Italy rolls back labour market deregulation with “dignity bill”

Italian Labor Minister and Deputy Premier Luigi Di Maio attends the 'Labor Festival' in Milan, northern Italy, 30 June 2018. EPA-EFE/FLAVIO LO SCALZO

Italy rolls back labour market deregulation with “dignity bill”


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The Italian government passed on Monday the so-called “dignity decree,” rolling back labour market deregulation.

Championed by the former administration of prime minister Matteo Renzi, the deregulation of the Italian labour market was intended to tackle chronic double-digit unemployment figures.

The Italian government is now championing punitive measure for companies that shift their production outside the EU (offshoring), as well as taking a series of steps to make firing employees much more difficult.

Renzi’s Jobs Labour Act was introduced in December 2015 and was modelled on the American “easy fire-easy hire” model. Labour market deregulation in Italy kicked off in 1997 and picked up the pace in 2003 and 2012, shifting the balance between full-time and precarious employment, as elsewhere in Europe, culminating with the Renzi reforms.

The Italian Minister of Labour and Industry – and leader of the 5 Star Movement (MS5) – Luigi Di Maio is now promising to reverse this trend.

Maio’s “dignity bill” will oblige firms that relocate to pay back any “incentives” they have received to invest over the last five years. At the same time, the bill hikes compensation for unfair dismissal by 50% and rolls back legislation on temporary employment as part of a “war on precariousness” and the so-called gig economy. Temporary workers will now be granted comparable employment rights to permanent employees.

The decree also cracks down on gambling advertising amidst a social epidemic in Italy.

Meanwhile, markets are sceptical.

The spread between Italian and German 10-year bond yields surged continued to surge Friday and Monday. However, it remains far below the levels reached in May, when markets feared the government was proposing to keep the option of exiting the Eurozone on the table.

On Friday, the European Central Bank also raised concerns on the Italian government’s plans to roll back pension reforms, envisaging a rise in the age of retirement introduced in 2011 (Fornero law).

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