Decentralized Collective Bargaining in Italy. SMEs and Case Studies

(Grant aGreement ref. VS/2012/0422)

Country Paper- Italy

Table of contents Sommario1.Introduction 3

2. Historical background 5

2.1 Decentralized bargaining before the 23 July 1993 Protocol 8

2.2 The 1993 Protocol 9

2.3 The Framework Agreement dated 22 January 2009 10

3. Economic and institutional changes 12

3.1 Firm level regulation and individual labor relations 12

3.2 Trade union agreements with FIAT. Case law developments

and the recent Constitutional Court case law No. 231 of July 23, 2013 13

3.3 Employeeparticipation and joint committees 15

4. Which scenarios for Industrial relations? 17

4.1 The Agreement of28 June 2011 (Confindustria – CGIL, CISL, UIL)

and the Agreement of 19 September 2013 (Alleanza Cooperative – CGIL, CISL, UIL) 17

4.2 Article 8, Law no. 148 dated 14 September 2011 19

4.3 The Frame Agreement of 31 May 2013 20

4.4 A Forthcoming law for regulating the Italian Industrial Relations System? 20

4.5 Industrial relations and SMEs 21

5. Bibliography 23

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Decentralized collective bargaining in France, Germany and Italy: industrial relations and SMEs interactions for economic growth

1.Introduction

In a globalised economy, where capital, goods, companies and people move around freely, labor and industrial relations a fundamental factor that condition the enterprises’ joint and, therefore, the fair distribution of jobs.

In this situation, collective bargaining agreements are called to act in addition to their traditional purpose of establishing minimum standard conditions that elimi-nate less efficient companies from the market, thereby either giving more impor-tance to the workers’ interest in improving working conditions or attributing a great value to the interest in increasing the number of jobs available.

This logic, which was fundamental in a situation where the only way to combat the exploitation of labor was by strictly self-disciplining competition between wor-kers by applying rules, tends to be integrated in a more complex situation typically found in modern-day society wherethe measures must be able to not lower down one’s guard over the employees’ rights and protectionssince in the occidental cul-ture the real danger is not rooted in the contents of employment relationship, now adequately regulated, but in the variety of the types of employment contract other than the open-ended contracts– with a particular increase of fixed-term contracts–in the possibility of not finding work at alland in the international competitions that applies differentials of costs and protections. At this point, the trade unions themselves may find it worthwhile to bargain also with the employing parties and the Governmenta controlled flexibility of the employment protections in order to (i) pursue macro-economic goals leading to growth in the labour market. (ii) make the protective measures more “suitable”tothe job creation strategy.

The outline of the analysis cannot take into account the complexity of the situations and the different points of view. As a result, the conflict between different interest groups explodes: both regarding (i) the “sacrifices” agreed on a federal level, which certain groups or professions tend to abstain from, who are less willing to agree to such sweeping agreements and who are aware of their own bargaining strength for obtaining specific advantages; and (ii) the reductions of rights and protections supported by the trade union organization at local level, often adversely affected by the trade union at national level when such reductions only aim at crumbling the national collective rule.

The unavoidable need for group independence to perform the double role of pro-tecting working conditions and defending the labour market ends up affecting the structure of the contractual system itself, by creating a conflict among those leaning toward a new balance between national collective bargainingand decen-tralized collective bargaining and those who even doubt on the merits of main-taining the national salary standards in the context of a low inflation economy,

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given the possibility of linking a substantial part of employee salaries to each firm’s productivity.

The frame agreement for industry dated 28 June 2011(“accord inteconfederale”) and the related agreement of 31 May 2013 along with the Article 8 of Legislative Decree no. 138/2011, implemented by Law no. 148/2011, allow firm level/decen-tralized collective bargaining (hereinafter also “decentralized bargaining”) to effecti-vely derogate from protective measures established by law and national contracts, in order to better adapt the employment regulations to specific productive con-texts and protect and maintain employment levels.Within the free spaces of actions implemented by the frame agreement there is the balance identified by those so-cial parties who are more careful to the development of the markets and the socie-ty, by complying with the general protection measures and the fundamental rights necessary for a fair regulation of the labour market.

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2. Historical background

The traditional Italian system of industrial relations is based on national bargaining contracts.

The collective contract can apply to a range of different situations, divided as fol-lows: national contracts, each relating to a certain productive category or profes-sion; non-national local contracts (e.g. provincial); firm level bargaining. The collec-tive bargaining is defined by frame agreements, relating to the entire economy or to large sectors of it (industry, trade, agriculture);

The law does not place any specific limit on the freedom of trade unions, resulting in the development over time of several aspects of bargaining, which have evolved in a way that is fundamentally important for understanding the trade union phe-nomenon.

Collective contracts are only regulated in detail by law for the public sector.

Immediately after the suppression of the corporative regulatory system in the post-war period, frame agreements were stipulated, which also set minimum salary le-vels.

Sector-based national bargaining only began to develop in the mid-1950s, with a diversification of the economic and regulatory terms for employment according to the specific requirements of each productive sector.

In any case, bargaining remained centralised, due to the need to regulate central issues, such as working time, employees’ classification andrights without leaving space for agreements with individual companies, also because the latters were opposed by both the trade unions in order to maintain general class solidarity, and by business associations in order to defend the discretion of individual employers to offer higher-than-minimum salaries. However, some companies did strike up in-formal negotiations on specific aspects of the employment relationship (e.g. hie-rarchical positions, bonuses) with internal commissions, although it was expressly specified that these agreements had no contractual value. The internal commission could exclusively “propose items to better manage the company services aiming at improving working methods in order to pursue a major return and productivity by evaluating and taking into consideration those employees’ proposal deemed to be useful”.The situation changed with the agreement for partially state-owned companies, stipulated between Intersind and ASAP with FIOM, FIM and UILM on 5 July 1962, which brought in the system, later extended to the entire private and public sector industry, which set out a derogation from the national contract on a sectorial level (which was effectively abandoned) and a firm levelfor certain areas (e.g. working hours, classification, piece-work, incentives, etc.), while trade unions and employe-

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es undertook not to promote reprisals or strikes regarding issues already regulated by the various levels (so-called trade union pact).

