The Commission has Nixed the Jobs Bill: Expecting Lower Wages and Increased Instability

The Commission has Nixed the Jobs Bill: Expecting Lower Wages and Increased Instability

Loosening the Chains: The Jobs Act, Ten Years Later

Freed from the shackles of traditional Italian labor laws, the Jobs Act, a brainchild of the Renzi administration, promised to breathe new life into the Italian economy by easing hiring and firing processes, promoting employment, and combating precariousness. Fast forward less than a decade, and one union, the Confederazione Generale Italiana del Lavoro (CGIL), led by Maurizio Landini, offers a harsh appraisal.

Flexibility Gone Awry

With the spotlight on the new form of single contract with escalating protections for new hires, the liberation of fixed-term agreements, and the boost in opportunities for accessory work, the Jobs Act was poised to introduce flexibility to the Italian labor market. But the union's research reveals a gloomy picture far from the intended effects.

"The Jobs Act's logic was to bolster flexibility and reduce dismissal costs for businesses, foster job creation, limit labor market segmentation, and benefit everyone," states the CGIL report. However, the union contends that the Act has merely increased precariousness and lowered wages without boosting competitiveness for Italian businesses.

The single contract with escalating protections, introduced for new hires on March 7, 2015, has significantly modified the existing protective barrier against dismissal. This new contract renders reinstatement in case of illegal dismissal minimal, primarily applicable in instances of discriminatory or manifestly unfounded termination. In the event of illegal dismissal, the worker is entitled to an economic indemnity proportional to their years of service, with a minimum of six months and a maximum of thirty-six months. In smaller companies, the indemnity ranges from a minimum of three to a maximum of six months. The contract makes dismissing for economic reasons less complicated, reducing the instances in which a judge can order the reinstatement of the worker.

A Decade of Stark Reality

After ten years, the Jobs Act, according to CGIL, has left a mark of weakness on workers' protections and conditions. Fixed-term and part-time contracts now impact nearly 30% of the employed populace, predominantly affecting young people, women, and graduates, thus making precariousness a structural aspect of employment in Italy. In addition, while the number of employed individuals has increased, the growth in total worked hours has been sluggish due to the proliferation of part-time positions.

Demand for jobs is dominated by low-skilled service sectors characterized by low technology, productivity, and compensation. Consequently, real wages in Italy have observed a historic decline. "These developments have amplified the deterioration of the Italian economy, igniting a vicious circle among precarious work, low wages, low productivity, and sluggish growth, leading to an expanding chasm with major European economies," the report adds.

Emigration on the Rise

Worryingly, immigration data steadily increased from the mid-1990s. An estimated 550,000 young Italians have emigrated during the period between 2011 and 2023, translating into a negative balance of 377,000 people in that age group. "The most troubling statistic is that 43% of young people leaving the country are university graduates, a percentage that has been growing over the years, reflecting the degradation of the country's productive system and the job market," notes the CGIL.

A Stagnant Economy

These dynamics are particularly alarming when viewed in a broader context, as the research points out, asserting that "the Italian economy has been locked in a thirty-year stagnation characterized by demand restriction policies, receding investments, limited innovative activities, and low education levels among the workforce."

The economic system overhaul has seen the expansion of low-skilled services, such as commerce, tourism, and catering, characterized by low technology, productivity, and wages, while manufacturing activities and high-knowledge services have been erased. This has impacted the country's position in international competition and worsened the lag in digital and ecological transitions. The outcomes include stagnant productivity and widening income disparities. "Strengthening labor utilization and productivity, instead of fortifying productive structures, has contributed to the weakening and stagnation of the Italian economy," sums up the report.

1. The CGIL report highlights the escalating protections in the single contract, introduced for new hires in 2015, as a major factor in the changed landscape of dismissals, with workers entitled to an economic indemnity upon illegal dismissal, ranging from six to thirty-six months.
2. In smaller companies, the indemnity upon illegal dismissal ranges from three to six months, making dismissals for economic reasons less complicated and reducing the instances in which a judge can order the reinstatement of the worker.
3. After ten years, the results of the Jobs Act, as assessed by CGIL, reveal a marked weakening of workers' protections and conditions, with fixed-term and part-time contracts impacting nearly 30% of the employed populace.
4. The demand for jobs is largely confined to low-skilled service sectors, with real wages in Italy experiencing a historic decline as a result.
5. The CGIL report suggests that these developments have exacerbated the deterioration of the Italian economy, leading to a vicious circle between precarious work, low wages, low productivity, and slow growth, producing a widening gap with major European economies.
6. Worryingly, the study notes a steady increase in immigration, with an estimated 550,000 young Italians emigrating between 2011 and 2023, resulting in a negative balance of 377,000 people in that age group.
7. The CGIL report underlines the stagnation of the Italian economy over the past thirty years, characterized by demand restriction policies, receding investments, limited innovative activities, and low education levels among the workforce.
8. The economic system overhaul has led to the expansion of low-skilled services, while manufacturing activities and high-knowledge services have dwindled, adversely affecting Italy's position in international competition and worsening the lag in digital and ecological transitions.

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