The life at the gates: Italy's labour dilemma

Article published on April 17, 2006
community published
Article published on April 17, 2006

This article has not been vetted by an editor at Paris HQ

While protests raged over proposed labour law changes in France, and heated debate about how to open European markets is taking place in Brussels, the EU's most rigid labour market remains unalarmed

Italy, which has replaced Germany as the economic "sick man" of Europe, remains the toughest place in Europe to get a job: that holds true for Italians and western Europeans in Italy. Both are facing labour laws that make firing so difficult that employers are shy about hiring. These difficulties extend to central and eastern Europeans and others looking to legally work in the country.

Italians, for their part, appear to have no issue with the policies. Opinion polls regularly show broad support for protective measures, and many residents don't even consider the issue one worth debating.

"It seems that half the people I know are looking for a job," said Aldo Constanzo, a 34-year-old Roman construction worker. "Obviously, the situation won't improve if more foreign workers come in to compete for the same jobs."

Rita Cattelan, a 49-year-old teacher, agreed: "we have to worry about Italians first," she said.

The emperor’s new clothes

Elections between former prime minister and media tycoon Silvio Berlusconi and challenger Romano Prodi, a former prime minister and European Commission president, took place April 9-10. While both sides held rallies and made statements about future tax plans, the exit strategy for Italian troops in Iraq, and other political issues, hardly a word has been spoken about possible changes to the country's labour laws.

"These labour issues are far too controversial for politicians to want to address them now, with so much at stake," said Mario Morcellini, an author specializing on political issues and the head of the Communications Science faculty at Rome's Sapienza University. “After the election, maybe. One can make certain assumptions based on what the leading figures have done in the past, but neither side wants to say now what it would do [regarding reforming the labour market] if given the chance.”

The main reason for that involves the country powerful and entrenched trade unions, which control huge swaths of voters. The three largest unions (CGIL, CISL, and UIL, respectively) see a protectionist labour policy as the best way to prevent erosion in Italy's job base.

"The Italian economy needs additional jobs more than it needs additional workers," said Kurosh Danesh, immigration coordinator for CGIL.

Naked lunch

That is a point some economists would debate, since Italy's fast-ageing work force is increasingly burdening what is already Europe's most expensive pension system in per capita terms (pension spending is the government's largest single expenditure). Relatively high wages for workers in Italy's industrial sector contribute to the decline in the country's international competitiveness, especially since 2002, when Italy adopted the euro and lost the ability to devalue its currency to make Italian products more attractive abroad.

"Italy's economic problems can only be solved with a series of changes that include a young, aggressive, and cheap work force making pension payments and creating products and services that are in demand," said Tilio Bataglia, a University of Bologna economist, and a frequent commentator on pension-related issues. "There is such a work force waiting at Italy's borders but they aren't being welcomed in."

Under the table

Some would argue they are coming in, and are simply working for under-the-table salaries that don't add to the tax or pension balance sheets. In 2003 (the latest figures available) the Italian government estimated that between 12 and 20 percent of the Italian economy was illegal. At the high end of that range, it means that if the black market economy were figured into Italy's GDP, the economy would leap France and the U.K. to become Europe's second largest economy, behind only Germany.

Those numbers include a large percentage of the 2.4 million immigrants in the country, with thousands more arriving each day, drawn by Italy's long borders, uneven border security, and prime location that makes it an easy destination for those in North Africa, the Balkans, and central and Eastern Europe.

Most want to be legal: in March, the government offered 170,000 legal work permits for foreigners, and half a million workers applied within 24 hours. That sparked comments from two then-ministers from the separatist Northern league political party, who quipped that the workers waiting in line should have been arrested.

“We had illegal immigrants lining up at the post office and nobody was willing to arrest them,” former Justice Minister Roberto Castelli said. “It would have been easy: they were all in one place.” But even arresting all the immigrants would not have resolved Italy’s labour crisis.