From the 80s onwards, the deteriorating economic situation forced (i) trade unions to face up to both the micro-economic problems caused by the crisis and the re-conversion of individual companies, and the macro-economic problems facing the system as a whole (ii) employer parties to confront themselves on issue previously deemed in their exclusive competence . On one hand, this led to the affirmation of the group action model through triangular frame agreements, with a resulting mo-deration of salaries including in category-based contracts, and on the other hand firm level bargaining often exchanged job security, sometimes even only partial, for reductions in salaries and regulations.

Furthermore, it must considered that Italy had for many years an extraordinary in-flation rate that obliged the parties to rule automaticand general measures for the adequacy of the salary by the national bargaining.

The need to contain the inflation caused also the modification of thee bargaining structure that was outlined in the protocol agreed on 23 July 1993, which establi-shed: national collective contrasts of a four-year duration for the regulatory part and two-year duration for the economic terms, which were linked to planned inflation rates; decentralized collective bargaining(firm level or local) of a four-year duration only for the areas specified in the national contract; any additional bonuses paid by individual companies were linked to performance and quality, with the excep-tion of terms that essentially repeated those in the national contract; regulation of contract renewals requiring the firm to present their proposal three months befo-re the contract’s expiry, in order to open negotiations; the obligation to suspend trade union actions during negotiations, for a maximum period of four months; if the negotiations extended beyond the third month after the contract’s expiry, workers would receive automatic salary rises of a percentage (30% and, after six months, 50%) of the planned raises, thereby providing a temporary salary solution that would last until an agreement was reached.

The 1993 protocol, which connected salaries with purposefully planned raises (at that time with the aim to face up the inflation increase and as of today deemed to be intentionally low due to the lack of expectedbut not realized public initiatives ), was partially subject to a recast by the framework agreement dated 22 January 2009, which CGIL refused to sign. The most important points are: simplification and reduction of the number of national collective contracts; two-level contract struc-ture, on a national and decentralized level; three-year duration of the national and decentralizedbargaining, regarding salaries and terms; index-linked raises (using a price-index excluding imported energy prices, drafted by a third party) including checks of any differences between real and forecast inflation to be performed by a joint committee, and with adjustments made for any differences found within the term of the current national contract, rather than relying on a pre-established plan; application of the index to a salary value to be defined in specific agreements; agre-ement in advance of the period and procedures for renewing the contract using an economic mechanism to cover the salaries from the date of the contract’s expiry only for employees actually in service at the time of renewal; trade union pact ap-plying during the negotiations; limitation of decentralized bargaining only to areas delegated by the national contract or by law, excluding areas and terms already bargainedon a higher level; reference to decentralized bargaining for performance-linked salaries, taking advantage of the specific tax and social security incentives

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(Article 1, paragraph 67 of Law no. 247/2007); possibility of including economic guarantees in the case of absence of decentralized bargaining; the right to dero-gate terms of the national contract in decentralized bargaining in the case of crisis or in order to promote development and employment; application of the system to the public sector, although with significant differences regarding the base for applying the forecast index, formed only salaries, adjustments made for differences, which are deferred to the subsequent contract and are not obligatory, the tax-wel-fare incentives for performance-linked salaries, subject to the limitations of public finances.

As to the main facts and figures related to the Italian Industrial Relations system please see below.

Industrial relations characteristics, pay and working time

Trade union density (%) (2011)(Trade union members as a percentage of all employees in dependent employment)

36.1 (a)

Employer organisation density (%) (2008)(Percentage of employees employed by companies that are members of an employ-er organisation)

58.0 (b)

Collective bargaining coverage (%)(Percentage of employees covered by collective agreements) (2009)

80 (b)

Number of working days lost through industrial action per 1,000 employees (2011) 37.46 (2008)

Collectively agreed pay increase (%)(annual average 2010–2011)

2.0% (d)

Actual pay increase (%)(annual average 2010–2011)

2.0 (e)

Collectively agreed weekly working hours 38.0% (f )

Actual weekly working hours 38.5 (f )

Sources: Eurostat

The three major union confederations are:

• the General Confederation of Italian Workers (Confederazione Generale Italia-na del Lavoro, Cgil);

• the Italian Confederation of Workers’ Trade Unions (Confederazione Italiana Sindacati Lavoratori, Cisl);

• the Union of Italian Workers (Unione Italiana del Lavoro, Uil).

Employer organization density was estimated at 58% in 2008. Employer confedera-tions vary by sector of activity and company size (Eurofound, 2013)

Industry The most important employer confederation is the General Confederation of Italian Industry (Confederazione Generale dell’Industria Italiana, Confin-dustria). According to the Confindustria website, in 2012 the confederation had ‘149,288 member companies of all sizes employing a total of 5,516,975 workers’. Confindustria companies come from all industrial sectors, including construction, and partly include services sectors.

Artisans Artisans have their own associations: Confartigianato and the National Con-federation of Crafts and Small and Medium Enterprises (Confederazione Na-zionale dell’Artigianato e della Piccola e Media Impresa, CNA).

Commerce and Tourism As far as Employer organisations in the commercial and tourism sectors, they are represented by: the General Confederation of Enterprises, Professional Occupations and Self-employment (Confederazione Generale Italiana delle Imprese, delleAttività Professionali e del Lavoro Autonomo, Confcommer-cio); and Confesercenti.

Source – Eurofound 2013

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2.1 Decentralized bargaining before the 23 July 1993 Protocol

With reference to the period before the 1993 Protocol was signed, no precise date exists for the beginning of collective bargaining on a decentralized level.

As anticipated in the previous paragraph, a genuine culture of collective bargai-ning emerged after the corporative period, along with the development of a more structured form of collective contract which placed the national category contract at the centre, while allowing for more detailed contracts for individual sectors or companies.

