Employment policies for displaced workers in Italy and in Lombardia

1. Monitoring Labour Market Reforms II 3 Workshop Benchmarking employment services for displaced workers Employment policies for displaced workers in Italy and in Lombardia Manuela Samek Lodovici IRS - Istituto per la Ricerca Sociale Warsaw, Jan. 18 2008

2. Introduction • Risk factors for employment are no longer exclusively concentrated in cyclical negative phases, but also in expansive cycles, because of globalisation issues: • increased capital mobility, • competition with low wage countries • freedom of multinationals to invest everywhere on the international scene • fluctuations in the goods demand • technological change • flexible forms of employment • Companies response strategies (Outsourcing; Off-shoring; Internal Restructuring; Bankruptcy / Closure; Mergers and Acquisitions) may also have a negative impact on the volume of the labour force employed.

3. Main causes of loss of employment in Europe Source: - European Commission - (Report 2004) – Estimations on European Restructuring Monitor (ERM) Data

4. Characteristics of displaced workers • Individual characteristics such as age, sex, education and occupation configure a set of different risks/ opportunities in the labour market which should be considered in the design of measures aimed at displaced workers • Disadvantaged groups (older workers, women, individuals with low education, immigrants) are at higher risk of displacement and long term unemployment. They need targeted measures, different from those aimed at stronger groups of workers.

5. Policy responses • As a consequence, policies adopted in favour of the displaced workers have been changing, becoming: • faster in activation (because crises are less predictable) • more flexible and targeted (the needs of businesses and workers are less standardised) • more institutionalised (the need for action is constant).

6. Policies to support displaced workers Dimensions of the interventions aimed at displaced workers and approaches

7. Level: Individual or Collective dismissals • Policies mix are different according to the dimension of the layoffs: individual or collective. • With collective layoffs usually social visibility is higher and this implies: more generous income support and diversified active policies, a higher number of actors involved (usually including trade unions), a higher amount of resources available. • Individual lay offs usually are only supported by income support (ordinary unemployment benefits). • Here we consider policies aimed at collective lay offs

8. Who: the actors involved  Participatory/Unilateral Approach • "Participatory" approach: • Involvement of all the actors (trade unions and workers, employers, public and private outplacement agencies) to identify solutions and to manage redundancies going beyond what is strictly required by the law. • It can also be referred to cases of cooperation and partnership between public and private (interim agencies, service companies, etc.). • “Unilateral” approach • Interventions are a "prerogative" of a single “institution” (usually the local authority and the body responsible for the income support measures, the trade union representing the workers’ interests, etc.. ), therefore it doesn’t allow the development of a shared strategy.

9. When: Timing of the interventions  Anticipatory / Reactive Approach • "Anticipatory” approach: • When the causes that lead to a crisis are in some way predictable, the solutions have the advantage of being able to play "in advance”, retraining the workers risking to be displaced so that they can be more attractive for other companies. • This approach also helps preventing the obsolescence of the workers’ skill, as well as psychological discouragement which reduces the activation of the workers (and consequently the chance of success of policies). • “Reactive” approach: • It intervenes when processes are already underway, in the attempt to contrast their negative effects.

10. How: Tools of the interventions  Integrated / Homogeneous Approach • “Integrated” approach: • Combination of multiple measures: from income support (passive policies), to active measures such as information, guidance, training and incentives for recruitment, psychological counselling activities. • “Homogeneous” approach: • intervention that uses only one measure: prevailing income support or vocational training, etc.

11. To whom: Beneficiaries of the interventions  Generalised / Targeted Approach • The outcomes of a process of employment reintegration vary significantly depending on whether it has been addressed to all the displaced workers (generalised approach) or only to socially and economically weaker displaced workers (targeted approach). • This distinction allows to monitor: • Dead loss effects: when results could have been achieved even without intervention, through market mechanisms; • Replacement effects: when companies would have assumed, but not the persons involved in employment policies; • Displacement effect: when the hiring would have occurred, but in other companies.

