Management’s Perceptions of Social Dialogue at Company Level in Italy
Collective bargaining in Italy primarily takes place at two negotiation levels: at the industry or sectorial level, which addresses issues such as the periodic determination of the pay and conditions for the industry or sector, and at the company level or plant level, which addresses specific workplace problems. Until the early 1990s, the balance between the two levels changed according to external circumstances. It was with the Tripartite Agreement of 23 July 1993 that the competencies, procedures and issues pertaining the two levels were clarified. Ever since, other agreements between trade unions and employers’ organizations addressed the issues related the two levels. The agreement signed in April 2009 makes clear that greater decentralization of bargaining is seen as a mechanism to “re-launch” a growth in productivity and therefore of real incomes. This poses enormous challenges to employee’s representatives as they assume a key role for the social innovation and competitiveness of the company.Drawing from interviews and a survey, it seems that Italian HR managers are aware of this key role of employee representatives, so much that they would like them to be more competent, open to change and less conflictual. They believe that a more cooperative environment leads to better agreements for both parties at the negotiation table.
KeywordsItaly Bargaining Social innovation Employee representatives Cooperativeness
7.1 The Context: Industrial Relations and Collective Bargaining in Italy
7.1.1 The Main Characteristics of Collective Bargaining in Italy
Italian industrial relations are characterized by a low degree of ‘legal institutionalization’ (Baglioni 1998; Cella 2009; Napoli 1998). Legislations and the state have a limited role in the regulation of collective bargaining, conflict and union representation.
Italian industrial relations have been poorly institutionalized, and not sufficiently mature when compared with those of other European countries. For a long time, the perception was that the main problem has to do with the Italian unions’ militancy and political divisions and with their unwillingness to compromise on a much-needed policy of centralized wage moderation. The absence of a clear set of agreed-upon rules has also been frequently singled out as a significant factor. The failure of national agreements in the early 1980s, and the decentralization of collective bargaining which ensued, provided empirical support for these critical views.
In the early 1990s the situation of Italian employment relations changed dramatically. In1993, the architecture of collective bargaining was thoroughly reformed and the links across bargaining levels became much more rational and institutionalized than they had ever been.
The tripartite agreement Protocol of July 23rd, 1993, represents a kind of ‘constitutional charter for industrial relations’, a so-called ‘basic agreement’ (Alacevich 1996; Cella and Treu 2009), which formed the basis for subsequent accords. It established a new institutional framework for income policies, bargaining structures and procedures, worker/union representation, employment policies and measures to support the production system.
The Protocol defined a two-tier bargaining structure, setting out that collective bargaining can legitimately take place at national-sectorial level and at company level. Alternatively, bargaining can take place at territorial level to cover a particular district, province or region.
The relationship between the two levels is based on the fundamental principles of (a) coordination, (b) specialization (avoiding overlap), and (c) derogation (only for the workers).
According to these principles, the national-sectorial level establishes minimum rights and standards for the whole workforce, giving social partners the ability to improve them through a second level of collective bargaining. The articulated system provides a controlled and coordinated decentralization. The national-sectorial level determines the modes and spheres of action of the second level of bargaining. Sector-based agreements are entrusted with establishing the issues with which decentralized bargaining is allowed to deal.
As in other European countries, the Italian collective bargaining system has come under pressure in recent years. There are increasing calls for greater decentralization, including wage setting, in order to meet companies’ competitive needs and to allow companies to overcome temporary economic difficulties. Moreover, according to many scholars, the introduction of an efficient system of second-level bargaining could increase labor productivity, which is particularly low—and declining—in Italian firms.
This increasing pressure has led to a tripartite agreement partly reviewing the norms of the Protocol of 1993. In 2009 a number of employer associations, including the General Confederation of Italian Industry (Confindustria), the Italian Confederation of Workers’ Trade Unions (CISL) and the Union of Italian Workers (UIL) signed the Framework Agreement for the Reform of the Collective Bargaining System (FARCB)1.