A distinctive element of this phase was the shift from the two main levels of bargai-ning (national and firm level) towards a decentralized bargaining governed by the national level1.

During this period, bargaining on a firm level took on a central role in contracts, becoming the reference point for all local affairs, given that at the beginning of the structured system, the same provincial trade unions that had previously stipulated provincial contracts became responsible for negotiating with companies.

The result was a “backwards” evolution of the peripheral level in our system of in-dustrial relations, in the sense that provincial contracts appeared to have more importance in the previous, strongly centralized phase of the contractual system, characterized by the centralization of all negotiation on higher levels (national, ca-tegory or federal).

Very briefly, the matter concerns the effectiveness of the clauses on relations betwe-en the various levels of negotiation in the context of the contractual system, along with the role and function performed by the provincial contract in comparison to the national category contract.

At the time, the position taken by case law, both in terms of merit and legitimacy, was already orientated towards recognizing the independence of provincial con-tractual negotiations on the basis that the national contract is perfected and beco-mes effective at the time of stipulation, “while integrative provincial contracts only regard specific local needs that could not be decided on a national level”2, essen-tially establishing that “provincial negotiations are the expression of independent bargaining that has the same value as national negotiations...”3.

This view of the relationship between different levels of collective contracts lasted

1 An example of this is the so-called Intersind-Asap Protocol signed in 1962 between the federa-tions of metal-mechanic workers and the Intersind and Asap associations (representing partially state-owned companies), which laid down the general principles of the new contract system with the two further levels of negotiation in addition to the national level, the identification of the areas to be negotiated on a firm level, i.e. the limitations of the competence of the decentralized contract (so-called referral clauses).2 In this sense, on 9 June 1060 the Milan Court of Appeals resolved the matter of a national collective contract that covered every aspect of the employment relationship by referring to integrative provin-cial contracts to set salaries, effectively rejecting the original judge’s view that the national contract formed part of a gradual process whereby the national category contract would only become fully effective after the stipulation of the individual provincial contracts.3 For this reason, in fact, the judge (Supreme Court decision no. 4758 dated 19 March 1987) stated that “the subsequent specification of part of the salary by provincial contracts does not lead to the nullity of said provincial contract (...)”, since the Supreme Court ruled that there was no hierarchy of sources because “in the field of independent negotiations, there are no spheres of exclusive or del-egated competence” and therefore the various levels of negotiation are “on the same level”.

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for a considerable length of time, from the end of the 1960s to the early 1980s, when the 1983-84 triangular agreements were signed.

During this period of time, the local contract had effect through references contai-ned in other higher-level contracts, while it only began to be specifically referred to in legislation in the mid-1990s (for example, the realignment contracts, area con-tracts and territorial pacts).

This was the decade when local negotiations took on a more important role, hand in hand with the transformations taking place in economic processes, which led to an expansion in the numbers of small businesses and frequent phenomena of delocalization, accentuating the problem of the validity of the institutional aspect of collective bargaining that was at the basis of large industry.

2.2 The 1993 Protocol

In this context, the Protocol of 23 July 1993 can be seen as the framework in which this phase of renewing the system of industrial relations, which had found initial recognition in the agreements of 10 December 1991 and 31 July 19924, received a more coherent form through the organization of the negotiation model in which structure and functions were defined from the viewpoint of “centralizeddecentra-lization”, which appears to be oriented towards a regulation of the contractual sy-stems in line with the needs of local firms.

Specifically, in Chapter II, dedicated to contractual frameworks, the local negotia-ting level was specified as an alternative to the firm level in certain sectors, “accor-ding to the methods and spheres of application to be established by the national category contract in the spirit of the current negotiating practices with particular attention to small enterprises”. Moreover, “unitary trade union representatives and local trade union organizations who are part of the organizations stipulating the national category contract” are legitimized to take part in bargaining, for the areas “subject to referral” by the national contract and according to the methods set out therein.

This therefore created the basis for introducing a change, firstly to the trade union culture, which the propositions in the Agreement appeared to provide a direct stimulus to increase the possibilities for the decentralization of national category contracts to a local level.

However, the model created by the 1993 Agreement failed to be satisfactory, as it did not allow for adequate decentralization in all categories to enable more flexi-ble salaries and terms of employment. In particular, it failed to focus on the needs of specific companies or local situations in order to encourage economic deve-lopment and employment, to the point that local negotiations continued to be seen as an alternative to firm levelbargaining, and were usually only found in sec-tors with a long tradition of them.

Effectively, the format for decentralized bargaining set out in the Protocol had two governing principles: clauses introduced along with structured bargaining that obliged the parties to negotiate within the subject areas and limits set out in the

4 In fact, from 1992 onwards, four important trilateral agreements were stipulated in Italy regarding income, economic development and employment policies: the agreement on the cost of labor and the abolition of the mobile scale, the agreement on the income policy in 1993, the 1996 employment pact and the 1998 social pact.

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national contract; the criterion of “specialisation”, according to which structured bargaining can only apply to areas not covered on a national level.

This led to the need, supported by several parties, to review the negotiation system and give more space - in addition to the pre-existing national and firm levels - to local contracts.

2.3 The Framework Agreement dated 22 January 2009

A significant achievement in the debate on the question of overcoming the model for industrial relations and collective contracts set out in the 1993 Protocol was represented by the framework agreement on the reform of the contractual aspects stipulated on 22 January 2009, which regarding the specific profile of decentralized collective bargaining , reveals the intention of the stipulating parties5 to outline rules and criteria for promoting its use.

In fact, the text sets out the essential principles of the new contractual model use-ful for the sector, public or private, for which the parties refer to subsequent frame agreements (“accordi confederali”), for the definition of “methods, criteria, deadlines and conditions of implementation”. This framework was confirmed both on the national category level and “decentralized bargaining as defined by specific agree-ments”, thereby safeguarding the specific features of individual economic and con-tractual sectors and the relative regulatory differences.

