee representation bodies(legally based, elected since 1998 every 3 years in each administrative unit with more than 15 employees) + local union representatives

7. Trade Unions – main features 1. High trade union density (50-60%, 15 to 20 percentage points higher than in the private sector) 2. High organizational fragmentation with inter-union rivalries (union belonging to the 3 largest trade union confederations CGIL, CISL and UIL + a high number of ‘independent’ craft and occupational unions) 3. Legal rules defining ‘representative’ trade unions at national level, entitled to participate to the negotiation tables and sign with ARAN collective agreements with general validity. Rules based on precise quantitative criteria (percentage on total membership and percentage of support in the elections of the workplace employee representation bodies) 4. Legally based workplace employee representation bodies elected every 3 years in all administrative units with more than 15 employees. Usually very high turnover rate (75-80%), slightly declining in the last election of March 2012

8. Reform of public sector employment relations(2009, under center-right government) Partial re-juridification of the employment relationship Stronger managerial prerogatives in personnel and HRM matters vis-à-vis trade unions Partial retrenchement of the role of collective bargaining, embedded in a stricter web of rules and constraints Performance management and performance assessment systems The implementation of the reform largely frozen since 2010 because of the crisis

9. Austerity measures both internal and external drivers All unilaterally decided Staff turn-over freeze and cut of resources for fixed-term, temporary contracts Suspension of collective bargaining machinery for 2010-2014 Wage and salary freeze (2010-14) for all employees (including those still under public law regime) Cuts in other personnel expenditures (training) Heavy cuts in government transfers to local authorities Reform of the pension system, quite tough (reasons: savings + demographic trends)

10. Employment levels and total public sector wage bill, 2007-2011

11. Austerity measures for local government Domestic Stability Pact (DSP), introduced in 1998 (financial targets for Regions and local government institutions aimed at public debt containment) Legal constraints are set to pursue the financial targets: 1) statutory duty to progressively reduce personnel expenditures 2) pay freeze until the end of 2014 3) total ban on new hirings, if personnel expenditure/current expenditure > 50% 4) Restrictions to staff turn-over for both permanent and temporary employees (staff replacement ratios) 11

12. The case studies Main local government institutions: 8,092 municipalities (70% with less than 5,000 inhabitants, and 93% less than 20,000) Two medium-large size were chosen: 1) Modena (Emilia-Romagna, Centre-North of Italy) Over 180,000 inhabitants 2039 employees at the end of 2011 2) Sesto San Giovanni (Lombardy, North of Italy) Over 80,000 inhabitants About 800 employees at the end of 2011 Traditionally cooperative relationships with unions (main union: CGIL) in both the municipalities 12

13. Main critical issues Reduction in the number of staff (in Modena: -5,5% from 2010 to 2012; -7,2% from 2008 to 2012) Main cause: due to legal constraints on personnel expenditures and on staff turn-over Municipalities are responding to the staff shortage through externalisation: a) transferring services to newly-established semi-autonomous organisations (special companies, foundations), subject to weaker DSP constraints b) contracting out the services to third sector organisations 13

14. Main critical issues 2) Increasing difficulties in motivating personnel because of very limited incentives: pay freeze freeze or denial of economic advancements limited funds for performance-related pay and for implementing performance evaluation systems (case of Sesto San Giovanni) cuts in training expenditures 3) Risk of lowering performance level and the quality of services provided 14

15. Social dialogue and austerity measures • Unions insist on internal re-organisation and personnel mobility as tools to contain staff expenditures without cutting the number of employees But so far re-organisation processes have been limited, difficult to implement 2) Strong union opposition to externalisation because of the alleged negative effects on terms and conditions of employment This effect is due to the shift from the (public sector) national collective agreement for local government to private sector collective agreements, with worse pay and working conditions 15

16. Social dialogue and austerity measures • Increasing unilateralism legitimated by • the 2009 public sector employment relations reform + • the need to quickly implement the austerity measures 2) Shift from highly cooperative relationships to conflictual ones 3) Local variations • Modena: a «dialogue of the deaf» • Sesto San Giovanni: still cooperation but the increasing union fragmentation due to inter-union rivalries emphasizes conflict between the parties 16 16

17. ConclusionsRestriction, Resilience, Reconfiguration • At national level, certaiIny a case of restriction • the Brunetta legislation reformed the institutional framework of public sector employment relations reducing union prerogatives and the scope and autonomy of collective bargaining, especially at decentralized level • austerity measures suspended the entire bargaining machinery for the 2010-2014 period 2) More variation at local level, depending also on the strategy of local actors (ruling coalitions / trade unions) 17 17