The most important changes compared with the system established by the 1993 agreement are:
Industry agreements now run for 3 years, covering both pay and conditions, rather than the two years for pay and 4 years for conditions, as set out in the 1993 framework;
Pay increases in industry agreements are no longer linked to the forecast inflation rate, but to the forecast European consumer price index for Italy, excluding energy consumption. Any differences between the forecast and actual inflation should be made up for within the 3-year period of the agreement. Productivity improvements are now only to be taken account of in company level bargaining, which the government is encouraging through tax incentives. Where there is no company-level bargaining, employees should receive extra payments through a wage guarantee element (EGR -elemento di garanzia retributive), to be agreed jointly by the two sides, and paid at the end of the three year period.
The negotiating timetable has been changed: the unions must submit their claim six months before the end of the agreement and the employers must respond within 20 days; strikes are prohibited during the last six months of an agreement and in the month after it runs out.
The General Confederation of Italian Workers (CGIL) refused to sign the agreement, and campaigned against the change. CGIL’s major criticism was related to the protection against inflation, which was seen as less than that provided by the 1993 agreement, as well as the fear that the new arrangements would undercut industry-level deals. The text of the agreement signed in April 2009 makes it clear that the greater decentralization of bargaining is seen as a mechanism to “re-launch a growth in productivity and therefore of real incomes.”
In 2011 the relations among the main trade unions confederations appeared to be improved by an agreement that all of them signed in June 20112. This set out clear rules for company-level agreements, of which the “development and extension” were seen as “a common objective” of all the signatory parties. These company-level agreements can “set out specific terms modifying the regulations contained in the national collective agreements, within the limits and in line with the procedure that the national company agreements themselves permit”, as stated in the text of June 2011. In other words, the terms of the industry agreement reached at national level can be improved or worsened provided that this possibility has been allowed for in the industry-level agreement itself. The general framework also laid down the rules on how company-level agreements are to be approved.
The agreement, thus, marks a very important step forward as it (a) retrieves the unity of the trade union, (b) strengthens second-level bargaining as a factor of competitiveness based on the enhancement of work, and (c) underpins workers’ protection.
7.1.2 Historical Development of Industrial Relations
Since the second post-war evolution, the system of industrial relations and collective bargaining in Italy has been closely linked to the evolution of the political system. In the past, the three major trade union confederations had a clear political affiliation. The Confederazione Generale Italiana del Lavoro (CGIL) was very close to the Italian Communist Party (PCI), the Confederazione Italiana Sindacati dei Lavoratori (CISL), created by trade unionists of Catholic inspiration, was very close to the Christian Democrats (DC), and the Unione Italiana del Lavoro (UIL) was closer to the Italian Socialist Party (PSI). Starting in the nineties with the disappearance of the parties’ reference, this categorization is no longer appropriate, although cultural references of origins are still valid. The weakening of the link between trade unions and political parties has contributed greatly to the overall reorganization of the Italian political system, particularly since the nineties.
In the fifties, collective bargaining was characterized by centralization, due to (a) the interest of the employers’ association to tie the labor costs of the most dynamic sectors to that of backward sectors, such as agriculture; (b) the lack of trade union structures necessary for decentralized bargaining, because employee representation at company level was absent and, when present, ineffective; and (c) CGIL looked at the development of decentralized bargaining with suspicion, fearing that decentralized structures had been able to create company unions or would become too independent and this would jeopardize the representation of the working class by the Communist Party (Cella 1976).
The sixties were the period of the "economic boom" and major changes in the political framework and industrial relations. The consolidation of the Fordism model of production in large enterprises pushed the unions to pay more attention to the negotiation of working conditions at the company level. The contractual dynamic accelerated, in particular the sectorial and industry bargaining, driven by labor market conditions in favor of the trade unions initiative (Cella and Treu 2009). Company-level bargaining was recognized and institutionalized. It was reserved for the competence to deal with the same matters of national contract. The two-tier bargaining structure, national and company level, were connected through a mechanism for the settlement of disputes. The number of company supplementary agreements increased enormously, regulating a wide range of themes and innovative institutions which then extended to the national level. To give some examples, the regional pay scales were abolished and equal wage increases were developed for everyone, improvements of the workplace health and safety conditions, and reducing the pace and duration of work time.