With reference to the decentralizedbargaining, it immediately stands out how the clauses from the Protocol that only allowed for referrals to local contracts for sec-tors that already practised it, excluding small enterprises which had never used it (points 1 and 2, chapter II) were not included in the new Agreement.

This decision can be interpreted as an incentive to use decentralizedbargaining.

Another important aspect, again on the subject of levels of negotiations, which are more clearly differentiated in the Framework Agreement than in the 1993 Agree-ment, from the prospect of an incentive to use decentralized collective bargaining, regards the inclusion of so-called open clauses in point 16 of the Framework Agre-ement, establishing that for the purposes of “directly managing crisis situations on a local or firmlevel, or to encourage economic development and employment, speci-fic agreements may outline special procedures, methods and conditions to modify all or part, even in a temporary or experimental manner, individual economic or regulatory aspects of the national collective contracts”.

The Framework Agreement therefore attributes local (or firm level) bargaining the capacity to derogate from the national contract and refer to specific agreements for the definition of the methods, procedures and conditions; a significant scope for derogation, even if limited to the pursuance of specific goals (managing crisis situations, promoting economic development and employment).

The Framework Agreement also moves in the same direction of incentivizing the use of decentralized bargaining in the part where it eliminates the economic terms specifying that “the right to modifications is limited to objective parameters identi-fied by the CCNL – i.e. National Collective Bargaining Agreement” – hereinafter also “CCNL”

However, the Frame Agreement dated 15 April 2009, with Confindustria, limited the scope of contractual decentralization at least in the industrial sector -

5 The framework agreement dated 22 January was not signed by all three trade unions.

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This is clearly shown by the inclusion in the Interconfederal Agreement of the clau-ses in the 1993 Protocol regarding contractual levels, confirming on one hand that decentralized bargaining are “firmor alternatively local, where applicable, within specific sectors”, and on the other that “the CCNL sets out the methods and scope of application for decentralized bargaining, with particular attention to small enter-prises”.

The effect was to consolidate the pre-existing framework, as set out in the Protocol and enshrined in practice, which limits decentralized local negotiations to the sec-tors where it was already permitted and practiced, showing a substantially hostile approach to the possibility of extending it and a tendency to preserve strongly centralized national negotiations.

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3. Economic and institutional changes

The end of the focus on the worker in Taylor-method factories, following the cri-sis of Fordism generated by technological innovation, brought an entire system of hierarchies and social values into question: once the old feelings of solidarity had collapsed (class, sphere, group or community), a rapid process of molecularisation of the social identity in the world of work developed. This process was composed, in the first place, by external, objective variables that are currently eroding, within the OECD area, the conditions on which trade unions have based their social power in recent decades.

On a legislative level, regarding labor law, this has led to a constant deregulation.

On the collective level, there has objectively been a serious erosion of the ideologi-cal and cultural basis which not only the trade unions, but all emancipative strate-gies and practices in work and social citizenship have relied on in the past century.

In this scenario, we could also refer to a crisis of the national collective bargaining contract, symbolized by the constant disproval of the various theories on its fun-damental importance, including the assumption that when an individual becomes a member, they subordinate their own interest to the interest of the professional group in which they participate, in the same way as all the other members.

This process has had an inevitable impact on trade unions. Not by chance, none of the functions usually attributed to the exercise of trade union representation has escaped unscathed from the objective and subjective changes underway, either in the sphere of social representation, negotiations or politics.

3.1 Firm level regulation and individual labor relations

In this context, we can outline some of the most modern, transnational tenden-cies towards the “firm level regulations” of the legal and contractual terms of em-ployment relationships, both individual and collective, caused by the establishment of the global economy, which has sent the traditional pillars of industrial relations into crisis: the national legal system and the national collective bargaining system, with the crisis of the function whereby individual and collective contracts are regu-lated by employment law.

This therefore involved a tendency for multinational companies/groups to crea-te their own, independent references, drafting regulations for systems calibrated around the individual company, according to the model of organization-based em-ployment systems, such as the “Fiat case”.

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3.2 Trade union agreements with FIAT. Case law developments and the recent Constitutional Court case law No. 231 of July 23, 2013

The matter of the restructuring of the FIAT facilities at Pomigliano D’Arco and Mira-fiori are emblematic of the current phase of rewriting employment and trade union rights.

The agreements in Fiat’s Italian facilities have developed the forecasted framework agreement on the reform of collecting bargaining dated 22 January 2009, between trade unions (excluding the CGIL) and associations representing employers, which attribute future CCNL the right to establish local or firm terms to modify all or part, definitively or temporarily, individual economic and/or regulatory institutions set down on a national level: “exit clauses, or opting out”.

The doctrine and case-law that established the theory of the impossibility to mo-dify in peius the CCNL’s protection.

The subjective and temporal effectiveness of FIAT firm level bargaining was a parti-cularly difficult problem to resolve.

Firm level bargaining no longer fulfilled its traditional role of implementing and/or integrating the CCNL, in particular regarding salaries, but a new role as a tool for managing corporate crises, with the reorganization of the productive system that can lead to certain salary reductions and a deterioration in working conditions.

Under the trade union perspective this new context triggers an overall balance or also a general improvement of workers’ conditions, but however certain aspects of the employment relationship could became worst.

In this context, the discussion revolved around the legitimization of trade unions to stipulate firm level agreements that offered worse terms than the CCNL.

In the FIAT agreement, one of the most controversial points was the “responsibility clause” for individuals, which is more technically defined as a “peace clause”.

The clause in question sets out sanctions for trade unions signing the agreement in the case of “failure to meet the obligations undertaken”, or actions likely to make the agreed conditions impossible to implement.

The key elements were the attribution of the choice to accept these obligations sti-pulated by the trade unions in their individual employment contracts. This is esta-blished in the above-mentioned “integrative clauses to the individual employment contract”.

The FIAT newco stepping out Confindustria system and its related metalworkers national bargaining collective scheme. They do not adhere to the “Confindustria system” and nor does the entire Fiat group, and will therefore bargaining a firm levelagreement which has similar effects of a CCNL.

