An analysis of the 2009 italian agreement between labor union and employer’s federation and the suggestion of the alternative idea of a social contract for the productivity and economic growth. The presentation is part of the course of "mercati interni del lavoro e innovazioni organizzative" with professor Riccardo Leoni. http://www.pattosociale.altervista.org/ April 2011.

1. La riforma della
contrattazione:
redistribuzione perversa o
produzione di reddito?
by
Riccardo Leoni and Nicola Acocella
Presented by
Matteo Foiadelli, Paolo Viganò and Fabio Invernizzi

2. !"#$%&
1. Historical context 7. Decentralised bargaining
2. ’93 July agreement and 8. Equalising economic
abolition of sliding scale element
3. 2009 agreement 9. Alternative ideas.
4. Indexation 10. Patto sociale
per la produttività e
5. Static model la crescita
6.Productivity 11. Conclusions

3. !"
#$%&'($)*+,)'-&./&

4. During italian economic boom:
productivity increase,
unemployment decrease.
Inflation remain constant.

5. After “autunno caldo”
and during 70’s:
productivity doesn’t increase,
unemployment doesn’t decrease,
wages increase.
Inflation increase.

8. 0"
!12,34+5,*6(..7.-&,*-8,
*9'+$&$'-,':,%+$8$-6,%)*+.

9. Objectives:
Improve productivity
Calm inflation
Create social cohesion
between social parts

10. Structure:
National bargaining: indexation
Decentralised bargaining: productivity

11. !"#$!%&$'()*+,(-

12. 2"
0;;1,*6(..7.-&,

13. Change:
3 years duration
Indexation system
Introduction of equalising economic element

14. <"
=-8./*&$'-

15. PROBLEM #1 PROBLEM #2
“Significative” inflation HICP
(harmonised index of consumer prices)
PROBLEM #3 PROBLEM #4
Wage indexation Decentralised bargaining

16. PROBLEM #1
“Significative” inflation

17. .,"$/$-0$&,-&,-1"+,(-&/"+$
Expected real
inflation rate inflation rate
(t) (t+3)

19. Significative inflation is contracted
between labor union and employer’s
federation

20. Significative inflation is contracted
between labor union and employer’s
federation

21. Significative inflation is contracted
between labor union and employer’s
federation

22. 23,#-,40"+,'$5&,-1"+,(-
Inflation part
not recovered

23. PROBLEM #2
HICP
(harmonised index of consumer prices)

24. NOT
CONSIDERED
>-.(65,
6''8%
Represent 0,2‰ of HICP
From 2000 to 2008
+16% for year

25. ?@$&&$,
A64(*&$B$C
NOT
The 81,2% of italian family CONSIDERED
live in his own house.
Family has to spent
part of the income
in order to
renovate home

26. D$".(.-&,$-)'7.%
!"!#$#%&
'()*#&)
NOT
CONSIDERED

27. E'F,:(.G4.-)5,
)'-%47.8
Low inflation rate
or deflation

28. #$6H,:(.G4.-)5,
)'-%47.8
Hight inflation rate

29. 6-"77/(7/,"+$&869:
Inflation part
not recovered

30. PROBLEM #3
Wage indexation

31. WAGE
1993 X EXPECTED
INFLATION = RECOVERED
INFLATION
18,7 !/h

32. WAGE
2009 X EXPECTED
INFLATION = RECOVERED
INFLATION
-12,6%
15,6 !/h

33. ;"#$&,-<$="+,(-
Inflation part
not recovered

34. PROBLEM #4
Decentralised bargaining

35. .$0$-+/"),%$<&>"/#",-,-#
2st level
Inflation
not recovered
1st level
Inflation
recovered

36. Decentralised bargaining
represent 10% of wage
Real value of
incentive could
decrease over time

37. .$0$-+/"),%$<&>"/#",-,-#
Inflation part
not recovered

38. PROBLEM #1 PROBLEM #2
“Significative” inflation HICP
(harmonized index of consumer prices)
PROBLEM #3 PROBLEM #4
Wage indexation Decentralized bargaining

39. I"
J&*&$),7'8.+

40. ! = base salariale indicizzata
" = valore economico del punto per l’indicizzazione
# = restituzione delle differenze significative
peu = tasso di inflazione ufficiale prevista
$ = incidenza dei beni energetici
peuBE = tasso di inflazione ufficiale prevista relativa ai beni energetici
% = rapporto fra inflazione percepita e ufficiale
pEU = tasso di inflazione ufficiale effettiva
pEUBE = tasso di inflazione ufficiale effettiva relativa ai beni energetici
Wnd = tasso di variazione del salario connesso alla contrattazione decentrata o
all’elemento di garanzia retributiva

41. 1. Used indexation
system is fair
2. With estimated
variables is unfair
3. Would be necessary
increase decentralised
wage

42. K"
L('84)&$B$&5

43. MH5,=&*+5,)*-!&,$-)(.*%.,$&%,
N('84)&$B$&5O
+12.1%
-1.1%*
COMPETITORS
+13.2%
DEALY
+12.1%
* Trend productivity 1995-2005

44. E$&.(*&4(.!%,(.*%'-%,
Lack investement in ICT
trend is similar with competitors
Rigidities in labor market
contrast with European Commission (Empowerment)
Little firms and Specialization in traditional sectors
explain only 18% of gap in productivity (Foresti et al.)

45. PRODUC
WAGE
TIVITY

46. P*(6$-*+$%&,&H.'(5
Wage rapresent
remuneration of the
marginal productivity
of labor.
PRODUC
WAGE
TIVITY

47. P*(6$-*+$%&,&H.'(5
Productivity increase when
employers increase effort.
PRODUC
WAGE
TIVITY

48. PRODUC
WAGE
TIVITY

50. PRODUC
WAGE
TIVITY
QH.'(5,':,J5+'%,E*9$-$
Unions bargain wage’s
increasement.
Profits decrease.

51. PRODUC
WAGE
TIVITY
QH.'(5,':,J5+'%,E*9$-$
Firms are oblidge to make innovation
in order to maintain the original level
of profit.