The centrist political framework which dominated the fifties, lost its power. The country changed; the policy framework needed to be broader, especially in order to answer the questions emerging from the world of work. The political framework opened to the left, the Socialists entered the area of government, after becoming independent from the Communist Party. It opened the era of the center-left and, despite its limitations, it marked an important political, cultural and social progress. This indicated the first attempts to plan the lines of an economic policy, towards which the CISL showed interest, because they believed that the union shouldn’t limit itself to the distribution of income, but also should intervene in the processes of accumulation, savings, investment and development of consumption.
The late sixties and early seventies were characterized by strong changes in labor relations. In the fall of 1969, massive labor struggles took place in the factories, ushering a period of violent conflict, later known as the "hot autumn". The great union mobilization was determined by the expiration of labor contracts, especially for the category of metalworkers. In this period, the workers’ movement were allied to the student protests, who claimed a generalized "right for education" for all social strata. The combined action of the students and workers’ movement pushed trade unions to take the lead of the protest movement. In many industrial plants, particularly in the metalworking industry, the three trade union confederations were forced to join. In 1972, the three major confederations came together establishing the United Federation (CGIL, CISL and UIL). The United Federation didn’t replace the old trade unions, but created a closer connection among them through various coordination structures (Lange and Vannicelli 1982).
With the eighties came the triumph of the free market, the predominance of economic policies inspired by neoliberalism, with its greatest champions in the governments of Ronald Reagan in the United States, Mrs. Thatcher in Britain, and the emergence of the Italian Socialist Party (PSI), after the passage of the Communist Party (PCI) to the opposition. This meant the destruction of social protections and marginalization of trade unions. In Italy, on the economic level, the scene was dominated by inflation above 20 %, with a heavy international recession and the consequent huge increase of unemployment. Companies restructured and renewed themselves at an accelerated pace, there was a growing surplus of labor, and wage guarantee fund became a welfare monster resources’ consumer. Under increasing pressure of the political parties, the margins of unions autonomy were reduced and in 1984 a vertical split of the United Federation produced two main unions movement, on the one hand the communist component, and on the other hand, CISL, UIL and the socialist component of the CGIL.
In this scenario, three large tripartite agreements were signed. The first one was signed in 1983 with the goal to reduce inflation through a cooling of the wages’ dynamic, induced by wage indexation. The second one was signed in 1984 with the lack of unitary agreement on partial sterilization of the wage indexation. It marked a profound change of scenery, culminating in the referendum for the abrogation of the wage indexation in 1985 with a successful result. After 1985 a new phase in industrial relations opened, which found its culmination in mid- nineties with the tripartite agreement of July 1993. It institutionalized a new framework for the contractual structure: change the bargaining procedures and workers representation in the workplace, employment policies and measures to support the production. This agreement can be seen as the first effort to create a systematic structure for the workers representation and collective bargaining.
In the early 2000s there was an unsuccessful attempt to reform collective bargaining (Cella and Treu 2009). CISL and UIL asked for a structural reform to give more space for company and territorial decentralized bargaining, which should facilitate the recovery of wage dynamics. CGIL, instead, continued to sustain the importance of national bargaining. The tensions lead to the rupture related to the signing of the agreement with the government on the labor market in 2002 (Pact for Italy). Concerns about the adjustment of the wages to inflation did not seem to be shared by the center-right government (second Berlusconi government). In 2007 the center-left government (second Prodi government) takes the business of promoting consultation, government and trade unions will come to a trilateral agreement relating to the welfare, the labor market and pensions. The agreement was harshly criticized by some unions, particularly from Italian workers Metalworkers’ Federation (FIOM) affiliated to the CGIL. In 2009, the government and the social partners, with the exception of the CGIL, signed an agreement for the reform of collective bargaining.
At the end of 2011 and the first half of 2012 two major reforms in the pension system and the labor market were introduced. Neither of the two were negotiated with the social partners. The pension reform was included in the first measures taken by the Government Monti in early December 2011. It was defined unilaterally by the government and harshly criticized by the three main trade unions. With regard to the reform of the labor market, there have been some discussions with the social partners, but no agreement was reached prior to the submission of the measure to parliament. Some elements of the reform were discussed with the social partners only after submitting the reform in parliament. However, there was no wide-ranging negotiation, as in the 90s.