Given the above frame, within the Fiat newcos the unions cannot therefore parti-cipate to creation of the RSU(trade union representative council) as set out in the frame agreement between Confindustria and the trade unions in 1993, although they may appoint trade union representatives (RSA) as set out in Article 19 of Law 20 May 1970, n. 300(the so called “Charter of Workers’ Rights”), by the worker orga-nizations which signed the collective contracts that apply to the productive unit.

As a matter of fact,since CGIL did not sign the FIAT newcos, it cannot appoint RSA, and it is effectively closed out of the trade union representation system in the lar-gest Italian industrial complex, although it is one of the most important unionin the

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metal-mechanics sector - leading to a series of legal disputes, marked by conside-rable judicial oscillations.

The recent judgment of the Constitutional Court (No. 231 of 2013) that declared section 19 of the Charter of Workers’ Rights partially unconstitutional has introdu-ced a significant change also for the resolution of the aforesaid matters and has opened the way to a possible legislative intervention on the matter in question. In the past the Constitutional Court saved Article 19 of the Charter of Workers’ Rights from a prospected unconstitutional declarationby correcting it in its substantial meaning, , i.e., by requiring that in order to enable a trade union to enjoy therights set forth in the old text of Article 19 of the Charter of Workers’ Rights it was not sufficient only a formal requirement consisting of the trade union’s signature of the collective agreement, but it was alsonecessary the trade union’s participation to the collective agreement negotiations. Thus, it was possible to prevent from the en-joyment of the trade unions’ rights those organizations havingsigned the collective contractonly for ratification purposes,withouttaking part in a dynamic way to the collective bargaining due to the lack of an authoritative role. Today the change of the relationship among trade unions from one side and the employing company from the other side affects the meaning of the selection criteria of the trade unions representativeness. In the FIAT case at hand, the concern was not to recognize the rights of a minor trade union, but to recognize the right to be present in the work places of a trade union like FIOM - certainly representative either for the number of people enrolled or for the relevant voting power - which took part to the nego-tiations of the collective contract but refused to sign it since deemed contrary to the workers’ interest. The Constitutional Court, indeed, stated that Article 19 of the Charter of Workers’ Rights is illegitimate whereby it does not set out the right to appoint RSA to those trade unions which, although have taken part to the nego-tiations, have not signed the collectivecontracts that apply to the productive unit. Upon this Court Constitutional judgment, it will be necessary to take into account such changed context and to think over also the arrangement of the selective cri-teria set forth by Article 19 of the Chart of Workers’ Rights.Throughjudgment 231/13 the Constitutional Court goes one step further since it deems a sufficient criteria the trade union’s participation to the negotiations, even in the absence of the si-gnature of the collective contract, like it happened in the FIOM versus FIAT case. This is a significant corrective intervention that the Constitutional Court enacted in order to avoid consequences contrary to the constitutional principle of the trade union freedom as well as even paradoxical outcomes.In the borderline case under which no one of theexisting organizations signs the collective contract, it could happen that no one of the existing trade unions could enjoy the union’s right in the lack of the corrective intervention of the Constitutional Court. The latter affirms that the power to correct the meaning of Article 19 of the Charter of Worker’s Rights, necessary to give constitutional rationality to the union right system, falls within its owns power as supreme judge of the laws while the same power is out of the jurisdiction of a trial judge. Thejudgmentof the Constitutional Court opens the dialogues on important issues, already raised by the first commentators, like for example the meaning of the term “participation to the negotiations” that is a theo-retical concept less stringent than “signer of a collective contract”and rather poten-tially ambiguous if it is true that “the signature of the contract is relevant not only under the civil law perspective” but also under the Industrial Relationsperspective since it is indicative of a quality of a notable importance trade union relating to the capacity of mediation for the need to meet an agreement”. This issue confirms that

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the matter relating to the union representativenesscontinues to be lacking of relia-ble solutions, even after the indications of the agreement of 2013. In its judgment the Constitutional reveals the need to obtain clear answers on those representati-veness criteria by the legislator and gives several hypothesis of solutions.

3.3 Employeeparticipation and joint committees

In Italy, the participative model has met with the combined opposition of a part of trade unionism inspired by the conflict-contract, and the claims for independence by companies, in an exquisitely market-based perspective. The proof is in the resi-dual interest in Article 46 of the Italian Constitution, which states “For the purposes of the economic and social elevation of work and in harmony with production re-quirements, the Republic grants workers the right to collaborate, in the manners and with the limitations established by law, in managing companies”. As is well known, this article has never been implemented, due to the pluralist and highly conflictual nature of Italian society, which is therefore not suitable to accept this kind of relationship between social groups.

Today, participation has become the subject of new attention and debate (please see the new rules implemented by Law n. 92 of 2012).

A particular type of “blend” between the Parties is the paritarism. that is a manage-ment instrument to be used in case of common interventions by the social part-ners.

To get an idea of the experience of bilateralism in industrial relations in Italy, we must first consider the “casse edili” (paritarian/bilateral institutions in the construc-tion sector), which are the longest-standing bilateral institutions of all. These were initially founded to provide specific economic support to construction workers, and gradually took on a decisive role in the entire collective bargaining system in the category, contributing to its evolution in a participant sense.

Bilateral institutions are instruments of a model of industrial relations in which ne-gotiation and participation coexist through the use of management committees, which guarantee stable, ongoing relations between representatives of the shared interests.

Bilateral institutions have recently taken on new rules, similar to an updated form of the original role of mutual support.

For example, the activities attributed to bilateral institutions by Legislative Decree no. 276/2003 include: “the promotion of regular, quality employment; intermedia-tion between supply and demand for employment; organization of training and professional activities at work; promotion of good practices against discrimination and social exclusion; mutual management of funds for training and income sup-port; certification of contracts and social security contributions; development of actions to promote health and safety in the workplace and all other functions attri-buted by law or by the contracts of reference”.

