Wage formation in the Italian private sector after the 1992„93 Income Policy Agreements

Abstract

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.

Flexible pay, firm performance and the role of unions. New evidence from Italy

“…Bonuses from PRP represent little more than 5-6% of the total gross wage, which suggests that the distribution of productivity gains to workers has been rather limited (Casadio, 2003).…”

Collective Bargaining and the Evolution of Wage Inequality in Italy

“…In 1993, a major reform of collective bargaining was approved. Its purpose was to achieve the following main objectives (Casadio ): ( i ) coordination across industries and moderation on wage growth to achieve low inflation targets; ( ii ) growth of regional differences in wages to adapt them better to the heterogeneous cost of living and labour market conditions at the local level; ( iii ) distribution of premiums related to performance ( on top of the sectoral minimums) and negotiation at the firm‐level of some other contractual provisions not related to compensation. This reform resulted in an increase of geographical differences in the top‐up components of negotiated wages.…”

Beneath the Surface of Stability: New and Old Modes of Governance in European Industrial Relations

“…The predicament of the Italian unions is a case in point: according to data from the Bank of Italy and the employers, many small firms and most workers in the South are de facto excluded from a second round of bargaining, as prescribed under the model inaugurated by the Ciampi pact of 1993 (Rossi and Sestito, 2003). Annual wage drift in the southern regions was estimated at 2.5 percent below the national average between 1995 and 2001 (Casadio, 2002). Given that average real-wage gains in these and subsequent years were very small, this means that they have lost out in real terms.…”