7.1.3 Workplace Representation
The Workers’ Statute of 1970 gives the workers the right to organize a plant-level union representation structure (Rappresentanza sindacale aziendale, RSA). The tripartite agreement of July 1993 introduced—in addition to the RSA—a so-called unitary workplace union structure (Rappresentanza sindacale unitaria, RSU). This body is elected by all employees, but representatives are usually elected through trade union lists. Therefore, it includes features of both works councils (the broad active electorate) and trade union bodies (almost exclusive inclusion of trade union representatives). In general, it can be associated with trade union bodies. The establishment of RSUs confirms the traditional system of single-channel representation in Italy, whereby union and employee representation are entrusted to a single body, as opposed to dual-channel systems where union delegates operate alongside works councils.
An RSU can be set up when there are more than 15 employees in the workplace. The national level agreements for the private and public sectors provide minimum numbers (3 members until 200 employees and 6 until 500 employees and then 3 more members every 300 additional employee) but these can be improved in industry and company agreements.
Two-thirds of the representatives in the RSU are elected by the workforce (both union and non-union members); one-third of the positions are reserved for the trade union organizations affiliated to the signatory organizations of the sectorial national collective agreement (Contratto Collettivo Nazionale di Lavoro, CCNL) applied in the company. RSUs, when present, have all of the rights attributed to RSAs by law or collective agreements (1970 Workers’ Statute rights, as well as rights regarding information and consultation). Since 1993, RSUs have been able to negotiate at plant level on issues that are delegated from the industry-wide level.
However, despite these general agreements, RSUs are not universal. There are some sectors -including banking and insurance- where they are very rare. If RSUs have not been set up it is perfectly legal for previous systems of trade union representation -which can vary from company to company, depending on the agreement signed- to continue, although this is also not common. However, whatever the form, it is trade unions that play the central role in workplace representation in Italy. Although RSUs are elected by the whole workforce, they remain primarily union committees.
Another important element is the existence of joint committees, where company and employees are formally represented. They are intended to prepare the groundwork for collective bargaining by providing technical support.
7.2 The Current Situation of Employee Representatives. What Do Employers Say? Conclusions of the Interviews
In this section we present the main results of the interviews with Human Resources (HR) managers on the profile of employee representatives in the company (ERs).
The Structure of Worker Representation
In Italy, the unions have a single channel of representation of employees in the company. In addition, the minimum number of members of the RSU is established by the Collective Agreement. In general, HR managers believe that the number of members of the RSU is adequate. They also believe that joint committees, composed by company and employees representatives, are essential for social dialogue, as they represent a place for discussion on topics which are then discussed at the negotiating table. They prevent and settle disputes between employers and employees.
Organizational and Contractual Innovation
Several HR managers think that the representatives of the workers are scared of change, of innovation. The representatives of some unions are less open to change than others, in particular, small unions (for example COBAS3) with whom it is more difficult to reach an agreement on the contractual innovations.
HR managers believe that a deep knowledge of the issues under discussion is crucial to the dialogue between the parties and achieving a good agreement. They believe that ERs have good general skills although they lack a broader view of the problem, a vision of the socio-economic context in which the company operates.
ERs are very weak regarding competencies, especially in keeping up with the times, understanding the company strategy and market change (HR manager, Metal sector).
Time and In-Depth Analysis
The time spent and deepening of topics under discussion are two fundamental elements to achieve a good agreement.
Any change needs to be prepared, discussed, and then we can confront each other easily; but at the beginning they [ERs], are always close to any change (HR manager. Energy sector).
Time seems a fundamental resource. Taking a deeper look in the issues takes time but it helps to reach agreements without strong conflicts.
Generally, the relationship of trust between HR managers and ERs is quite high, above average. However, most of them make it clear that the relationship of trust is better with representatives of major trade unions, with which the exchange is continuous. Conversely, the relationship is more problematic with smaller unions, such as the COBAS, because they are more ideological.