The decree clearly intends to promote the development of activities providing ad-ditional support to the State welfare system, as well as supporting bilateralism in industrial relations.

It is worth to notice that recently Law 92/2012 – Art. 4, para. 64, stated that in order to give a systematic order to the rules concerning the workers’ information and consultation and the employees’ participation to the profits and the corporate ca-

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pital, the Government is delegated to enact, within nine months from the date of entrance into force of this law, upon the proposal of the Ministry of Labor, one or more legislative decrees finalized to implement the forms of employees’ involve-ment in the employing company, to be started through the drafting of a firm level contract according to the following principles and criteria:

A identification of the obligations of information, consultation or negotiation to be performedby the employing companytowards trade unions, employees or other organizations identified by the same firm level contract, by observing the minimum level fixed by the legislative decree February 6, 2007 No. 25, that adopted Directive 2002/14/CE on the workers’ information and consultation;

B forecast of process of monitoring of the plans’ implementation and their re-sult and the agreed decisions also by appointing a committees with the rele-vant powers;

C establishment of special committeesprovided with tasks of control and par-ticipation in the management of matters like work placessafety and workers’ health, the work organizations, the professional training, the promotion and the implementation of situations of equal opportunities, the remuneration lin-ked to the results, the social services supplied to the workers and their family, forms of company welfare and any other matters pertaining the social respon-sibility of the employing company;

D trend analysis and control over specific company choices through the par-ticipation representatives elected by the workers or appointed by the trade unions; ;

E forecast of the participation of the employees to the profits or the corporate capital and the implementation and the results of the business plans with an establishment of forms of trade union representatives’ access to the informa-tion on the trend of the same plan;

F forecast that in the companies carried out as limited companies or Euro-pean companies, under the Regulation (CE) n. 2157/2001 of October 8, 2001, employing in total more than three hundred employees and whose article of association provides that administration and control are exercised by a board of management and by a board of surveillance, according to articles from 2409-octies to 2409-quaterdecies of the Italian civil code, could be provided the participation of the employees’ representative in the board of surveillance as member of such board with full rights and with the same rights and duties of those members representing the shareholders, including the voting rights;

G forecast of the privileged access to the employees to hold shares, quotas or option rights directly or through the incorporation of foundations, special en-tities incorporated as investment companies with variable capital, or through employees’ association which has within its own purposes, the non speculative use of the stock participations and the exercise of the collective representation in the government body of the company.

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4. Which scenarios for Industrial relations?

4.1 The Agreement of28 June 2011 (Confindustria – CGIL, CISL, UIL) and the Agreement of 19 September 2013 (Alleanza Cooperative – CGIL, CISL, UIL)

The problem of strengthening the role of decentralized bargaining continued to be the fulcrum of trade union debates on the general reform of the bargaining process up until the guided settlement reached on 28 June 2011, in an Agreement signed by Confindustria, CGIL, CISL and UIL.

Regarding the contents, the statements of principle set out in the introduction are important, in particular, for our purposes: “a commitment to setting up a system of industrial relations to create the conditions for competitiveness and productivity capable of providing growth in the productive system, employment and salaries”, along with the shared goal of “encouraging development and the use of decen-tralized collective bargaining (...) without detracting from the role of the national collective employment agreement”.

The parties followed these statements with an important consideration on “modi-fication agreements”.

These offered the possibility of derogating from the terms of the national collec-tive bargaining, “including in an experimental or temporary manner”, due to the “requirements of specific productive contexts” and “within the limits and by the procedures set out in the national collective bargaining”, but went so far as to admit the possibility of modifications on a local level, although at very precise conditions.

The framework outlined in the 2011 Agreement adhered substantially to the model of controlled decentralization. The matter of the decentralized collective bargai-ning carried out by the local organizations, however, appeared to return to the previous balance achieved in the 1993 Protocol.

In the 2011 Agreement, the social partners not only supported the role of local bargaining, but actually proposed promoting it, as mentioned in the introduction, by providing a detailed list of goals that they hoped to achieve in the form of sta-tements of principle, making particular reference to increased productivity, higher employment rates and salaries.

Despite the good intentions, although local bargaining is explicitly mentioned in the 2011 Agreement in point 7, this occurs only in the context of firm level-bargaining, in the sense that the intervention of local organizations belonging to category-level trade unions can only take place by agreement with the firm level representatives concerning the stipulation of the contracts to be applied within the company.

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Moreover, although on a general level the local bargaining process is permitted in order to achieve the goals listed, the text goes on to limit the scope (to situations of crisis and investments to promote economic development and employment). The-refore, second-level bargaining must result in the promotion of new employment.

Additional specific limitations apply in terms of the areas that can be established on a local level (working duties, hours of work, organization of work).

This partly goes against the principles set out in the introduction, including the ge-neral goal of “setting up a system of industrial relations to create the conditions for competitiveness and productivity capable of providing growth in the productive system” and the associated goal of “achieving results that support firm levelacti-vities (...) and an adequate development policy for the various productive needs (...)” which can only be fulfilled through an adequately supported local bargaining process.

Nonetheless, the agreement reached between Confindustria, CGIL, CISL and UIL on 21 September 2011 did allow for the debate between social partners-.

Unions and Confindustria set down rules regarding representativeness and the en-forceability of firm level bargaining, defining the limits for derogations from the national collective bargaining.

With reference to representativeness, firm level can only be stipulated if they are signed by the majority of the TURs (“RSA” – unions at firm level) or approved by the CTURs (“RSU” – special workers/unionscouncil) for the workers’ organizations repre-senting the highest number of employees. Only trade unions representing more than 5% of the total number of workers in the category are admitted to the national negotiation, ascertained by a combination of the votes recorded in RSUelections and members certified by INPS and sent to the CNEL.

In the event of disagreement at firm level of one of the representative trade unions is , or 30% of the employees of the company in question, a consultation will be held, which will be valid of at least 50% plus one of those entitled participate, the same quorum necessary for approving a contract.