52. R"
D.).-&(*+$%.8,
9*(6*$-$-6

53. L('A&,%H*($-6
After 3 years organization
performance is evaluated
PROFIT

54. L('A&,%H*($-6
Employeds received
a share of profit
BONUS

55. =-N4&,
'($.-&.8
COMPETENCE

56. S4&N4&,
ROI
'($.-&.8
?
COMPETENCE

57. BONUS

58. T*)UF*(8,
+''U$-6

59. T*)UF*(8,
ROI +''U$-6
=-).-&$B*&$'-,%5%&.7,
8'.%-!&,F'(U

60. L($).V
1000! ROI

61. L($).V
2000! ROI
In order to
reach their goal
firm could
increase price
without increase productivity
if demand is anelastic

62. L($).V
2000! ROI
In order to
reach their goal
firm could
increase price
without increase productivity
if demand is anelastic

63. If one firm share a part
of new profits
ROI the real wage of
employee increases
MH*&,H*NN.-%,
FH.-,.B.(5,
A(7%,8',$&O

64. ROI ROI ROI ROI
INFLATION

65. ROI ROI ROI ROI
REAL WAGE DOESN’T INCREASE

66. W"
>G4*+$%$-6,
.)'-'7$),.+.7.-&

67. WAGE
WAGE WITH
WITHOUT
DECENTRALISED
DECENTRALISED
BARGAINING
BARGAINING
SOCIAL EQUITY

68. WAGE
WITHOUT
DECENTRALISED
BARGAINING
WAGE WITH
DECENTRALISED
BARGAINING
SOCIAL EQUITY

69. WAGE +
EQUALISING WAGE WITH
ECONOMIC DECENTRALISED
ELEMENT BARGAINING
SOCIAL EQUITY

70. W"0
>G4*+$%$-6,.)'-'7$),
.+.7.-&"
!"#$%&'(

71. S4&N4&, ECONOMIC
CYCLE
'($.-&.8
? EQUALISING
ECONOMIC
SKILLS ELEMENT

72. T*)UF*(8,
+''U$-6

73. EQUALISING
ECONOMIC
ELEMENT

74. Today
Based on 4 previous years

75. Supply after 3 years
(at the end of the contract
validity)

76. DECENTRALIZED
BARGAINING
Fiscal incentives
Cost of bargain for
the firm

77. EQUALISING
ECONOMIC
ELEMENT
Fiscal incentives
Absence of bargain cost
for the firm
Bargain at national level

78. UNILATERAL
INDIVIDUAL
BONUS
Fiscal incentives
Without bargain
No minimum bonus

79. EQUALISING UNILATERAL
DECENTRALIZED
ECONOMIC INDIVIDUAL
BARGAINING
ELEMENT BONUS
EXCLUSION OF
UNIONIZATION

80. 1"!
X+&.(-*&$B.,$8.*%"
)*+&*,-./,-#*0(1(,&'2

81. BONUS

82. BONUS
VALUTATION
SKILLS

83. @'(F*(8,
+''U$-6

84. 1"0
X+&.(-*&$B.,$8.*%"
345/%-(-*60&+#*#'-+0
&%&'&*,2

85. Today
Based on 4 previous years

86. Supply today

87. @'(F*(8,
+''U$-6

88. !;"
L*&&',%')$*+.,
N.(,+*,N('84&&$B$&Y,.,
+*,)(.%)$&*

89. ICT
COMPLEMENTARITY
NEW WORK ORGANIZATION
PRACTICIES CHANGE

90. GOVERNMENT
COOPERATION
EMPLOYERS’
UNION LABOR
FEDERATION

91. GOVERNMENT
SIGN
A
PROTOCOL
AT
NATIONAL
LEVEL
EMPLOYERS’
UNION LABOR
FEDERATION

92. GOVERNMENT
AS EMPLOYER FOR PUBLIC SECTOR:
IMPLEMENT NEW WORK
PRACTICES
AND
NEW FORM OF ORGANIZATION
GIVE FISCAL INCENTIVES
ONLY TO FIRMS THAT ADOPT THEM

93. GOVERNMENT
SIGN
A
PROTOCOL
AT
NATIONAL
LEVEL
EMPLOYERS’
UNION LABOR
FEDERATION

94. EMPLOYERS’
FEDERATION
IMPLEMENT NEW WORK
PRACTICIES
AND
NEW FORM OF ORGANIZATION
BARGAIN OF OBJECTIVE

95. GOVERNMENT
SIGN
A
PROTOCOL
AT
NATIONAL
LEVEL
EMPLOYERS’
UNION LABOR
FEDERATION

96. UNION LABOR
COOPERATION AT FIRM LEVEL
IN ORDER TO INTRODUCE NEW PRACTICIES
AND OBTAIN FISCAL INCENTIVES

97. !!"
Z'-)+4%$'-%

98. !"
Q'',%$7$+*(,&',!12,
*6(..7.-&"
D'.%-!&,$7N('B.,
N('84)&$B$&5

99. 0"
>G4*+$%$-6,.)'-'7$),
.+.7.-&,8$%)'4(*6.%,
8.).-&(*+$%.8,9*(6*$-$6

100. 2"
M'(%&,$-8./*&$'-,
%5%&.7,

101. @('7,)'-&(*N'%$&$'-,
&',)''N.(*&$'-"
7/,,#0(#+-/%&07&"0%/0
7"#85,,-.-,90&0%/0+"&(+-,/