Unions, workers, students and left wing activists across major cities in Italy took to the streets last Friday to protest vehemently against planned reforms by the Italian government which will make it easier to sack workers.
This protest followed an estimated one million strong union rally in Rome last month and a series of further strikes are planned as workers from numerous industries cling on to the rights which some perceive make them almost untouchable.
Economic statistics released last week shows that Italy is, again, back in recession. Italy is believed to be the third biggest economy in the Euro-zone and the Italian government is under pressure to take urgent steps to tackle this.
Italy’s Prime Minister, Matteo Renzi, has proposed a series of controversial political and legal reforms, the aim of which is to tackle high unemployment and encourage greater inward investment by foreign companies with many larger industries in decline.
Italy is of course not alone in the mire of financial turmoil as some of the world’s strongest economies battle to regain stability on the balance sheet. Problems in countries such as France, Germany and Spain are well document and it’s not just a Europe-wide issue with Japan’s economy having just slipped into recession. We’ve observed the trend that most of those countries have taken some labour reform measures to deal with unemployment by making it easier to hire and fire workers. Those measures were taken in response to concerns by employers who felt unable to hire workers in an unstable economic environment if they would end up having to bear significant costs to reduce their workforce at some later stage.
The view taken in certain countries is that those measures have not gone far enough and more drastic action is required to reduce unemployment and kick-start the economy. Previous reforms in Italy come under further scrutiny by Prime Minister Renzi. Due to the continuing problems with youth unemployment which is quoted at 43% and the fact that economists are advising that the Italian economy has now contracted to the level of 2000, there has been significant concern about labour market flexibility.
This chimes with our understanding that the main areas of concern for the EU economy (and possibly global economy) are flexibility, responsibility of employers vis-a-vis employees and the concept of engagement.
Renzi is attempting to introduce greater flexibility in the labour market by making it easier to dismiss workers. The Italian model has always been very pro-employee and currently workers can be reinstated to their old roles if they have been dismissed by employers, even if it is for a serious issue such as gross misconduct. These reforms would effectively prevent workers from being reinstated where they were dismissed for business reasons (as opposed to personal or conduct reasons) and would simply provide them with a right to compensation.
Not surprisingly, these proposals have led to a significant amount of industrial relations dislocation and recently we saw the metal and engineering workers taking to the streets of Milan in protest against the changes. Public transport has also been hit including airports.
Furthermore, there has been indication from the trade unions that they will be particularly active in the run up to a proposed general strike on 5 December.
Undoubtedly this is going to be a difficult period for the Italian labour market. Inflexibility has been so entrenched in the model for a number of years that moving it towards a more progressive flexible model will prove to be painful for all parties.