Thursday, June 27, 2013
C2.17 (Oudemanhuispoort)
This paper reconstructs the trajectory of Italian industrial relations in the past 40 years. In the 1970s the Italian industrial relations system was in flux. The Hot Autumn wave of strikes had dramatically increased the power of trade unions both at the workplace level and in society as a whole, and, combined with the trade shocks of the 1970s, had upset the model of low-wage export-led growth which had driven accumulation in the post-war period. The trajectory of Italian industrial relations has essentially been a response to these shocks and has proceeded along two main axes: first, reform of the collective bargaining structure to increase predictability, reduce conflict, and lower costs; second, liberalization of the labor market to increase employment. The assumption has been that in order to be competitive the Italian firms have to be able to enjoy greater discretion and that labor should facilitate the process of economic adjustment. Initially, the main problem was persuading trade unions to accept wage moderation and put in place a more centralized bargaining structure. These efforts were unsuccessful in the 1980s but paid off handsomely in the 1990s, when the wage share declined substantially and competitiveness increased. Later the emphasis shifted to labor market liberalization and this led to the complete liberalization of atypical forms of employment. By the end of the 2000s the process of liberalization had managed to slightly reduce unemployment but had led to a dramatic decline in productivity growth because (it may be and has been argued) labor had become so flexible that it had reduced firm incentives to innovate. In theory there are now two options: either argue that liberalization has not gone far enough and continue on the same path. This is the preferred option for the great majority of Italian elites, including on the left of the political spectrum, and the one adopted by the current government under pressure from the EU and the ECB. Or admit that it has gone too far and change course. In practice, given international constraints, it is doubtful that Italy would be able to change course even if it wanted to.