12. The Italian case: Policies to support displaced workers/1 • Both in Italy and in Lombardia, in recent years displacement risks have been growing due to increasing international competition, technological innovation and to the increase in temporary and non standard forms of employment. • In the Italian welfare system, mainly based on the insurance principle (therefore not universalistic), the generosity of the benefits depends on the duration and the amount of the contributions. • Hence, the type of contract and the actual length of employment, which is closely related to the nature of the contract (permanent or fixed term), are the first discrimination variables. • There are categories of workers (such as collaborators and first job seekers) completely uncovered by unemployment benefits in case of unemployment, and others (interim workers) for whom the "most generous" institutions are not applied.

13. The Italian case:policies to support displaced workers/2 • The Italian model of social protection against unemployment is however rather advanced for displaced workers with long employment histories. • It is possible to use “temporary layoffs” with generous income support for workers in case of temporary crisis or restructuring (Cassa Integrazione Guadagni) and/or mobility benefits in case of collective dismissals which are much more generous that ordinary unemployment benefits. • On the other hand, active labour market policies are not very developed, especially in Southern Italy

14. The Italian case: Policies to support displaced workers/1

15. The Italian case: Policies to support displaced workers/2

16. Displaced workers in Italy • In Italy many individuals find a job through relational networks which are more difficult to activate for the discouraged (long-term unemployed) or people with limited relational networks (immigrants, but also less educated women or women re-entering in the labour market). • There are “disadvantaged" categories of workers requiring (targeted) interventions different from those that can be used, with success, with other groups of unemployed (for example, workers with more than 40 years) • Most of the unemployed with previous working experience have lost their job for the ending of a temporary work.

17. The Italian case: recent trends • In recent years Outplacement Projects have been activated, aimed at workers in mobility with special conditions of weakness in the labour market. • Outplacement projects present interesting forms of collaboration between public and private employment services to support re – employment of workers expelled from production processes (especially small businesses). Cooperation among PES and authorized and accredited outplacement agencies operating at local level. • Workers involved are identified by PES in accordance with the conditions of weakness in the labour market (gender, age, title study,…….). • Outplacement Agencies try to qualify expertise and skills of the weaker workers identified by PES and to support the matching between job opportunities identified and worker professional profile.

18. Lombardia: recent trends • Lombardia In 2005: • Employment rate (population 15-64 years)  65,9% • Unemployment rate  3,8% • Main reasons for losing the job are: • “dismissal or mobility” (49,5%) • the end of fixed term contracts (31,8%) • Displaced workers in 2006 in Lombardia, (ISTAT Micro-data) : • Displaced workers  24.920 • Unemployed due to end of temporary job  16.006 • Unemployed receiving ordinary unemployment benefits2.720 (11%) • Unemployed receiving mobility benefits2.189 (9%) • Workers in CIG (temporary dismissed with in come support) 14.362

19. Lombardia: main characteristics of the displaced workers with income support (CIG) • Among those who have not worked because in “Cassa Integrazione Guadagni”: • Men and women are almost equally distributed (7,346 men against 7,286 women). • The share of older workers is significant: the majority age cohort is the 45- 54 years (49.6%). Also relevant is the share of individuals belonging to the 55-64 cohort (13,7%). • More than two thirds (64,5%) have a low education level (at maximum primary education)

20. Lombardia: main characteristics of dismissed workers • The younger cohorts are far more represented among the unemployed without income support: they are 36% of the unemployed, but only 7% of those in CIG • Despite the young age, the level of education is low (people with at maximum the primary education amounts to 60,4%). • This could indicate that we are facing a particularly disadvantaged contingent of young people who have left school early.

21. Policy suggestions/1 The analysis of specific cases of policies aimed at displaced workers in Lombardi, show that it is important for success to have: • Rapidity of response and prevention (anticipation) • Integration of income support and active measures, to enable displaced workers to attend constantly to training or guidance courses and to verify if beneficiaries of benefits are seeking actively a job. • Participative approaches involving all relevant actors (especially PES and Private Outplacement agencies and involving the trade unions) are more effective: lower conflict and targeted measures;

22. Policy suggestions/2 • Targeted and rapid interventions for the weakest segments of displaced workers and non standard workers are needed, because their degree of social protection is quite poor. • A necessary pre-requirement of any policy is also to have updated and complete databases on the labour market trends and flows, especially at the local level, to allow anticipation of crisis and a coherent planning of the interventions, adequate resources.