The frame agreement also overcomes the problem of derogating from the wor-king conditions, specifying that collective bargaining tools can be adapted to firm needs, in line with changes in the market, the organization of the work and the way employees provide their services.

The agreement between Confindustria and the trade unions, approved on 28 June 2011, strengthened firm level bargaining, set out definite criteria for measuring tra-de union representation within companies, confirmed the general validity of the peace clause, and reiterated the structure of the Italian bargaining system founded on two levels, national and firm level, with frame agreements providing the fra-mework of rules for the parties, with the consolidated legal tradition in the matter of trade union relations, based on collective independence, with a clear attempt to restore relations with trade unions’ traditional communities of reference, rather than veering towards the firm levelside of employment relations.

On September 19, 2013 CGIL, CISL and UIL signed with the Alliance of Italian Coo-peratives (Alleanza delle Cooperative Italiane), which gathers Legacoop, Confcoo-perative and the General Association of Italian Cooperatives (Associazione Generale Cooperative Italiane, Agci)a frame agreement aimed at regulating the same items with reference to cooperatives scope.

In such case decentralized collective bargaining related to district/territorial levels were significantly regulated.

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As to representativeness the social partners defined paths that are similar to the Frame Agreement of June 2013.

4.2 Article 8, Law no. 148 dated 14 September 2011

The social parties wanted to expressly reiterate the commitment to comply with the contents of the Agreement and to act so that their respective structures at all le-vels also comply, with the joint signing of an addendum dated 21 September 2011, whose insertion was made necessary following the actions of the government with Law no. 148 of 14 September 2011 (the conversion with amendments of Legislative Decree no. 13 of 13 August 2011) which among the “urgent measures for financial stabilisation and development” also set out specific provisions regarding collective bargaining.

One of the most controversial of these is article 8, called “Support for proximity collective bargaining”.

The law gives trade unions the task of modifying and adapting the protection of workers through decentralized bargainingable to derogate from laws and national collective contracts on specifically indicated subjects (paragraph 2), to accomplish certain purposes (paragraph 1) and with the condition that signing of these agree-ments is by trade unions selected on a majority basis, which extends the effective-ness to all involved workers (paragraph 1).

Specifically, article 8 attributes general effectiveness to firm levelor territorial con-tracts stipulated by associations with greater representation on a national or territo-rial level or by their company representatives, as long as they are signed “based on a majority criterion related to the aforesaid trade union representatives”.

Essentially, regardless of stipulation by external trade unions or by their company representatives, what counts for the government is compliance with a majority cri-terion in reference to the company framework. Thus both the territorial contract and firm levelbargainingare applicable to all of the workers in a certain company if the stipulating subjects, either external trade unions or firm levelunions, represent the majority of the workers of that company.

Numerous, significant subjects are indicated by the law. Of note: the duties and classification of personnel; short-term contracts; regulations concerning working hours; contract work including by project and freelance work; and dismissal.

The aforesaid legislation is indisputable in its intention to grant the territorial col-lective contract investiture in our legal system and it identifies the procedures and conditions for its concrete effectiveness, from the viewpoint of acknowledgement of a general effectiveness, although based on a majority criterion still to be defined and ability to derogate at national category level, while maintaining only the con-stitutional, EU and international conventions concerning work.

This law has raised various jurisprudence issues, including territorial comparative representation, generalized effectiveness of local proximity agreements, power for territorial collective derogations and the limits connected with them.

4.3 The Frame Agreement of 31 May 2013

On 31 May 2013 a new frame agreement (“accord interconfederale”) was signed by Confindustria, and CGIL, CISL and UIL, whereby the parties substantially apply

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the agreement of 28 June 2011 concerning representation and representativity for the stipulation of National Collective Labor Contracts, establishing the principles the enactment regulations are based on as well as the necessary conventions with involved entities.

The agreement is clearly an important step after the events at Pomigliano, Mirafiori and, in general, after the deep-seated change caused by the events which involved and featured FIAT; the process still has a long way to go, but it is completely part of the very long trail of evaluations revolving around the failure to enact article 39 of the Constitution and the effectiveness erga omnes of collective contracts.

Briefly, the memorandum of understanding strengthens the agreement signed on 28 June 2011 and establishes:

A the “weight” of each trade union organisation is determined by cross matching the worker delegates (calculated directly from the withholding taxes in their pay packets) and the votes collected by the trade unions for Tra-de Union Representative (RSU) elections, based on a model very similar to that used for civil servants;

B the number of members and the votes expressed in the elections for the RSUs (elected by proportional method) each weigh 50%. The CNEL is in charge of certifying these votes;

C the trade unions which reach 5% of the representation – calculated as the average between the percentage of the members and the percentage of the certified votes – will be admitted to the negotiations for the various collective contracts;

D the national collective bargaining agreement (CCNL) is effective and can be implemented for the parties only when signed by 50% + 1 of the trade union organizations which took part in the negotiations according to the calculation procedures as per point c) above, upon certified consultation of a simple ma-jority of the workers.

We are clearly at a turning point. New clear and undisputable rules, which allow for a more lucid negotiation of collective contracts and their effective applications; the agreement will prevent, or at least attempt to prevent, a new casus in the wake for what happened with Fiom and will allow for a new season of industrial relations: voting on the contracts is by majority, according to the criteria reported above, and it will not be possible to have separate negotiations.

4.4 A Forthcoming law for regulating the Italian Industrial Relations System?

A legislative intervention that could be useful to fill the gap of the union repre-sentativeness system by integrating the Constitutional judgment and minimizing political and constitutional risks, could follow one of the solutions indicated in the same judgment: i.e., the legislator could define the union representative requisite set forth in Article 19 of the Chart of Workers’ Rights by referring to the guidelines included in the agreement of 2013 in a more detailed manner.

For instance, the legislator could provide in Article 19 of the Charter of Worker-s’Rights that the reference is made to the general contractual system and not only to the collective contract applied in the local unit (by avoiding, thus, the anomalies

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occurred in the FIAT case).