Obviously, we are talking about the representatives of the central trade union confederations (CISL, UIL, CGIL), then there are COBAS [Rank-and-file committees], in this case trust falls rapidly…. (HR manager from the Bank Sector).
Industrial Relations Climate
Managers perceive the climate of industrial relations in their company as good. The dialogue and cooperation seem to be the prevailing elements in the confrontation between the parties. The following sentence is representative of the business climate in the negotiations:
The attitude of both parts to the dialogue and confrontation, the openness of the employee representatives was essential to come to an agreement. We don’t think there are other roads besides dialogue and confrontation (HR manager, Energy Industry).
Although in the metal industry where the FIOM has not signed the contract, the company climate is more confrontational:
At moment in the metalworking industry it is very difficult to dialogue with FIOM [Metalwork trade union linked to CGIL] which did not sign the national collective agreement, so you can imagine what it means in a metalworking factory—where the majority is still from FIOM… last year I have really had an ‘annus horribilis’: They keep stuck the factory. The FIOM demanded the same labor rights despite not having signed the contract (HR manager, Metalworking industry).
Differences Among Sectors
The main difference is between the private and public sector. The Italian government reached an agreement with unions on the 4th of February of 2011 regarding productivity-linked pay increases in the public sector. The agreement also covered negotiations for a framework agreement on industrial relations in the public sector until 2012, as collective bargaining was frozen until then. Due to the financial intervention package in July 2010, the renewal of collective agreements in the public sector was suspended from 2010 to 2012. The pay of the public sector workers was also frozen. At present, pay in the public sector is frozen as well as the employees’ turnover and the renewal of collective agreement.
It is evident that due to the limitations imposed by legislation, negotiating space in the public sector is very limited:
Due to the change in the regulatory framework the renewal of collective agreements, pay and turnover are frozen. At present, most of the controversies, 60 %, are request of change of the type of contract, from fixed term or seasonal to open-ended contract (HR manager, Transports’ sector).
7.3 Perceptions of Employers on ERs. Results of the Survey
The results presented in Fig. 7.1 are based on a survey amongst 614 European HR managers from eleven different European countries. T tests were conducted to analyze differences between Italian and the rest of European HR managers participating in this study.
Figure 7.1 presents the results of the comparison between the Italian HR managers and those of other eleven European countries. The significant differences in four variables have been circled. First, the variance of competences and attitudes (Diversity in competencies and attitude of ERs) among Italian ERs seems to be smaller than European ERs (M = 2.94 versus M = 3.38). The level of personal conflict and friction (relationship conflict) between management and ERs in Italy (M = 2.01) seems to be lower than the average of other European countries (M = 2.29). However, Italian ERs during the conflict seem to be more cooperative (Cooperative conflict management by ERs) (M = 3.00) than the European average (M = 2.76). Finally, the cooperation of ERs for resolving conflicts seems to be reflected in the relative effectiveness (Conflict management efficacy) with which management and ERs resolve conflicts in Italy (M = 3.35, versus M = 2.98).
The comparison between Italian and European ERs shows that Italian ERs are more cooperative during the conflicts, in spite of the level of personal conflict -on average higher than Europe-. This cooperative attitude leads to a more efficient resolution of conflicts.
7.4 Suggestions Given by Employers to Improve Social Dialogue in Italy
The interviews reveal a certain capacity for dialogue between HR managers and ERs at company level, although in some cases there are some difficulties due to the lack of a broader vision by the ERs, extended to the context in which company operates and the opening to contractual and organizational innovations. In the latter case, the lack of openness is often related to the different positions expressed by unions. Both difficulties can be overcome through better training of ERs and through the deepening of arguments.
Several HR managers think that a wider knowledge beyond the strictly trade union issues would help to better understand the changes of the market and corporate strategies, and this could encourage social dialogue in the enterprise. Consequently, many managers think that a continuous update on issues such as the labor market, labor law, and international economics favor the dialogue between the parties.
