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The 1992-1993 income policy agreements were crucial to introduce the wage moderation, favouring the employment growth, helping the fiscal adjustment and finally the joining of the Euro currency. In 1993 the wage bargaining was specialised with macro-stability devoted to the national contracts level and the wages micro-flexibility to the firm-level. The main national contracts halted any price-wages spiral, driving the inflation expectations and coordinating the wage dynamics. The diffusion of firm-level flexible wage-premia remained confined to the medium-large firms; productivity gains were only partly distributed to wages; insufficient elements of wage flexibility and differentiation were introduced. Compared to the other European countries Italy can be considered a low wages country; especially in the Southern regions, where the larger share of irregular jobs and poverty is concentrated. The overall effects are not obvious: the income distribution could be biased toward a reduction of the labour share; there is a consensus that the job-rich growth period experienced since 1995 was mainly due to the wage moderation; the predominance of a national level bargaining has not jet given rise to wage differentials reflecting the higher unemployment in the South.

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