Another hypothesis in line with the Charter of Workers Rights could be to include in the new text of Article 19 letter a) the RSA appointed within the trade unions to be deemed comparatively more representative according to the criteria already defined in the confederal agreement currently in force.

The provision of the rules of the representativeness at the company level is a rele-vant contribution to rationalize our system of Industrial Relations; and it is matter of urgency that such rules strengthen in the practice with the support of the legislator.

CGIL, CISL and UIL have neither decided nor indicated the option they consider the most suitable for achieving the purpose above mentioned. With regard to this is-sue, talks between social partners and institutions (the minister and the parliament) have recently started.

4.5 Industrial relations and SMEs

The system of industrial relations for small and medium enterprises has witnessed significant developments and innovations in recent years. From this viewpoint our country is an extraordinary workshop of new forms and tools determined mainly by the special features of the economic fabric which characterizes Italy.

The SMEs system is not bound to the 2011 frame agreement and its related 2013 agreement above mentioned.

It is a set of experiences not always adequately known and appreciated. Thus, it comes as no surprise that the prevailing culture and image of industrial relations in Italy is still linked to the problems of major corporations, especially industrial ones. The idea of a Fordism model, as the most significant and qualified dimension of our production system still dominates much of the debate, almost ignoring the fundamental figure which shows the actual presence of less than 500 companies with more than one thousand employees in our country, while there are around 2,600 enterprises with more than 250 employees. The other facet of our economic structure is characterized by approximately 3.3 million small enterprises with less than 15 employees, and around 98 thousand companies in the mid-size range with between 16 and 250 employees.

Thus, the practice of constantly recalling these fundamental indicators is indispen-sable for providing a balanced picture of the profiles of collective bargaining in the world of small and medium enterprises.

Over time, most Italian small and medium enterprises have built positive and col-laborative relations and dynamics, with responsible involvement and aware parti-cipation.

It is certainly not by chance that the development of social representation abilities in unionising the small and medium enterprise sectors has become more dyna-mic in recent years. Indeed, it has only been in the past 3 years that the amount of companies registered with special-interest associations has grown and become stronger and, at the same time, the number of SME workers who are members of national trade unions has increased.

Large private and public corporations had an industrial relation system as early as the 50s and 60s: a system which became the dominant culture in negotiating and the mainstay in the strategic and prospective equilibriums of each corporation and the primary involved industrial sectors (metalworking, metallurgical, chemical,

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electronic, energy, textile, construction, infrastructure and telecommunications).

The evolutionary path of the small and medium enterprise sectors was different, where systems based on direct, simplified relations transformed into dynamics ba-sed on representation organizations which grew within the various territories with the same fabric as the small and medium enterprises.

This particular blend of humanity, knowledge and experience made the represen-tation action more effective in various phases of economic and social growth in Italy, without excluding actions of significant visibility. Many are familiar with the memorial battles in past decades involving commercial and artisan organizations for more equal taxation, greater simplification of bureaucratic procedures and in-creased job flexibility due to the special organizational and operating situations.

This stronger and more concrete ability to integrate and participation of represen-tatives has produced, particularly in recent years, numerous innovative agreements and instruments able to enhance and promote the centrality of human capital in small enterprises, compared to financial capital or the same production sites.

A new and strong sociality has thus marked this evolution leading to the shared creation of numerous new procedures and institutions through bargaining:

• in the field of professional training apprenticeships and continuous training of workers, but also of entrepreneurs;

• in the field of a shared flexibility of times and hours, able to meet the ope-rating and production needs of enterprises, but also to consider the unique expectations of workers and their families;

• in the field of unemployment benefits aimed at protecting workers and their income;

• in the field of supplementary welfare instruments (pension funds, health care plans, etc.).

The third distinctive feature of industrial relations and bargaining in small and me-dium enterprises is related to paritarian/bilateral institutions.

Such experience has its cultural roots in the history of mutuality and integration which was such a part of Italian growth in the decades around the turn of the 20th century. From its initial self-protection and solidarity reasons, bilateral collabora-tion progressively became entrenched with the principles of horizontal and vertical subsidiarity, i.e. the propensity to cover even institution-like roles and functions.

The areas currently covered by bilateral institutions action are numerous and com-plex, involving the shared management of determinant processes such as training and innovation, but also those of the social shock absorbers and protection of wor-kers’ income, rather than welfare-like job protection. All of the issues involved are in constant evolution and expansion, always maintaining a strong ability to con-verge on the centrality of the human factor, as the primary capital of the small and medium enterprise, where knowledge, skills and competence are all one with the processes of innovation, capacity and competitive research.

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http://www.lavoce.info

http://www.cuorecritica.it

Fondazione Giacomo Brodolini (FGB – Italy).

http://www.fondazionebrodolini.it/

Istituto Italiano di Studi germanici (IISG - Italy) - Scuola Europea di Relazioni Industriali (European Industrial Relations School)

www.studigermanici.it

Institut de recherches économiques et sociales (IRES – France)

www.ires-fr.org

Vereinte Dienstleistungsgewerkschaft (ver.di – Germany)

www.verdi.de

Unione Italiana del Lavoro (UIL – Italy),

www.uil.it

Confederazione Nazionale dell’Artigianato e della Piccola e Media Impresa

www.cna.it


http://www.studigermanici.it

http://www.ires-fr.org

http://www.verdi.de

http://www.uil.it

http://www.cna.it

Project coordinator

Fondazione Giacomo Brodolini (Italy)

Contacts:Via Barberini 50

00187 Roma

Telephone: +39 (0)6 44249625

Fax: +39 (0)6 44249565

E-mail: [email protected]

Website: www.fondazionebrodolini.it

For more information about the project,

please visit the website:

www.collective-bargaining.eu

This project has been realised with financial support from the European Union.

This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.


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Decentralized Collective Bargaining in Italy. SMEs and Case Studies

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