I think it is much better for a company to have a proficient counterpart. Expert ERs who display a proactive behavior are also good for the company. In contrast, weak trade unions and ERs are more inclined to create conflicts and it doesn’t help neither trade unions nor company (HR manager, Transport sector).
Change can only happen if you are dealing with an open counterpart. Several managers think that a more careful selection of ERs would help. Trade unions should choose their candidates better, they should choose people with a natural inclination to cooperation and negotiation, open-minded and with a high level of proficiency.
Consistency and Informal Contact
The relationship of trust between HR managers and ERs can be improved through consistency in behavior and informal contacts
These activities are mainly pertaining to the field of informal relationships, at the same time; trust is based on the achievement of concrete results. The achievement of concrete results feeds mutual trust (HR manager, Financial sector).
Another important element in building a relationship of trust between HR managers and ERs are the bilateral committees in which the comparison is made on specific issues and informally
Trust climate could be improved giving to ERs the chance to intervene on specific topic with their proposal, increasing their participation. Managers’ goodwill in this case is not enough; we need to write joint protocols establishing shared rules of play. We can talk about employee’s participation as much as we want but if there isn’t a [Joint] Committee (HR manager, Energy sector).
Decision Making Process
HR managers believe that, in general, it is very difficult to involve trade unions in decisions on the strategies of the company. On the other hand they think that ERs must have a lot of influence in decision-making on the organization of work processes.
7.5 Discussion and Expectations of Italian Employers on ERs’ Roles, Attitudes and Competences
The Italian system of industrial relations is characterized by a growing rate of decentralization, which opens space for cooperation among social actors at plant level. Decentralization is seen as mechanism to improve productivity. Productivity improvements are now only to be taken account in company level bargaining. Therefore, company-level bargaining open space for cooperation among employers and workplace trade unions on improving working conditions.
Qualitative interviews and surveys shows a high level of social dialogue at company level, even if there are some contradictions due to the different approach to industrial relations between trade unions confederation and rank and file trade unions.
There is a general opinion among Italian HR managers that there’s a need for more competent counterparts, less confrontational and more open to change. The ideological orientation that shapes the ERs’ profile in Italy, especially in the case of ERs who are members of small trade unions, is characterized by confrontation with management. In this regard, HR managers say it would be important to attract competent, younger and open-minded people for this role, and pay more attention to the selection process.
I would like to see the ERs being more aware of the overall context in which the bank operates, a greater understanding of how the labor market works, less prejudice against the employer, or ideological positions, when we sit at the negotiating table. In other words, more open to change and innovation (HR manager, Banking sector).
Training ERs is an aspect which is strictly linked to the previous one. Companies should invest more in the training of ERs because HR managers believe that competent ERs are more open to change and this would help a constructive social dialogue within the organization. However, in the perception of the HR managers training ERs is responsibility of the trade unions:
I would invest more on training because the more competent they are, the more ERs are able to read the situation and its importance. Currently, the company invests on the specific themes, such as workers safety. Trade unions have their training schools, which are very good (HR manager, Transports sector).
The company trains their employees through the Joint Committee. This Committee can also train ERs (HR manager, Energy sector).
ERs don’t receive any company support for improving their competencies. I mean a specific program for them. Trade Unions support their representatives through seminars (HR manager, Metal sector).
It is clear that companies do not see ERs training as their responsibility, even if they are aware of the importance of competent ERs for the quality of agreements and social dialogue.
Regarding the attitudes of ERs, HR managers would like ERs to have a higher degree of openness towards change and to be more independent of their trade unions. Particularly, they see that ERs who are members of small Trade Unions are closed to any organizational or contractual innovation.
We find strong rigidity. This is due to various factors. Most of the time this rigidity is due to the political line of the trade unions of which ERs are members (HR manager, Banking sector).
Accordo quadro: Riforma degli assetti contrattuali, 22 gennaio 2009
Accordo confederale fra Confindustria e CGIL, CISl and UIL 28th June 2011
The Confederazione dei Comitati di Base (COBAS) is a rank and file trade union. It was formed in the late 1980s by members who were dissatisfied with the leadership of the three main Italian confederations (CGIL, CISL and UIL).
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